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Online business contributes estimated £100 billion to UK economy
16th December 2010

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Management consulting firm the Boston Consulting Group has recently released a report which breaks down some key statistics surrounding online business in the UK and how Britain’s figures compare with other leading economic powers in the world. Commissioned by Google UK, the report presents some staggering statistics which attempt to put the vast scope of the internet economy into understandable, real terms. Overall, the UK is shown to be a consumption-driven net exporter of online goods and services, with an unusually high level of internet activity. Two main conclusions are reached: firstly, that the internet remains a strong platform for economic activity even in times of recession, and secondly that there is the potential for even more growth in the future. Let’s review some of the statistics in more detail and outline the implications and opportunities for online businesses.

Benefits for businesses and consumers

The report suggests a further set of peripheral benefits for internet users even when they are not buying online. First among these is the ability to access consumer reviews, expert advice and price comparisons, helping consumers to make more informed product choices even if they ultimately decide to purchase in a brick-and-mortar store. Consumer-generated reviews, discussion groups and special-interest blogs are a valuable source of independent information and part of a wider trend towards the distribution of ideas online. Sales are not the only business benefit: the internet can facilitate quicker transactions and business decisions and a bevy of companies now offer tools for networking and project management online, which can improve workforce efficiency.

When we situate these impressive figures in a global context, the prognosis for online business becomes even better. The International Telecommunication Union (ITU) recently announced the results of a study which places global internet users at a total of 2 billion, or 30% of the world’s population. While predictably Western countries possess the highest density of users, even Africa can now boast that 10% of its residents have internet access and this number is set to grow. Once again, the benefits of internet use are far-ranged and not simply limited to buying goods and services. We are seeing the potential for online business and networking in developing countries, a phenomenon which can boost struggling economies and make it easy to exchange ideas, cultural influences and even business contracts with individuals and companies from all over the world.

The dark side of e-conomy: problems and limitations

However, the report outlines some limitations of e-conomy and online business, chief amongst which is the fact that one fifth of the UK’s adult population have never used the internet. Demographics who are less likely to use the internet are the over 65s and those with low incomes. Additionally, even internet users suffer from embarrassingly slow internet speeds. The average cost of the internet in the UK is low, but only 15% of UK users have a connection speed faster than 5MB/sec, compared to 65% in South Korea at the very top of the scale. Causing user frustration and slowing down internet activities, these slow connection speeds could make users reluctant to use company websites which contain slow-to-load media. A stream-lined, effective website has the best chance of not only attracting users but also convincing them to explore the site.

Although the unique, interactive structure of the internet allows for an unprecedented level of communication and flow of ideas, efficiency can be severely hindered by unsolicited contact and distraction. The Boston Consulting Group cites the most recent Microsoft Security Intelligence Report regarding the proliferation of spam email: an estimated 97% of all emails globally are unwanted or unsolicited. These may not be harmless communications, as fraud and cybercrime, particularly of a financial nature, are also rife online. Information security should be a paramount concern for all businesses thinking about expanding onto an online platform. More benignly, UK internet users devote a quarter of their total time online to social networking, which can be hugely positive for business seeking to advertise in the new media, but also dangerous for company productivity.


Ultimately it would appear that the benefits of internet business outweigh the risks. While there are certainly pitfalls waiting for those who have not sought advice, most problems can be avoided with forward planning. Businesses must learn to adopt a nuanced approach to advertising and promotion, blending traditional business models with their online equivalents in order to ensure that they do not miss key demographics. “Multichannel” advertising, i.e. advertising across different platforms, is a powerful new way of attracting new customers and is being used with increasing imagination and success by many companies. The internet frontier version 2.0 is open for business, and Boston Consulting Group’s report provides an excellent map for navigating this strange, but promising, new land.