Combining both consumer and market data with Verdict's unique insights, e-retail is essential reading for any business with an interest in the online channel. It provides thorough analysis of this rapidly growing market, with forecasts to 2019. Preview sample pages from our E-Retail in the UK report to learn more.

2. August 2014
E- Retail in the UK | Verdict Channel Report page 2
Key Findings
Online growth slows, but remains far ahead of total retail
While online growth from 2014e to 2019e is set to be slower than that of the previous five
years, expenditure is increasing significantly faster than total retail. This will result in online
spend as a proportion of total retail growing from just 7.1% in 2009 to 15.7% in 2019e, and
we expect this to continue to grow. The main driver of growth over the next five years to
2019 will be high clothing & footwear online expenditure growth, and will result in the sector
moving from being the third largest sector in 2014 to the largest in 2019.
More fulfilment choice increases convenience
The increasing penetration of both click & collect and PUDO delivery services is making
online shopping even more convenient for shoppers, attracting those who would previously
have been put off due to scheduling issues for deliveries – primarily full time workers –
which is supporting expenditure growth. Providing a strong click & collect service has
become a basic expectation from shoppers in many sectors; however, the PUDO market
remains fragmented, with a number of operators that have slightly differing services.
Spend per head growth remains high
Spend per head will grow rapidly over the five years to 2019, up 33.4%, driven by
increased purchases of bigger ticket items, growth of high value food & grocery
weekly/monthly regular shops, and bulk buying clothing & footwear products with the
expectation of returning many items. The impact of clothing & footwear shoppers returning
so many items is a significant, and growing, cost burden to online retailers, and we expect
that they will attempt to address this by passing on at least some of the cost to shoppers.
As a result, this trend should have less of an impact in the subsequent years from 2019.

3. August 2014
E- Retail in the UK | Verdict Channel Report page 3
Online shopping by device
Tablet expenditure growth continues unabated
Figure 1: Proportion of total online spend, by device (%), 2013
Desktop/laptop
75.1%
Mobile phone
6.5%
Tablet
18.4%
Source: Verdict V E R D I C T
Spend via tablets accounts for 18.4% of online expenditure in 2013, up from 11.3% in
2012. This rapid growth is not replicated in mobile phone expenditure, with the proportion
growing by just 1.5 percentage points from 2012 to 2013. This shift toward mobile devices
does not mean that there is a big movement toward shopping on the move. In fact, the vast
majority of tablet expenditure is in the home, and simply represents the shift from laptops to
tablets, which are easier and quicker to use.

4. August 2014
E- Retail in the UK | Verdict Channel Report page 4
Outlook & Trends
The second coming of social commerce
Social media’s retail involvement has been limited to acting as affiliates, but the complete
migration of Twitter and Facebook usage to mobile platforms has given them another
opportunity to take a more central role in e-commerce, as Facebook’s latest ‘buy’ button
experiment attests.
Facebook trialing ‘buy’ button
Facebook is trialing a ‘buy’ button within advertised posts in timelines so that consumers
can purchase without ever leaving Facebook. The social network plans to hold the payment
details so that consumers can purchase further items from other retailers without having to
key in payment details again.
Figure 2: Facebook announcing new integration of e-commerce, 2014
Source: Verdict, Facebook V E R D I C T

5. August 2014
E- Retail in the UK | Verdict Channel Report page 5
Pre-purchase experience is key
Six of the 10 most used retailers outperform the online market average for
satisfaction
Figure 3: Shopper satisfaction with the top 10 most frequently used online retailers pre- and
post-purchase (%), 2013
75.0
80.0
85.0
90.0
95.0
100.0
75.0 80.0 85.0 90.0 95.0 100.0
Post purchase satisfaction (%)
Pre-purchasesatisfaction(%)
Average market satisfaction
Note: both Tesco's and Asda’s scores are for their online non-food offer; online food & grocery purchases are not
included.
Source: Verdict V E R D I C T
Three of the 10 most visited online retailers are pureplays, and it is unsurprising to see all
of them outperform the market in terms of customer satisfaction. This is because Amazon,
eBay and ASOS are online specialists that are constantly innovating to ensure that their
offer remains compelling and that customers can order and take receipt of their purchases
quickly and conveniently. These pureplays have to ensure that they are as competitive as
possible, because without any stores to drive interest in the brand or products that they sell,
they rely more heavily on customer endorsements. Ensuring that the shopper journey is as
simple and easy as possible makes this happen, encouraging return visits and
recommendations.

6. August 2014
E- Retail in the UK | Verdict Channel Report page 6
Online customer Shopping Journey
Drivers of purchasing
The pre-purchase phase of the online shopping decision process is a key stage in choosing
the right retailer, but will also create a lasting impression for the shopper, which can decide
whether they return to purchase again. Initially, there are factors that shoppers have
preconceived views on regarding the items that online shopping or physical shopping are
better for. Price is the most prominent driver for shopping online, while refunds and
customer service are areas that physical shopping is viewed to be better for.
Purchase decisions happening fast
Figure 4: How long shoppers spent researching before making their last purchase (%), 2013
10.0%
45.8%22.1%
11.8%
3.9%
6.4%
Instant (impulse purchase)
Less than 30 minutes
More than 30 minutes but
less than an hour
One to two hours
Two to five hours
More than five hours
Source: Verdict V E R D I C T
The decision to make a purchase is happening very quickly for the majority of online
shoppers, making it particularly important to display and provide information on products
effectively. For their last online purchase, 55.8% of shoppers bought after browsing for
under 30 minutes, and 77.9% made the purchase after less than an hour of browsing. This
is less time than would be spent browsing in physical stores, but, critically, they are also
able to compare many retailers in a lot less time. With price being such an important factor
for shoppers, having competitive pricing is a must for retailers competing at the value end
of the market.

7. August 2014
E- Retail in the UK | Verdict Channel Report page 7
Shopping on-the-go remains limited
Figure 5: Penetration of on-the-go mobile shopping by age group (%), 2013
3.8
3.2
1.8
1.3
1.2
0.9
15-24 25-34 35-44 45-54 55-64 65+
%
Source: Verdict V E R D I C T
This shows the penetration of each age group where the last product purchased online was
done so on-the-go (in a public place/travelling or in a store).
Just as with impulse purchasing, young shoppers make more use of shopping on-the-go
than older ones. However, penetration remains very low across all demographics, with the
practice of shopping while out of the home still impractical. If more retailers integrate mobile
wallets into their websites, and mobile wallets become more widely used, shopping on-the-
go will grow much faster. Storing payment and delivery details on a mobile wallet makes
purchasing on a mobile phone much easier, as well as more trustworthy for those shoppers
concerned about security over public networks.

8. August 2014
E- Retail in the UK | Verdict Channel Report page 8
Click & Collect
Click & collect substantially outperforms total online market to 2019
The forecast 81.9% growth in the click & collect market means that, in the five years to
2019, it will outperform the total online market by 36.4 percentage points. This growth partly
reflects the greater number of retailers that will start offering this service, enabling them to
make their offer more convenient for customers, and also the improvements that existing
retailers will make to their click & collect service.
By 2019, click & collect will have become a mainstream fulfilment option for online
shoppers because of the added convenience, and will come to be expected by customers
who will continue to want to avoid having to pay for home delivery. The clothing & footwear
and food & grocery departments will drive this growth with expenditure increases of 106.0%
and 246.2%, respectively.
Figure 6: Standalone collection points like those offered by Tesco at tube stations will become
more prominent, 2014
Source: Tesco, Verdict V E R D I C T

9. August 2014
E- Retail in the UK | Verdict Channel Report page 9
PUDO
Locker penetration low but set to rise
Figure 7: Penetration of online shoppers who have used PUDO services (%), 2013
37.2
32.7
15.6
Picked up from
convenience store (eg.
Collect +)
Delivery to local Post
Office or other delivery
hub
Picked up from a locker
%
Source: Verdict V E R D I C T
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