Online retail growth 'threatens' SMEs

18-08-2006

Small businesses will lose out if they fail to keep pace with the rapid growth of the online shopping sector, internet payment service Paypal has warned.

Publishing a leaflet advising businesses on the impact of internet shopping's widespread adoption, Paypal argues that small businesses could suffer diminished profits if they do not make a similar transition onto the worldwide web.

"Retailers are realising that they need to provide an impressive 'online shop' to stay ahead of the game and find the success they are looking for," Carl Olav Scheible, head of merchant services at PayPal, commented.

However Paypal's research suggests that many businesses are making the change, with 25 per cent of all retailers operating online last year compared to just seven per cent in 2004.

But it believes that small businesses "are in danger of falling behind and therefore missing out on valuable profits", justifying the need for the guide it has published.

The shift towards shopping by computer has been largely market driven, being directly linked to increasing takeup of broadband by internet users.

Striking shifts in the nation's shopping habits will result in a 71 per cent increase in online shoppers by 2010, Paypal predicts.

"Over the past few years we've seen the internet gradually eating away at the high street," Mr Scheible added.

"Consumer interest in broadband has been a key driver for the emergence of 'convenience home shopping' with 10 million UK households now signed up."

As environmental groups claim that internet shopping will help reduce carbon emissions and overhead costs for home delivery services in the food market fall, it is likely that the online retail sector will remain a growing market for the next few years.

The popularity of the internet in Britain was confirmed last month by the publication of a report from market research firm Mintel, which showed that the UK has overtaken Germany as Europe's largest purchaser of retail products.


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