Around 130,000 UK businesses now sell online, in a market representing about 2.5% of all household spending (over £18 billion a year in total), according to Government figures. In the last five years, internet retail sales in the UK rose by over 350%, compared with growth of only 20% for all retail sales. In 2005, the typical online shopper spent £560 online, and forecasts suggest that this could grow to over £860 per year by 2010. Other research has, however, also identified consumer concerns when shopping online about security of payment, or potential problems with delivery.
The OFT has taken some action to protect consumers on the internet in the past. Recently it acted to ensure that the major supermarket chains provide clearer information about online pricing of products. It has also worked with businesses to address consumer concerns about delivery and cancellation rights, obtaining agreements guaranteeing that Amazon.co.uk and BOL.com include delivery charges in refunds.
The OFT also actively promotes self-regulation by online and offline traders, particularly through its Consumer Codes Approval Scheme. SafeBuy, a code of practice for web-based retailers, has recently completed Stage One of the two-stage approval process.
The new study will examine whether:
The study will concentrate on four representative 'case study' sectors: domestic electrical goods, music sales (including downloads), airline ticket sales (including accommodation bought at the same time), and online auctions.
The OFT says these sectors have been chosen because they represent at least a third of all online spending and are good examples of the internet as a growing and developing marketplace. It is also anticipated that these sectors will provide useful lessons to apply to other areas of internet shopping.
Market studies such as this are performed under the Enterprise Act of 2002. The OFT will make contact with businesses and other stakeholders, to hear their views, but it stressed that the purpose of the study is to conduct exploratory research, not to investigate particular companies.
The OFT expects to publish its findings in spring 2007.
