Analyst firm Jupiter estimates that average UK online spend per buyer this year will be EUR727 (£484), rising to EUR1,106 in 2008. In that year, Europe's total spend will nudge EUR100 million. Meanwhile, Forrester Research predicts that e-commerce will be worth 4.7% of total retail in the UK this year, increasing to 11.1% by 2008.
So what are we spending our money on?
According to Jupiter, more than a third of transactions involve travel, with a typical site combing thousands of tour and flight operators to match specific search criteria.
Indeed, the more popular sites tend to be search-led rather than retail-led, with price-comparison sites such as Kelkoo, Bizrate.com and NexTag attracting loyalty. Shoppers don't stay on these sites for long - US surfers spend less than two seconds on NexTag - but they are bookmarked as that important first port of call.
David Soskin, CEO of cheapflights.co.uk, even describes the world's most popular website - eBay - as 'a very big search site which matches buyers with sellers'. eBay's success has been both astonishing and bizarre. Nothing else has tapped into our hitherto hidden compulsion to whittle away hours in an auction room bidding frantically for items as diverse as executive chess sets and genuine mud from the Glastonbury festival.
Despite eBay and Amazon's widespread appeal, e-commerce sites still give investors the jitters, and not without reason. Amazon has huge brand equity but makes relatively little money: total earnings per share for 2003 came in at just $0.08, up from losses of $0.39 in 2002 and $1.56 in 2001. Because investors got their fingers burnt at the start of the millennium, a wariness infects attitudes towards dot.coms, so when shares in Yahoo! fall, so do those in Amazon and eBay.
This does not seem to be hampering competition in e-commerce, though, and no sector proves this more acutely than the UK's second-largest, groceries, a highly cut-throat business. Tesco.com, the world's most successful online grocer, enjoys a strong lead with more than five million UK fans. And it's not just about flogging washing powder: Tesco.com offers DVD rental, personal finance and even DIY divorces. Could Tesco-branded MBAs be next?
But Tesco faces stiff competition from UK rivals eager to erode its lead status and, despite being relatively late to market, the Wal-Mart-owned Asda should not be underestimated: Wal-Mart is the fifth most popular e-commerce site on the strength of its US presence, according to Nielsen//NetRatings, and James Roper, the chief executive of the Interactive Media in Retail Group, speculates that Wal-Mart could dominate up to 40% of all retail.
Sectors earmarked for e-commerce growth in the UK include apparel, which is taking off in the US thanks to sites such as jcpenney.com. The underwear site figleaves.com is, if you'll pardon the expression, sticky. It's clear that e-tailing is eclipsing mail order because, in the days before the internet, Figleaves would have been a low-profile catalogue.
But progress can be frustratingly slow as the take-up of high-speed access lags behind dial-up connections. The Office of National Statistics states that broadband accounts for just 27.2% of the UK's 12.1 million wired homes. Experience dictates that, as soon as surfers have high-speed access, they spend more time online and buy more, hence the exponential growth forecast by Jupiter and Forrester.
But many sites need to address technical issues such as crashing at the checkout. UK e-commerce sites could lose up to £226 million in 2004 as a result of poor functionality, says the website testing specialist SciVisum.
That's like shooing customers out of the store when they're about to part with cash.
When managed well, offline brands that have translated well in the online space can seriously challenge clicks-and-mortar brands. Fnac.com, for example, is more popular than Amazon in France and Spain. According to Nielsen//NetRatings, though, Amazon worldwide remains second only to eBay, with a remarkable 41 million active customer accounts. Its cachet was confirmed in June last year, when 1.3 million copies of Harry Potter and the Order of the Phoenix were advance-ordered on Amazon sites, making this title Amazon's largest new-product release.
Topping the pile of management books sold on Amazon sites this year is Jim Collins' Good to Great: Why some companies make the leap... and others don't, a title that encourages companies to think differently about the role of technology. Sounds like a must-read for businesses considering a leap into cyberspace.
MOST POPULAR E-COMMERCE WEBSITES IN EUROPE
Total audience (000s)
1 eBay 85,724
2 Amazon 47,662
3 Shopping.com 18,302
4 Yahoo! Shopping 17,577
5 Wal-Mart 11,885
6 Bizrate.com 11,046
7 Target 10,268
8 Kelkoo 10,115
9 NexTag 8,114
10 Overstock.com 7,734
SOURCE: NIELSEN//NETRATINGS, AGGREGATED FROM DATA ON 10 EUROPEAN
HOW MUCH WE SPEND PROJECTED ONLINE OUTLAY BY COUNTRY (E)
2004 2006 2008
Germany 10,305 16,993 25,801
UK 11,570 17,538 24,332
France 5,718 10,122 16,644
Italy 2,446 4,139 6,500
Spain 1,539 2,792 4,569
Sweden 1,412 2,094 2,902
SOURCE: JUPITER RESEARCH
PROJECTED AVERAGE ANNUAL SPEND PER ONLINE BUYER (E)
2004 2006 2008
UK 727 891 1,106
France 511 653 885
Germany 453 595 811
Sweden 443 534 661
Italy 298 385 534
Spain 314 396 522
SOURCE: JUPITER RESEARCH
PROJECTED GROWTH OF B2B E-COMMERCE (E)
2004 2008 CAGR*
UK 110,354 372,795 27.6%
W Europe 564,315 1,740,349 25.3%
* COMPOUND ANNUAL GROWTH RATE SOURCE: IDC
ONLINE SUPERMARKET SHOPPING
Unique audience Time per session
Tesco 5.15m 34m 38s
Asda 736,000 18m 57s
Sainsbury's 617,000 10m 46s
Aldi 302,000 9m 02s
Waitrose/Ocado 273,000 5m 50s
ONLINE BRITAIN PROPORTION OF HOUSEHOLDS WITH INTERNET ACCESS (JAN-MAR)
SOURCE: OFFICE FOR NATIONAL STATISTICS
E-COMMERCE IN THE US (DOLLARS BN)
2004 (est) 2008 (est)
Books, music, video 8.6 19.1
Computers & electronics 14.2 23.1
Travel 30.6 60.6
Groceries, home & apparel 22.9 81.8
Other 19.4 99.8
Total online sales 95.7 229.9
SOURCE: FORRESTER RESEARCH
Unusual items sold on auction site eBay include an executive jet
($4.9m), Lady Thatcher's handbag (£103,000), Robbie
Williams' bed (£15,400), Christina Aguilera's used bathwater
(£810) and several virginities, both male and female