The United Kingdom boasts the world’s leading e-commerce market

Won’t be needing these anymore.
Won’t be needing these anymore.
Image: Reuters/Stefan Wermuth
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Silicon Valley may be the global hub of innovative internet thinkers. But when it comes to internet shoppers, the United Kingdom can’t be beat. On June 20, officials reported much better-than-expected UK retail sales for last month in large part because of online spending: non-store sales grew 19% in May, compared to the year before, bumping total sales 1.9% higher.

Even though the UK is a smaller consumer market than that of the US, China or Japan, its shoppers spend more money online. According to eMarketer, a digital marketing research firm, business-to-consumer online sales in the UK were on average $3,585 per person last year, the most of any country. (That figure includes travel, digital downloads and event tickets.) UK shoppers make 13.5% of their purchases online (paywall), more than their counterparts in Germany, the US or South Korea—which is considered one of the world’s most digitally active populations.

By 2016, online retail is expected to make up 23% of UK retail sales, up from just 13.5% in 2010, according to a report last year by the Boston Consulting Group. That would be the highest proportion of any of the G20 economies. This chart shows online retail sales as a proportion of total sales of major economies, based on 2010 data.

Online sales as a percentage of total retail sales in 2010.
Online sales as a percentage of total retail sales in 2010.
Image: SQW

There are several reasons for the UK’s success. First, they speak English, which makes them prime targets for US-based e-commerce giants like Amazon. British e-commerce sites also attract many European shoppers who do most of their online shopping on foreign websites. The top foreign website among shoppers in the Nordic countries is the UK, for example. As much as 30% of all UK-EU trade is done through UK online retailers.

Second, e-goodies travel shorter distances within the UK and to Europe than they do in the US. The UK’s universal postal service program makes shipping cheaper. Brits use credit and debit cards more than citizens of other European countries. And smart phone usage in the UK is one of the highest in the Europe.

The UK’s vibrant e-shoppers aren’t just good for Amazon; they’re helping fledgling small and medium-sized e-commerce companies in the UK. Online sales at companies with fewer than 250 employees grew 43% (pdf, p.24) a year between 2004 and 2008, according to government statistics.