NEWS A slew of reports out this week show that online retail is in rude health compared to its high street cousin, with web travel agent ebookers at the forefront of the technology-based turnover, reporting almost 70 per cent year-on-year growth in sales made over the internet.
ebookers announced today that it made its first full year pre-tax profit of £1.3m in 2003 – thanks to internet sales, which jumped 69 per cent year-on-year in the first quarter of 2004 on the corresponding quarter of 2003. While the sales from the UK are up 40 per cent, the rest of Europe seems to have gone click crazy, with online sales jumping 107 per cent.
The group saw a rise in revenues of 109 per cent to £67m, compared to its 2002 results of £32m. "This performance was testament... to the continued shift of consumers onto the internet," the company said.
And while ebookers may have the internet to thank for driving up profit, it also intends to use it to drive down costs.
The travel agent said that it will be using new technologies and turning its offline acquisitions into internet properties to cut costs – meaning that nine retail outlets will be closed in favour of web offerings. ebookers will also be standardising its websites and technologies across the business.
Nigel Addison Smith, ebookers' CFO, said that the online rise is attributed to both consumers opting to book via the internet themselves as well as the company's new-found preference for online advertising.
"We've seen internet booking start to come through and we're starting to spend more on online advertising, working with search engines and so on, instead of some of the masses of newspaper marketing," he told silicon.com.
According to figures released by the Office of National Statistics on Friday, retail sales in the UK were 6.5 per cent higher in February this year than the previous year.
However, things for the internet sector were looking far rosier, with a growth of 8.2 per cent for internet and mail order companies. Figures from Visa say that Britons are spending twice as much on the internet in the fourth quarter of 2003 over the corresponding period the year before – with web spending on Visa cards jumping to £1.8bn.
Unsurprisingly, it's the travel sector that saw the biggest rise amongst plastic-toting consumers, with Visa reporting a 122 per cent rise in spending on travel and holidays. Addison Smith added that he saw no reason for the spending trend to slow yet. "We're in an early growth phase in Europe. In the US, 15 to 20 per cent of the industry comes from online and the collective wisdom is it will reach a third. In Europe, it's five to six per cent now but there's not reason to think that it won't go the same way as the US," he said.
Another recent survey predicts that by 2009, a quarter of all shopping will be done online.
