ACTIVITY 4.8.1 E-COMMERCE ON THE INCREASE Online retailing in the UK increased by 22% in 2013 compared with high-street sales growth of 1.8% according to industry analyst Verdict Research. E-tailing now accounts for almost 15% of total retail spending. In surveys, 74% of UK consumers believed the internet meant cheaper goods, and 67% agree that it is better for comparing prices than going to high-street shops. The decisions of Dixons, a major retailer of electrical products in the UK under the Dixons and Currys brand names, are typical of the changes that e-commerce is forcing on many businesses. Dixons decided to: close many of its high-street stores. rebrand those remaining into 'Currys.digital'. move the Dixons brand completely online. The strategy cost 7 million, but was expected to increase sales as well as reduce annual costs by 3 million. 'I am very excited about the prospects for the Dixons brand as a pure e-tailer,' said the chief executive of Dixons. 'Consumer buying behaviours are developing with the growth in broadband and tablet usage.' E-commerce is now an indispensable part of the fashion industry too. The online retailer www.asos.com receives over 1.7 million searches on its site each month and is the most visible fashion retailer online. Another site, Net-a-Porter, formed a partnership with fashion label Halston. It displayed one particular dress which sold out in 45 minutes after its launch. Burberry uses digital and mobile technology to live-stream its new collections via Twitter, and Facebook allows users to make instant purchases from its website. There is also potential for young new designers keen to enter the industry to show off their styles to a huge online audience.

Burberry has an effective system for communicating interactively with its consumers - e-commerce can improve long-term relationships with customers However, there were concerns amongst e-tailers that conversion rates (converting web page visits into sales) fell during the economic recession of 2009-11 and this problem

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could return if the economy hits further problems in future. There are also familiar customer complaints about difficult-to-use sites, delays in postal deliveries and 'it was not as it seemed on screen', so perhaps high-street shops are not doomed after all. 'The high street will not die,' said a director of Verdict Research. 'Internet retailing is certainly set to become more significant, but shopping is a tactile process and for many people it is a leisure activity - e-commerce does not provide those two things.' 20 marks, 40 minutes 1. Define the term 'e-commerce'. [2] 2. Describe how Currys has used business-to-consumer e-commerce to market its products. [4] 3. Analyse a potential benefit to Burberry of using e-commerce to market its products. [4] 4. Evaluate Dixons' decision to close its high-street shops and to go 'fully online' as the only method of selling its products. [10] (has to be long response since its 10 marks)