Britain’s online businesses unprepared for shift to mobile world


Companies that operate online are thriving despite the current tough economic conditions, according to new research from Barclays’ Technology, Media and Telecoms industry team, with half of those questioned having produced double digit growth in the last three years.

Barclays Online Business Outlook 2013 has revealed that the average online company surveyed experienced 11.4% compound annual growth over the last three years. With the UK economy growing just 0.2% in the same period, the online sector is growing at a rate of 57 times faster.

Yet, Britain’s online businesses stand to miss out on significant opportunities due to a lack of forward planning around mobile and preparation for superfast 4G networks.

The research found that 89% of online businesses have not yet developed their website for mobile devices – despite the fact that over a third (34%) have seen a rise in mobile traffic to their website since Christmas. This is a surprising oversight given that online businesses that have developed mobile sites or apps generated 27.8% of their revenue from mobile in 2012, that’s an average £2,474,000*. Furthermore, UK smartphone users are increasingly accustomed to making purchases from their mobile phone, with more than half making at least one transaction from their handset in 2012**.

Sean Duffy, Managing Director and Head of Technology, Media and Telecoms at Barclays, said: “In our experience, online businesses that have already invested in the mobile side of their business through the development of mobile-ready websites or apps are already seeing a significant proportion of their business coming from mobile devices. Our research backs up what our clients are telling us – mobile-ready online businesses generated more than a quarter of their revenue from mobile last year. Considering that the average online business in the UK generated £8.9 million in revenue in 2012, this equates to almost £2.5 million of potential income through mobile. Online business is already booming and with the number of mobile consumers only set to rise, our view is that it will continue to do so.”

The survey also revealed a series of contradictions among UK online businesses when it comes to their mobile strategy:

• 64% of online businesses in the UK believe a mobile strategy is an important factor in their business success

• Yet almost the same number (60%) admitted they are yet to devise and implement such a strategy

• Just 11% of online businesses have a mobile app or mobile-ready website

The independent research comes as 4G mobile licences were awarded to leading mobile phone operators in an Ofcom auction worth almost £2.5bn. With 4G networks due to roll out to the majority of consumers this year, 4G mobile broadband will provide smartphone and tablet computer users with “superfast” download speeds, up to 10 times faster than current speeds.

Regarding the impact of 4G on their business:

• 25% of online businesses had not heard of 4G; a further 37% had heard of it but knew nothing about it

• 53% of online businesses questioned think that 4G networks will increase mobile traffic to their website

• 45% are unsure if their website will be able to cope with the additional traffic potentially generated by 4G, while 5% stated it would not be able to cope

• 55% do not believe there is a risk to their business if they don’t adapt to take advantage of 4G

Sean Duffy continued: “With an increasingly mobile audience it’s clear that online businesses need to find the time and resource to plan for the risks and opportunities that this brings. We’re already seeing a growing trend for consumers to browse on their mobile or tablet rather than their PC, and while the introduction of 4G networks is unlikely to cause technical problems for online businesses, it is likely to accelerate this trend.

“Companies that are already prepared for consumers to use their sites from a mobile device stand to gain a significant competitive advantage. It isn’t enough to simply replicate the big screen PC experience for mobile devices. A similarly rich and diverse experience on a smartphone needs to take account of the physical limitations of small screen devices and the way consumers interact with them. The advent of 4G will drive even more internet traffic to mobile – not addressing that shift in usage could severely limit ecommerce opportunities.”

Barclays Online Business Outlook 2013 also looked at lost sales last year due to website outages. The research found that the average downtime recorded represented seven days’ worth of trading. If 2013 sees the same level of website outage as 2012, these online businesses could forfeit 1.9% of their turnover. This potential loss of trading is worth almost £170,000 for each online business, based on an average turnover of £8.9m.