Online retailers to see £740m benefit from superfast broadband

Superfast broadband could deliver an additional £515m a year to online retailers when it is rolled out to most of the UK by 2017, according to a survey.

The survey, from the Centre for Economic and Business Research for Royal Mail, found that superfast broadband has so far led to online shoppers increasing their annual spending by £225 million. This is up 3.1 percent, or £23 a year, per superfast broadband user.

Furthermore, once the government meets its target of rolling out superfast broadband to 95 percent of the population by 2017, an extra £515 million a year would be added - leading to a total of £740 million a year in online shopping enabled by superfast broadband.

Ofcom defines superfast broadband as the service provided by Virgin Media Cable, Openreach fibre-to-the-cabinet or Digital Region Networks.

The survey found that the impact of the faster internet infrastructure varied across the UK.

Shoppers in Scotland and Wales increased their online spending the most since receiving superfast broadband, up 5.1 percent and 4.4 percent, respectively. However, this correlated with areas of low population densities, which implied that people who lived further away from large shopping centres were more likely to shop online.

Meanwhile, the older population of the South West of England - where the average age is highest - is likely to have contributed to the lowest average increase in online shopping, of 1.4 percent.

Nick Landon, managing director of Royal Mail Parcels, said: “Royal Mail’s study shows that the investment in superfast broadband networks is having a positive impact on spending online.

“Superfast broadband is acting as a catalyst, encouraging people to spend more online and the further rollout of networks across Britain over the coming years can only benefit the online retailing market.”

Many traditional bricks-and-mortar retailers are trying to create omnichannels to bridge their online and physical presences, and cater for the multiple ways people shop with them. Offering a click and collect service, where people can order online and collect in a store for free, is proving to be popular with companies like John Lewis, Marks & Spencer and Argos.

CEBR surveyed 1,412 adults in Britain with superfast broadband, and 1,710 adults with non-superfast broadband.

Copyright © 2014 IDG Communications, Inc.

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