The collapse of a leading online sports retailer has shaken U.K. confidence in the e-commerce boom. And it comes at a time when research suggests that while British consumers like to get information and service via the Internet, they still prefer to purchase by phone or face to face.
The first major casualty of the dot-com shakeout in the United Kingdom was Boo.com. Set up with $135 million backing from investors such as LVHM (owners of Gucci and other upscale brands) and Benetton, the company had a shaky start – its launch was delayed for five months.
Setbacks like this appear to have prevented it from catching on. With costs of $1 million per week, but revenue of just $1 million per month, something had to give. In the end, it was the backers’ patience – they refused a request for $20 million more to keep trading.
A new report, “Responding to the Future 3,” may help explain the failure. The survey asked 1,000 adults in the United Kingdom plus a similar number in the United States about their Internet use. It was organized by the U.K.’s Direct Marketing Association and conducted by the Future Foundation, a London think tank.
According to Future Foundation director Melanie Howard, while 45% of U.S. consumers have bought online, just 29% of U.K. consumers have done so. She believes the issue is not about technology, but about deeper-rooted buying habits.
“One of the big questions for the future of e-commerce is not whether people will buy online, but whether they will do more home shopping overall,” says Howard. “A high proportion – over three-quarters of U.K. consumers – say they don’t like buying items without seeing them first.”
The research found some evidence of changing channel preferences. Nearly 40% of British shoppers like to purchase face to face, but 50% prefer the phone. Although only 7% mentioned the Internet, this was more than double the number who chose to buy by mail.
Compared with U.S. buyers, it seems that Brits still want the human touch. “That whole concern about changing how consumers deal with companies is a barrier that needs to be cracked, whatever the medium,” says Howard.
“What could make U.K. consumers happier to buy on the Internet is money-back guarantees, which 70% said they would like,” she notes. Given that many young Net users just lost money ordering items from Boo.com that will never be delivered, she has a point.
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