Tales of Amazon’s Dominance of UK Online Retail Were Greatly Exaggerated
The BBC is reporting this week that Amazon has half of Britain’s online retail market, but I’m not so sure that there are enough facts to back up the claim.
On Sunday the BBC broadcast and published a documentary that examined Amazon’s dominance of UK retail. The text version of the piece led with a startling claim:
On average, every person in Britain spends just over £70 a year on Amazon. That’s more than half the country’s entire online retail spend. It’s an impressive result for a business started on a couple of computers exactly 20 years ago.
This is quite the newsworthy story, but when I went to confirm the story and find details which would put it into perspective I ended up with new information that made me doubt whether the BBC is correct.
Update: And I just received confirmation that this detail was not correct:
@thDigitalReader You’re right. We misread info we got from ONS – then thought they’d confirmed our line. Have asked for cut. Thank you.
— Charles Miller (@chblm) April 24, 2014
According to The Independent, Amazon’s revenues for 2013 were under £5 billion:
Analysts said Britain’s biggest online retailer was feeling the squeeze as traditional players such as John Lewis and Dixons raised their game — particularly with “click and collect” services.
Accounts filed by the US parent company show Amazon’s UK sales were $7.29 billion (£4.46 billion) — a rise of around $800 million on a year earlier. British revenues rose by $1 billion to $6.48 billion in 2012 and by $1.4 billion to $5.35 billion in 2011.
Depending on your perspective, that could be a large sum. But before I posted I went looking for details on the overall retail spending in the UK, which I thought would present a useful perspective on Amazon’s share of UK retail.
I was aiming for a post similar to the one I wrote on Friday which compared Amazon’s revenues to other US retailers, but instead I ended up with information that lead in a completely different direction.
According to the latest estimates, online retail in the UK were a lot larger than the BBC would have you believe:
UK shoppers spent £91bn online in 2013, according to new figures.
The internet retailing market grew by 16% during the course of the year, according to the IMRG-Capgemini eRetail Sales Index for December. It was capped by a final month in which online sales rose by 18%, with £11bn spent up from £9bn in December 2012. Twice as much was spent via mobile devices as was spent using them in December 2012. The figures beat IMRG’s original estimate, last January of 12% growth.
The BBC said that Amazon accounts for "more than half the country’s entire online retail spend". I’m sorry, but that just doesn’t add up. There isn’t even any way to massage the numbers and make that statement come out true.
Does anyone have a clue as to why the numbers don’t add up?
I will admit to being baffled.
fjtorres April 23, 2014 um 7:56 pm
Could it be the Luxembourg loophole?
A fair amount of Amazon sales to the UK is served from Luxembourg.
It could gigantic or the Beeb could be overestimating it, accidentally or on purpose. (The UK media is seriously anti-amazon.)
Nate Hoffelder April 23, 2014 um 9:02 pm
Except that Amazon’s total global revenue is less than the 45 billion pounds (half of UK online retail). So it is simply not possible for Amazon to generate that much revenue in the UK.
fjtorres April 23, 2014 um 10:00 pm
Since when do ADS sufferers do good math?
puzzled April 23, 2014 um 10:32 pm
Half the people who shop online in a year have at least one order at Amazon?
Ebook Bargains UK April 24, 2014 um 4:32 am
Thanks for this, Nate.
Our feature writer / researcher is sick at the moment, so we haven’t got much to add in terms of stats, but the BBC claims are beyond farcical.
Rather like the claims that Amazon is still holding 80% ebook market share in the UK these numbers just aren’t realistic, and seemed to be based on lazy journalism, historic data and hearsay evidence.
Bricks and clicks in the UK are well-advanced and while Amazon is very likely by far the biggest, others aren’t so very far behind.
If we factor in online revenue from things like video streaming, where Blinkbox and Netflix UK are way head of the game, the BBC claim seems even less plausible.
Nate Hoffelder April 24, 2014 um 7:05 am
I don’t know enough about UK retail to judge whether the BBC’s claims were true, but I suspected (based on what I know about the US) that Amazon’s influence was overstated.
And i was right; the producer has confirmed the error.
Robin April 24, 2014 um 6:20 am
Being a lot less mobile than I used to be, and living on my own, the majority of items coming into my home are ordered over the internet – including groceries. Aside from the groceries I would estimate that around 50% of my spend is with Amazon or via Amazon Marketplace. Why? Basically two points: the Amazon site gives me a much wider choice of items; if there’s a problem they usually sort it out within 24 hours.
As for the British news media ………..! I have not bought a newspaper in more than 20 years. Too much soccer and too much concentration on celebrities. Any other 'news' items you need to ask, "Why are they telling me this and why are they telling it to me now?"
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