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East Midlands Chamber News

Online businesses are overcoming austere conditions

rising profitsCompanies that operate online are thriving despite the current tough economic conditions.

Half of firms questioned for research by Barclays’ Technology, Media and Telecoms industry team, produced double digit growth in the past three years.

Barclays Online Business Outlook 2013 has revealed that the average online company surveyed experienced 11.4 per cent compound annual growth over the period.

With the UK economy growing just 0.2 per cent in the same period, the online sector is growing at a rate 57 times faster.

The in-depth independent research found that the UK’s online economy has performed exceptionally well in what has been an uncertain environment worldwide.

Regarding respondents’ outlook for their business over the next year:
•Nearly two thirds (64%) of online businesses are optimistic about their own growth prospects for the year ahead. Only 4% of those surveyed are pessimistic
•48% stated that they are optimistic about the UK economy in 2013, with only 13% being pessimistic
•35% cited a rise in competition in their sector as the biggest threat they face this year
•25% cited increasing costs across their business as the second biggest threat.

Jon Egley, eBusiness Manager at DNCC, said: “Our anecdotal evidence supports the findings of the research, which is that companies operating online are doing better than those which have no web presence.

“The internet is a very powerful tool for corporate promotion and for trading. It is a relatively low-cost, high-impact shop window and managed properly, the teaching of which is one of the aspects we deliver at the DNCC eBusiness Club, it really is a hugely important tool for companies to have in their portfolio.”

Ray O’Donoghue, Managing Director at Barclays in the Midlands, said: “Online businesses have bucked the trend over the last three years and experienced success in spite of the stagnant economic conditions.

"The next challenge for companies operating online is sustaining this level of growth and ensuring that they take advantage of new and rising trends.

"We are advising our online clients to become mobile-ready, as it’s a significant opportunity, particularly with the imminent roll out of 4G networks across the UK due to make mobile browsing easier for more and more consumers.

"Businesses that fail to move with the times risk losing out on valuable ecommerce opportunities.”

As well as looking into the overall business picture and the growth rates of online businesses, the research also investigated attitudes towards mobile and in particular, the arrival of 4G networks.

Already widely identified as a key trend to affect online companies, Barclays Online Business Outlook revealed many businesses are unprepared for this opportunity:
•64 per cent of online businesses in the UK believe a mobile strategy is an important factor in their 2013 business success, yet almost the same number (60%) admitted they are yet to devise and implement such a strategy
•89 per cent of online businesses have not yet developed their website for mobile devices
•Online businesses that have developed mobile sites or apps generated 27.8% of their revenues from mobile in 2012, an average of £2,474,000*
•34 per cent of online businesses questioned reported a rise in mobile traffic to their website since Christmas last year, compared to the same period the year before
•53 per cent believe that 4G networks will increase mobile traffic to their website further still
•Almost half (45%) are unsure whether their website will be able to cope with the additional traffic generated from 4G networks.

Ray added: “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.”

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