UK e-commerce market to hit €231 billion by 2021
Written by Peter Walker
The e-commerce market in the UK is expected to grow by nine per cent a year over the next three years – with the market projected to be worth €231.2 billion by 2021.
Research compiled by J.P.Morgan noted that the UK represents more than 30 per cent of the total European e-commerce market. France (€81.7 billion) and Germany (€73 billion) are the second and third largest e-commerce markets respectively today, together representing a third of all e-commerce activity in Europe.
The 2019 Global Payments Trends Report, which analysed e-commerce and payment trends in 34 countries - including 18 in Europe - revealed that while the UK is set to maintain its position as the largest e-commerce market in Europe, its growth may be outstripped by other European countries predicted to experience double-digit e-commerce expansion between now and 2021.
Of these, the Czech Republic (16 per cent), Italy (14 per cent) and Spain (13.5 per cent) ranked highest for forecasted growth.
E-commerce growth in the Czech Republic is likely to be supported by its comparatively high ratio of online stores per capita. Italy’s growth is anticipated to be driven by cross-border purchases, with 40 per cent of Italian e-shoppers making an overseas purchase in the past year. Finally, Spain’s growth is expected to be underpinned by ongoing investment in e-commerce from dominant domestic players.
The UK is expected to experience a deceleration in e-commerce sales growth in the coming years as a result of market maturity, Brexit-related uncertainty and its receptiveness to seasonal trends, major public events and holidays.
“The UK remains the titan of the European e-commerce space, dwarfing the next largest markets of France and Germany,” stated Ray McDonnell, managing director at J.P.Morgan Merchant Services Europe. “While the UK’s e-commerce market will remain healthy, this year’s exit from the EU and the maturity of the market may slow that growth somewhat.”
Across Europe, mobile commerce is set to be a main driver of e-commerce growth. Last year the total value of mobile payments in the UK was €91 billion – accounting for more than half (51 per cent) of the total e-commerce spend in Europe. Over the next three years, it is predicted that mobile e-commerce will grow at a rate of 20 per cent per year, to become a €188.8 billion market by 2021.
Card payments continue to dominate transactions in Europe with more than half (53 per cent) of e-payments in 2018 made by card. However, it is expected that digital wallet transactions will see the most growth over the next three years.
Between now and 2021, digital wallet payments are set to grow at twice the rate of cards in the UK – with a compound growth rate of 15 per cent and six per cent, respectively.
“Card payments remain UK consumers’ favourite when it comes to buying online, but paying via a digital wallet app is becoming increasingly popular,” added McDonnell. “As biometric security options increase on smartphones and two-factor authentication becomes obligatory under PSD2, we may see an even greater uptake of mobile-based e-commerce compared to desktop-based transactions.”