The study, commissioned jointly between the Interactive Media Retail Group (IMRG) and Hitwise, ranks sites on visits - or popularity - throughout the month of October 2006, but doesn't include auction sites or shopping comparison sites such as Ebay, Kelkoo or Froogle. Sitting at the top of the table is Amazon UK, which continues to lead the way in the UK retail market - despite the fact that it lacks a bricks-and-mortar presence on the high street.
This trend is the norm rather than the exception when it comes to sites that dominate the top ten of the 'Hotshops' list; only Tesco and Argos have a significant offline presence, which they are using to their advantage in the hunt for online spend. Elsewhere in the top ten, there is a high ranking for the Jersey-based e-tailer Play.com (2nd) alongside major no-frills airlines and travel aggregators like EasyJet (6th), Expedia (7th) and RyanAir (9th).
This trend is representative of the ways in which the pure online companies are putting more into their online strategies than traditional retailers (Tesco and Argos withstanding). This apparent urgency is derived from the fact that without users, their business model is - to put it bluntly - kaput. James Roper, the CEO of the IMRG, commented on what this means for the retail sector on the whole:
"It is surprising that so many leading high street brands are not performing better, or even appearing in the list at all. The online consumer spend is not new money; it is cash that is not being spent on the high street. Merchants are either winning online, or losing the retail game."
Furthermore, online retailers have increasingly been turning to traditional offline methods to raise awareness of product range and special offers, using the tactic of catalogues and brochures to encourage consumers to buy online as a cost-effective way of raising response rates. With 61 per cent of UK consumers consulting catalogues prior to making online purchases, this is clearly one key area of battle where the pure e-tailers are learning from their bricks-and-mortar competitors.
Tesco is one traditional retailer who have been shrewd enough to use the strength of their offline brand to tap into new markets and sell products which are not available in store. The launch of Tesco Direct in September was significant for Tesco in the sense that they took their values and applied them to new verticals such as furniture, children's toys and a wider range of home electrical products. The launch looks to have been a very successful one - the site has already leapt to the top half of the 'Hotshops' list, ranking at 22nd. Other traditional retailers will have taken note of this shift in focus for the UK's leading supermarket brand.
Indeed, another study released by Enterasys Networks suggests that the industry might only be at the tip of the iceberg with online spend growth, based on the perceived threat of security concerns, which still puts off 43 per cent of customers from buying online. If this figure is accurate, players who are already at the top of the retail tree in the UK could be set to expand their margins further if secure internet shopping can be communicated effectively.
With Royal Mail predicting that it will deliver as many as 100 million items ordered over the internet (up from 70 million last year), it seems that the online retail sector is in a buoyant mood. How traditional retailers try to hit back against the pure online players and use their offline brands to convince new customers that it's safe to buy online will definitely be one battle we'll be watching closely in the coming year.
