UK businesses risk 36.7 billion due to website failures

Businesses in the UK risk losing up to 36.7 billion in revenue per year if their websites fail during peak periods. That's according to a new report by the UK tech firm Micro Focus and the Centre for Economic and Business Research (CEBR), which found that nearly 100 million of British e-commerce revenue is already lost due to website failures and outages every year. 


 

The report shows that the UK's e-commerce industry is growing at an unprecedented rate of 20 per cent year-on-year, highlighting the importance of keeping websites running optimally:
 
The market is currently estimated to be worth 320 billion per year, representing 22 per cent of the country's GDP[1].  

It grew robustly through the 2008 recession and has continued to average 20 per cent year-on-year growth ever since.  

The market is likely to grow even faster in the next ten years, as the proliferation of smart phone usage fuels more online transactions.

Both business and consumer facing firms rely on the internet for a growing proportion of transactions, meaning they stand to lose significant revenue and market share to rival firms if their websites fail.  

David Valentine, general manager at Micro Focus, comments: "As a result of website failures, almost 100 million of e-commerce revenue is already lost every year.  If businesses don't ensure their websites can handle the extra loads experienced during peak times, such as July and the run-up to Christmas, the cost could reach 36.7billion.
 
"Businesses must not only protect against this potential loss of revenue in the short term, but also protect their brand and reputation in the longer term by ensuring a better customer experience," continues David Valentine. "Making sure that websites are tested for the highest volume of anticipated users has traditionally been expensive and difficult to manage but new, scalable cloud-based testing services make this much more cost-effective."
 
Ensuring that e-commerce sites can withstand peak loads is a challenge because traffic can vary from 5,000 transactions per hour at normal times to 50,000 during a promotion or peak period. Online ticket retailers are particularly susceptible to fluctuations in demand, as demonstrated by recent website failures for the London 2012 Olympics and Ticketmaster.co.uk.  Traditional approaches to website and software testing required a large investment in infrastructure to replicate the peak volumes, but Micro Focus' cloud-based model of performance testing removes the need for this overhead. Instead of investing in hardware that is not used for a large portion of the time, businesses schedule the testing time for their required user volume on demand only paying for what they use, when they need it.
 
CEBR Statistics in Depth:
320 billion per year: the size of the e-commerce market (based on B2B and B2C platforms)

28 billion per year: the size of internet retail sales (1 in every 10 spent comes via the internet rather than on the high street)

One quarter: the proportion of large UK enterprises that gain revenues through online channels

One fifth: the proportion of small and medium UK businesses that gain revenues through online channels

94.1million per year[2]: the amount of e-commerce revenue lost to the UK economy as a result of website failures

1.0 billion: the amount of online revenue that will be lost due to website failures by 2020 if the status quo remains

36.7 billion[3]: the revenue that stands to be lost each year if website failures occurred during peak periods

July and the run up to Christmas (September to December): the peak periods that account for 11.6% of UK business' annual e-commerce revenues.
 
[1] This figure is calculated based on the seasonal demand profile of internet retail sales published by the Office for National Statistics

[2] This figure only accounts for revenue lost to businesses which transact via the internet. The greater the competition is in the e-commerce market, the larger the share of this revenue that can be recaptured. A less competitive market would mean that online businesses would risk losing market share to traditional high-street and non-internet-based businesses.

[3] This figure is calculated based on the seasonal demand profile of internet retail sales published by the Office for National Statistics

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