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UK B2B E-Commerce market report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the B2B E-Commerce market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry and how fast are its rates of growth? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this Report

E-commerce covers the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet.

EDI is a document standard which, when implemented, acts as common interface between two or more computer applications in terms of understanding the document transmitted. It is commonly used by large companies for e-commerce purposes, such as sending orders to warehouses or tracking their order. It is more than mere e-mail; for instance, organisations might replace bills of lading and even cheques with appropriate EDI messages. It also refers specifically to a family of standards. In 1996, the National Institute of Standards and Technology defined electronic data interchange as ""the computer-to-computer interchange of strictly formatted messages that represent documents other than monetary instruments. EDI implies a sequence of messages between two parties, either of whom may serve as originator or recipient. The formatted data representing the documents may be transmitted from originator to recipient via telecommunications or physically transported on electronic storage media."" It distinguishes mere electronic communication or data exchange, specifying that ""in EDI, the usual processing of received messages is by computer only. Human intervention in the processing of a received message is typically intended only for error conditions, for quality review, and for special situations. For example, the transmission of binary or textual data is not EDI as defined here unless the data are treated as one or more data elements of an EDI message and are not normally intended for human interpretation as part of online data processing.

Before using EDI, trading partners must set up a trade agreement to define the parameters of EDI. Each partner in an EDI trade agreement must independently determine a method to translate internal data to and from EDI formatted messages. Each must agree on the communications media and arrange the method for transmitting information. This may involve several methods, such as a dedicated communications link, a virtual area network (VAN) or the internet. Each must provide for system recovery in case of failure or error, security and timely response.

There are several advantages to using EDI:

  • EDI speeds the process and improves the accuracy of getting information into the user's computer system. The traditional connections between businesses are telephone and mail. Both can be slow and require human intervention. EDI uses direct links to the computer system to minimize the transmission delay.
  • Direct links also eliminate the need for transcribing data into the computer. This reduces errors and saves time.
  • EDI solves business problems, offers cost savings, and strategic benefits, and provides a competitive edge.
  • EDI helps organisations improve communications and increase competitiveness, efficiency, and customer service by cutting costs and maximizing productivity and profitability.
  • EDI can lower costs by reducing inventory investments by timelier ordering. EDI can enable better business practices, such as ""just in time"" stocking. If point of sale data is sent directly to vendors, inventories can be monitored and orders automatically generated to minimize overstocking.
  • Omni-channel marketing is a multi-channel approach to sales which seeks to provide the customer with a seamless shopping experience, whether the customer is shopping online from a desktop or mobile device, by telephone, or in person at a store.

    Market Segmentation

    • Manufacturing
    • Utilities
    • Construction
    • Wholesale
    • Retail
    • Transport
    • Accomodation
    • Information
    • Other Services

    What you need to know

    E-commerce has penetrated virtually every sector of business and commerce, but the level of that penetration remains low in many cases and huge opportunities still exist for growth. The two very distinct areas of e-commerce are showing very different features and opportunities. Electronic data interchange (EDI) is largely restricted to areas where frequent deliveries within a wider order are placed. It is a strongly established sector in manufacturing and the wholesale industry. Yet it remains the province of a limited number of companies, with only 1.3% estimated to receive orders through EDI in the UK. Nonetheless, EDI accounts for more than half of the total e-commerce market, and is even more significant in the B2B market.

    The more dynamic element of the market concerns website sales, where the B2C market is demonstrating strong growth and the B2B market remains under-developed. Only an estimated 9.1% of companies are gaining UK orders from websites, though this rises to 19.6% if micro companies (those employing up to ten people) are excluded. SMEs continue to under-utilise e-commerce, yet cloud computing is offering data mining capabilities to all companies, while software-as-a-service can cost-effectively replicate many of the features offered by industry giants, such as Amazon and Alibaba. It remains the case, that the larger the company, the more likely it is to gain sales through ecommerce. The proportion of companies making e-commerce sales is far lower than those purchasing through e-commerce. 33% of all companies make purchases through e-commerce, rising to 50.6% of companies with more than 10 employees.

    Expert analysis from a specialist in the field

    Written by Terry Leggett, a leading analyst in the B2B sector, his extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

    Statistics demonstrate that the larger the company, the more likely it is to use e-commerce as a route to market. Yet cloud computing and software-as-a-service are making important facilities increasingly cost-effective for SMEs. Companies of all sizes remain three times more likely to use e-commerce as a purchasing route than a sales channel. Terry Leggett
    Senior B2B Analyst

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
      • Executive Summary

          • The market
            • Much larger than the B2C e-commerce sector
              • Renewed strong growth
                • Figure 1: The B2B e-commerce market, 2014-18
              • Segmentation by route
                • Figure 2: Segmentation of B2B e-commerce sales, 2014-18
              • Segmentation by sector
                • Figure 3: Segmentation of e-commerce sales, by sector, 2018
              • Major room for growth
                • Figure 4: Proportion of companies making e-commerce sales, by channel, 2009-17
              • Strong prospects for growth
                • Figure 5: Forecast B2B e-commerce market, 2019-23
              • Companies and brands
                • Huge fragmentation
                  • SMEs under-utilising website sales
                    • Figure 6: Proportion of companies making website sales by size of company, 2017
                  • EDI is also strongly biased towards larger companies
                    • Figure 7: Proportion of companies making EDI sales by size of company, 2017
                  • What we think
                  • Issues and Insights

                    • E-commerce is more than just having a website
                      • The facts
                        • The implications
                          • E-commerce still underdeveloped, particularly by SMEs
                            • The facts
                              • The implications
                                • Paid internet advertising – A key component
                                  • The facts
                                    • The implications
                                      • Figure 8: Propensity of companies to use internet advertising, by size of company, 2017 (% of companies by number of employees)
                                  • The Market – What You Need to Know

                                    • B2B digital strategy playing catch up
                                      • More companies buy on the internet than sell
                                        • The UK – A receptive audience
                                        • Market Size

                                          • E-commerce continuing to grow strongly
                                            • Figure 9: Total growth of e-commerce sales, 2014-18
                                          • EDI back in growth and website sales are dynamic
                                            • Figure 10: E-commerce sales, 2014-18, by type
                                          • The B2B activity
                                            • Figure 11: B2B e-commerce sales, 2014-18, by type
                                        • Market Segmentation

                                          • B2B much larger than B2C
                                            • Figure 12: Segmentation of the e-commerce market, by end user type, 2018 (£ billion)
                                          • EDI almost double website sales in B2B
                                            • Figure 13: Segmentation of the B2B e-commerce market, 2018, by channel (£ billion)
                                          • E-commerce used by most business sectors
                                            • Figure 14: Segmentation of e-commerce sales, by sector, 2018
                                            • Figure 15: Proportion of companies making e-commerce sales, by sector, 2017
                                        • Segmentation: Manufacturing

                                          • EDI the favoured e-commerce route
                                            • Figure 16: E-commerce sales by the manufacturing sector, 2014-18, by type
                                          • B2B dominates e-commerce activity
                                            • Figure 17: Segmentation of manufacturing website sales, by type of customer, 2014-17
                                          • E-commerce still confined to few companies
                                            • Figure 18: Proportion of manufacturing companies involved in e-commerce, 2017
                                        • Segmentation: Utilities

                                          • A website-led sector
                                            • Figure 19: E-commerce sales by the utilities sector, 2014-18, by type
                                          • A major B2C market
                                            • Figure 20: Segmentation of utilities website sales, by type of customer, 2014-17
                                        • Segmentation: Construction

                                          • A low e-commerce use sector
                                            • Figure 21: E-commerce sales by the construction sector, 2014-18, by type
                                          • B2C of growing importance
                                            • Figure 22: Segmentation of construction website sales, by type of customer, 2014-17
                                          • Purchasing far more common that selling
                                            • Figure 23: Proportion of construction companies involved in e-commerce, 2017
                                        • Segmentation: Wholesale

                                          • The largest e-commerce market
                                            • Figure 24: E-commerce sales by the wholesale sector, 2014-18, by type
                                          • Website B2B sales progress strongly
                                            • Figure 25: Segmentation of wholesale website sales, by type of customer, 2014-17
                                          • Both e-commerce purchasing and selling are common
                                            • Figure 26: Proportion of wholesale companies involved in e-commerce, 2017
                                        • Segmentation: Retail

                                          • Websites dominate sales
                                            • Figure 27: E-commerce sales by the retail sector, 2014-18, by type
                                          • A consumer dominated market
                                            • Figure 28: Segmentation of retail website sales, by type of customer, 2014-17
                                          • Room for much more growth
                                            • Figure 29: Proportion of retail companies involved in e-commerce, 2017
                                        • Segmentation: Transport and Storage

                                          • The third largest industry sector
                                            • Figure 30: E-commerce sales by the transport and storage sector, 2014-18, by type
                                          • B2B sales development
                                            • Figure 31: Segmentation of transport and storage website sales, by type of customer, 2014-17
                                        • Segmentation: Accommodation and Food Service

                                          • Website sales record strong growth
                                            • Figure 32: E-commerce sales by the accommodation and food service sector, 2014-18, by type
                                          • More than a third of the market is B2B
                                            • Figure 33: Segmentation of accommodation and food service website sales, by type of customer, 2014-17
                                          • Purchasing more common than selling
                                            • Figure 34: Proportion of accommodation and food service companies involved in e-commerce, 2017
                                        • Segmentation: Information and Communications

                                          • Still demonstrating growth
                                            • Figure 35: E-commerce sales by information and communication sector, 2014-18, by type
                                          • A quarter of website sales are B2B
                                            • Figure 36: Segmentation of information and communications website sales, by type of customer, 2014-17
                                          • Major penetration for purchases
                                            • Figure 37: Proportion of information and communication companies involved in e-commerce, 2017
                                        • Segmentation: Other Services

                                            • Figure 38: E-commerce sales by other services sector, 2014-18, by type
                                          • B2C continues to lead website sales
                                            • Figure 39: Segmentation of other services website sales, by type of customer, 2014-17
                                          • Purchasing more common than selling
                                            • Figure 40: Proportion of other services companies involved in e-commerce, 2017
                                        • Market Forecast

                                          • Strong overall growth
                                            • Figure 41: Forecast total e-commerce market, 2019-23
                                          • Blurred boundaries
                                            • Figure 42: Forecast comparison of the B2C and B2B e-commerce market, 2019-23
                                          • B2B market segmentation
                                            • Figure 43: Forecast segmentation of the B2B e-commerce market, 2019-23
                                        • The Impact of the Economy

                                          • GDP
                                            • Figure 44: GDP overall quarterly development, Q1 2015-Q3 2018
                                            • Figure 45: GDP quarterly development, by sector, 2004-18
                                            • Figure 46: Forecast GDP development, 2018-23
                                        • Market Trends

                                          • Introduction
                                            • Artificial intelligence (AI) – An important progression
                                              • Consistent omni-channel strategies
                                                • Richer content
                                                  • The mobile trend
                                                    • Voice-assisted commerce
                                                      • Chatbots
                                                        • Augmented reality (AR) and virtual reality (VR)
                                                        • Market Drivers

                                                          • Internet usage
                                                            • Figure 47: Worldwide internet usage, by region, 2000-18 (million)
                                                            • Figure 48: Proportion of UK businesses with internet access, by size of company, 2017
                                                          • Website use by companies
                                                            • Figure 49: Proportion of UK businesses with websites, by size of business, 2017
                                                        • Companies and Brands – What You Need to Know

                                                          • The power of platforms
                                                            • How the B2C market impacts the B2B sector
                                                            • Industry Structure

                                                              • A very fragmented sector
                                                                • Strong growth in companies
                                                                  • Figure 50: Development of the dedicated retail sales via mail order or internet, 2014-18
                                                                • Further room for growth
                                                                  • Figure 51: Proportion of companies making e-commerce sales, by channel, 2009-17
                                                                • SMEs have further opportunities to build website sales
                                                                  • Figure 52: Proportion of companies making website sales by size of company, 2017
                                                                • EDI is strongly biased towards larger companies
                                                                  • Figure 53: Proportion of companies making EDI sales by size of company, 2017
                                                                • Major mismatch between buyers and sellers
                                                                  • Figure 54: Comparison of companies active in e-commerce selling and purchasing, by size of company, 2017
                                                              • Competitive Strategies

                                                                • The ‘Big 2’ have different international growth strategies
                                                                  • Others are also targeting global positions
                                                                    • Figure 55: Geographic breakdown of Electrocomponents turnover (%)
                                                                  • Complementing outlets or specialising in e-commerce?
                                                                    • Changing attitudes to catalogues
                                                                      • Different approaches to stockholding
                                                                      • Company Profiles

                                                                        • Alibaba Group Holdings
                                                                          • Activity
                                                                            • Performance
                                                                              • Figure 56: Turnover summary of Alibaba Group Holdings, 2014-18
                                                                            • Strategy
                                                                              • Amazon
                                                                                • Activity
                                                                                  • Performance
                                                                                    • Figure 57: Financial summary of Amazon, 2013-17 ($ million)
                                                                                  • Strategy
                                                                                    • Electrocomponents
                                                                                      • Activity
                                                                                        • Performance
                                                                                          • Figure 58: Financial summary of Electrocomponents, 2014-18 (£ million)
                                                                                        • Strategy
                                                                                          • Office Depot
                                                                                            • Activity
                                                                                              • Performance
                                                                                                • Figure 59: Financial analysis of Office Depot International (UK), 2013-17 (£ million)
                                                                                              • Strategy
                                                                                                • Orbital Fasteners
                                                                                                  • Activity
                                                                                                    • Performance
                                                                                                      • Figure 60: Financial summary of Orbital Fasteners, 2013-17 (£ million)
                                                                                                    • Strategy
                                                                                                      • Screwfix Direct
                                                                                                        • Activity
                                                                                                          • Performance
                                                                                                            • Figure 61: Financial summary of Screwfix Direct, 2014-18 (£ million)
                                                                                                          • Strategy
                                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                              • Abbreviations
                                                                                                                • Methodology