By Daniel Hunter

Companies that operate online are thriving despite the current tough economic conditions, according to new research from Barclays’ Technology, Media and Telecoms industry team, with half of those questioned having produced double digit growth in the last three years.

Barclays Online Business Outlook 2013 has revealed that the average online company surveyed experienced 11.4% compound annual growth over the last three years. With the UK economy growing just 0.2% in the same period, the online sector is growing at a rate of 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.

“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," Sean Duffy, Managing Director and Head of Technology, Media and Telecoms at Barclays, commented.

"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% 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% 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% 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% 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.

“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," Sean Duffy concludes.

"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.”

The independent research comes as 4G mobile licences were awarded to leading mobile phone operators in an Ofcom auction worth almost £2.5bn. With 4G networks due to roll out to the majority of consumers this year, 4G mobile broadband will provide smartphone and tablet computer users with "superfast" download speeds, up to 10 times faster than current speeds.

The study also looked into attitudes around bank borrowing, 46% of online companies believe bank borrowing is more expensive nowadays compared to five years ago, despite the fact that banks such as Barclays are currently lending at the cheapest rates for 25 years.

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