Buyers riled by internet shops

It may not have been thee-Christmas some predicted, but even so £175m was spent on internet purchases by British consumers - more than 10 times the 1998 figure.

It may not have been thee-Christmas some predicted, but even so £175m was spent on internet purchases by British consumers - more than 10 times the 1998 figure.

However, of the 1.8 million people who shopped online, a quarter were dissatisfied, according to a report to be released tomorrow by Continental Research, a company that monitors UK internet use.

"The main issues for most internet companies have been to get the product right, develop an efficient website and attract customers," said Paul Longhurst, managing director of New Media Services, a marketing agency. "However, as last Christmas highlighted, the majority neglected the logistics of distribution and failed to deliver."

Colin Shaddick, a director at Continental Research, envisages a steep learning curve ahead for most online businesses. "Companies will have to tighten up and make sure that they are able to keep up with demand," he said. "If a company can't cope now, it will have no chance unless it addresses its fundamental problems."

Already 10 per cent of Europeans are connected to the internet, an important milestone, according to a report by Warburg Dillon Read. Pascal Daloz and Eric Elalouf, analysts at the investment bank and authors of the report, believe that this figure "is sufficient to trigger a sharp increase in corporate investment and attract even greater investor interest". The US was at 10 per cent three years ago. Since then, the internet sector has generated 15 per cent of regional GDP growth.

The level varies across Europe, and in the UK it is higher than the overall average: 42 per cent of Britain's adult population has access either at home, work or college. Nearly 7 million of the 24 million households in the UK are now online, according to Continental Research's findings. This has increased by 1 million since last October. A further 1 million homes are predicted to connect over the next six months.

According to retail and internet analysts, future Christmases will see a bigger share of total retail spending for online companies. While £175m is a lot, it still appears paltry beside the £14.6bn that was spent in total last Christmas.