UK shoppers will spend £20 billion online in 2005, according to Fletcher Research.

7.5 per cent of all purchases will be made online in the UK by 2005, according to the report, called "UK Online Retail: From Minority to Mainstream". In 1999, only 0.25 per cent of all retail sales were online, according to Shobhit Kakkar, an analyst at Fletcher Research .

The report forecasts that by the end of this year, UK consumers will spend £1.7 billion on "e-shopping". The online leisure travel market will account for £490 million of the projected total, and the computer product market will reach sales of £410 million this year.

Building brands Industry figures have supported the findings. QXL.com’s CEO Jim Rose said: "Customers have to trust who they are buying from." To survive in a crowded and consolidating market, such as the online auction market that UK-based QXL.com resides in, a company has to build up its brand name and aggressively expand its presence, Rose added.

"The issue is about critical mass. For example, we have to have a lot of buyers and a lot of sellers, and size alone is making us a player in the European market. I must get five to 10 emails a week from smaller online auction companies looking to sell or 'partner' with us," Rose said.

Advertizing Online retailers must focus on building brands, with large and targeted advertising campaigns. Daniel Gestetner, managing director for ShopSmart, said: "You've got to try and reach those consumers who don't know about you with advertizing, which is where we spend a large part of our resources."

Gestetner claimed campaigns are expensive. He said: "Amazon said last year they spent $70 per customer on advertising, and those figures are similar in the UK when it comes to what's needed to produce brand recognition."

According to Fletcher analyst Kakkar, Amazon's efforts are paying off. He said: "Amazon has comfortably the largest share of the UK online book sellers market, though there's a growing challenge from traditional retailers and new online book sellers."

All the forum speakers stressed that online retailers must create strong customer support systems, not only satisfy the customer and create return business, but to collect information from them as well. QXL.com revealed their practice of rewarding and communicating with top customers, and its procedure of sending out random email surveys. Rose said: "There are rewards for information gathering."