Rise in Internet use could fuel e-tail growth, claims Mintel ...

Two thirds of the country will be online by 2006, but turning browsers into buyers will still be a challenge for retailers.

This is the conclusion of a report from consumer analyst group Mintel, which predicts Internet take-up will peak at about 75 per cent of the adult population.

Mintel senior retail analyst Neil Mason claims that this is much more optimistic than previous surveys, which saw Net usage already peaking at less than 50 per cent.

'We've asked people of their intentions and we've found there is still a group of people intending to use the Internet. It's just a question now of persuading them to sign up,' he said.

The latest edition of Mintel's Internet Quarterly found that 57 per cent of the UK population, nearly 30 million people, go online. Some 3 million have made the jump in the past three months.

Mason said: 'It would appear that much of this sudden growth in Internet penetration levels is being driven by a rapid expansion in the marketing efforts of broadband service providers.'

The biggest beneficiaries of this rise in Web usage are auction sites, which see 10 per cent of Internet users bidding. The potential is much greater, with an extra 20 per cent of Web users admitting that they have browsed auction sites, with an intention of purchasing an item.

This underlines another finding in the report - that the issue of price is the most significant driver for purchases. However, brand is of less importance.

'Ever since the early days of e-commerce, e-tailers have been trying to get away from simply being the cheap option and have been trying to build brand names for themselves in order to encourage customer loyalty,' said Mason. 'Loyalty based on price is no loyalty at all and customers will jump ship at the first sign of a cheaper site. It is rather depressing news for e-tailers to find that all these efforts seem to have little effect.'

In terms of fixed-price purchases, the biggest spending bracket is on travel. Some 20 per cent of Internet users bought tickets or travel-related services online, compared with only 12 per cent who bought clothes.

Mason claims that physical items, such as books or DVDs, suffer against products such as financial services, which can be bought digitally. He also believes the lack of faith in fulfilment systems is the biggest barrier for the growth of e-tailing.