Scottish Enterprise e-Commerce Report 2012: Our Response

e-commercePress coverage of the recent SE Report described e-commerce as the ‘biggest thing in business today’, supporting 200,000 jobs and contributing £31 billion in sales to the Scottish economy. One expert stated that ‘e-commerce employs roughly double the number of people employed in the oil and gas industry’ (see References).

Based on this evidence, it would appear that e-commerce is ‘mission critical’ to the future success of the Scottish economy – or is it? How accurate are the Report’s findings? Are they robust enough to form the basis of future policy-making in this area? SE have already stated that the Report will have a major impact on future digital policy, with a much greater focus on ‘international e-commerce awareness, advice and support’. Did we not do this back in the late 90’s and early noughties?

Given the claim that e-commerce is critical to the Scottish economy, it is somewhat surprising that no online forum has been set up to encourage industry feedback and comment on what has been described as a ‘landmark, no-nonsense report that gets right to the heart of the issue’. Before committing public resource behind the main recommendations of the Report, should we not be crowdsourcing the collective knowledge and experience of the whole digital supply industry in Scotland?  Early soundings, using Twitter, would suggest that there is considerable unease with a number of aspects of the recent Report which need addressed. In response to a tweet enquiry, @scotent replied that the ‘next step is to hear views on encouraging ecommerce, with networking/community events this year’. But what if the actual focus on e-commerce is wrong?

Global Competitiveness ReportDecisions concerning public sector digital support will have a major impact on the future competitiveness of the Scottish economy. We need to get it right.  In our view, the Report’s narrow focus on e-commerce will lead to a concentration of public sector support in the wrong area.  There are many other aspects of ‘digital’ that are of equal if not more importance than e-commerce.

We would have preferred to have posted our thoughts on a dedicated industry forum specifically set up for this purpose rather than on our own blog.  These issues are far too important to be associated with a particular brand.  We welcome open debate, comments and feedback on any issue discussed below or any other aspect of the Report; either using the comments section below or an industry forum of your own choice.

Due to the very wide ranging nature of the SE e-Commerce Report, we will restrict our comments to just three areas:

  • Report methodology and headline findings
  • Why the focus on e-commerce?
  • Recommendations and the Digital Policy Agenda

Report Methodology and Headline Findings 

The overall aim of the Report was to evaluate Scotland’s competitive position in relation to the adoption of e-commerce by Scottish based businesses; identify the value and potential impact on the Scottish economy of current activity; to consider if businesses are using e-commerce to maximise their efficiency and performance; and to consider ways in which public sector support for e-commerce could be improved.

Given the dearth of available statistics on Scottish e-commerce, the Report authors (SQW) have done an excellent job at bringing together disparate information from a wide range of sources, using different methodologies and often with different definitions of e-commerce.  This is a strength, but also a weakness of the Report.

MethodologyThe Report represents the first serious attempt at pulling together disparate information sources to present a detailed snapshot of e-commerce in Scotland. It does a very good job in this respect. A large number of very interesting and useful graphs, tables and statistics are presented.  Whether the evidence presented is robust enough to support the main recommendations of the Report and future policy-making in this area is another question. By SQW’s own admission there are a large number of caveats and assumptions underlying the key findings and recommendations.

It is our opinion that the evidence presented is simply not strong enough to support the case for e-commerce being the focal point of future digital policy in Scotland. For example, taking the headline figure of 200,000 direct jobs and £31 billion in e-commerce sales per annum, SQW state that:

‘these numbers are indicative estimates, to give an idea of the scale of activity. They are based on UK-level data, adjusted for Scotland’s share of UK employees in each sector, as there is no definitive source for such data at the Scotland-level at present’.

We would dispute whether the quoted headline data even gives an indicative estimate. It covers all e-transactions, including EDI.  The estimated value of e-commerce sales over web sites is just £8 billion or 26% of the total.


It is the value of web site e-commerce sales that most people will read into the Report, not EDI. By our calculation, the number of jobs supported by web site e-commerce is closer to 51,600 rather than 200,000 – still important but not ‘double the number working in the oil and gas industry’ as claimed by a leading e-commerce expert.

We would stress that the comments above should not in any way be seen as a criticism of SQW.  The authors are very open and honest throughout the Report on the methodology weaknesses due to the lack of available statistical evidence on Scottish e-commerce. They have done a very good job at pulling together and analysing what is available.

Our main concern is with the headline data quoted in the press and the exaggerated comments made by some expert observers.  In our view, these headline figures and exaggerated claims have negated what otherwise was a very useful Report.  It is worth noting that the Report also received mixed press coverage with headlines ranging from ‘E-commerce performance slammed by Scottish Enterprise’ to ‘SE unveils 200,000 jobs in Scotland through e-commerce’. One headline states that ‘Scotland lags behind rest of the UK in e-Commerce’ yet the report states very clearly that in most areas we do not lag behind (see References).

Before committing public resource to support e-commerce, surely we should agree its relative importance to the Scottish economy and whether we are world leaders or laggards? Please let us have an open debate about this; one that is not led by vested self-interest.

One aspect of the Report’s methodology and findings that we do take issue with is the recommendation that ‘it would be worth assessing the feasibility of a Scottish university offering an MSc in e-commerce, in liaison with HEI partners’.  As far as we can see, nobody from the Higher Education sector was consulted as part of this research. Why not?

It is worth pointing out, at this stage, that SE’s narrow focus on transaction based e-commerce is in mark contrast to the much wider approach being adopted by other countries. For example, in September of this year, Dublin City University Business School will be launching three new MSc programmes in Cloud Computing, Digital Marketing and Strategy ‘to help equip graduates with skills in high-growth areas and to help tackle Ireland’s ICT skills gap’.

Social Media RevolutionWhy the focus on e-commerce?

Having been closely involved at the ‘coalface’ of Internet developments in Scotland since 1996, it will come as no surprise that we do consider e-commerce to be important to the future competitiveness of the Scottish economy. However, it is NOT the ‘biggest thing in business today’; nor the most important challenge facing the Scottish economy.

Meltdown of the global financial system, Eurozone crisis and bank relationships would probably top the list of ‘Things That Keep Scottish Executives Awake at Night’.  From a policy perspective, the lack of an entrepreneurial culture in Scotland, our low business start-up rate, limited SME internationalisation and a ‘lost generation’ of young people due to high youth unemployment/underemployment have been the major agenda items at recent conferences we have attended including the ‘Business in Parliament’ event and Scottish Council Development and Industry’s Annual Forum.

Even in the digital world, e-commerce is not even the biggest challenge facing Scottish companies today.  We have reviewed a number of ‘Key ICT/Internet Trends Reports’ published by leading authorities such as the Gartner Group, the World Economic Forum, Economist Intelligence Unit, IBM etc (see list of references at the end of the article). These have identified a wide range of opportunities and threats including hyper-connectivity; social; mobile; apps; the Cloud; convergence; virtualisation; ‘big data’; consumerisation; superfast broadband etc. E-commerce is seldom mentioned as a key trend.

Social BusinessOur own view is that the single most important digital challenge facing Scottish companies today is how to do business in a world where the customer is in control.  The Social Media and Mobile Revolutions have led to a massive shift of power from suppliers to customers.  Old ways of doing things are declining in effectiveness. As we have argued on numerous previous occasions on this blog, radical new innovative approaches to doing business are required. The key strategic challenge for Scottish companies is how to become social. Gen C (the connected customer) is demanding that our companies become social businesses – see our previous posts on this topic here.

The rest of the world seems to have woken up to this fact – see, for example, the popularity of leading authors such as Brian Solis, ‘The End of Business as Usual’ and the excellent work of Don Tapscott, ‘Grown Up Digital’, ‘Wikinomics’ and ‘Macrowikinomics’.

Based on the above, it is a legitimate question to ask why did SE commission a Report with such a narrow focus on transaction based e-commerce? Take the Cloud as an example. Recent reports have argued that the world economy stands on the verge of a digital technology revolution built around Cloud Computing.  According to various estimates, the Cloud is currently worth $74bn.  This is expected to increase to $150bn by 2013.  In the UK alone, it is expected that spending on the public and private Cloud could create 226,000 jobs by 2015. A legitimate area for public sector support in Scotland?

In a Social Media era, where the customer is in control, it is rather depressing that a Report commissioned by a lead economic development agency can begin with the following statement:

‘The brief for this commission defined e-commerce as follows:

E-commerce refers to the selling or trading of goods and services online (through web or other ‘digital’ channels e.g. mobile apps) and related digital marketing activities to drive traffic to the online presence e.g. Search Engine Optimisation, web advertising etc.’

As we have stated elsewhere, if we continue to treat our customers like passive sheep just waiting to be driven to our web site, there is a real danger that the sheep will tell us to ‘flock off’.

As leading-edge thinking around the world points to the need for companies to become social; as Gen C (the connected customer) demand social responses, we in Scotland publish reports on e-commerce.

Digital Policy

Digital Policy

Recommendations and the Digital Policy Agenda

The SE Report makes a number of strategic recommendations including: re-vitalised e-commerce awareness-raising activity; the collection and analysis of regular official statistics on Scottish e-commerce; more frequent and regular networking opportunities specific to e-commerce; strengthening the supply of e-commerce skills possibly through a new MSc in e-Commerce; enhanced support for e-commerce operations in Scotland including the potential of e-commerce site reviews for large Scottish companies, including retailers, and food and drink companies. Scottish Enterprise would, of course, lead and coordinate these initiatives.

We have no doubt that the above recommendations would receive the full support of the e-commerce supply industry in Scotland. Whether the recommendations would maximise the ROI from public sector support is another matter. Should the taxpayer really be subsidising e-commerce site reviews for large companies? What is the economic case for this? Should public money be used to subsidise the sales cycle of e-commerce suppliers?

It will come as no surprise to learn that we would be fully in favour of a coordinated public/private sector approach to raising the profile of all things digital within Scotland; especially as there is strong evidence to suggest that we are falling down the e-readiness league table compared to our main international competitors. (Note: e-Readiness is defined as the ability to use information and communication technologies (ICT) to develop one’s economy and to foster one’s welfare). Countries such as Denmark, Sweden, the Netherlands, Norway, US, Australia, Singapore, Finland and others have a higher e-readiness score than the UK, hence Scotland.

However, we would argue strongly against concentrating public support on transaction based e-commerce.  This would be a major mistake and would divert limited public sector resources from other more important issues.

At the very least, a coordinated and integrated Digital Agenda for Scotland should cover the following six areas:

  • Social Media/Social Business
  • Connectivity and the Cloud
  • Internal Process Efficiency
  • Web Marketing and e-Commerce
  • Internationalisation
  • Mobile

We would be more than happy to expand on these topics at the appropriate time.

We welcome feedback and comments on this post, either using the comments box below or on a forum of your own choice (just let us know which one).

Take care.

Jim and Alan
Energise 2-0

PS: Apologies for the length of this post but hopefully you will agree that it raises important issues for the future competitiveness of the Scottish economy. We welcome debate.


Scottish e-Commerce Study

E-Commerce Performance Slammed by Scottish Enterprise

Scottish Enterprise Unveils 200,000 jobs in Scotland through e-Commerce

Scottish e-Commerce Report Welcomed as a Landmark

New Report Suggests Scottish Business Trailing in e-Commerce

The Global Information Technology Report 2012

E-readiness index

GoDigital and related strategies from 2002

Gartner: 10 key IT trends for 2012

eMarketer Webinar: Key Digital Trends for 2012

Quarterly Digital Intelligence Briefing: Digital Trends for 2012

Related Posts


  1. Dan Frydman
    July 4, 2012 at 6:36 pm - Reply

    Brilliant response and yes, it’s certainly worth congratulating SQW on what they’ve achieved. Having a vested interest in Scottish companies commissioning more e-Commerce websites, I’m keen that companies have the best resources at their disposal for making good e-Commerce decisions.

    However I think you’re right that this doesn’t need to be underwritten by the tax payer for larger companies. There is however a job to be done in educating existing online and offline retailers in what can be done in e-Commerce, but as an overall business strategy – particularly for export.

    London leads in this with e-Commerce conferences and rather than recreating that in Scotland, we should take advantage of London’s critical mass by going there for 1st class events. Many would say they already do so there’s no reason not to stop that.

    Scottish Enterprise would do well to utilise the expertise we already have in Scotland amongst online retailers to give peer based advice to other retailers – rather than the system as it stands which can more often rely on consultants. The advice from these consultants is valuable, but not always the most up to date with current and future challenges.

    I’m looking forward to an ongoing debate on this and seeing Scottish Enterprise, the Chambers of Commerce, IOD, FSB, etc., getting involved – not as talking shops offline, but engaging online and building real knowledge across all Scottish business sectors.

    • Jim Hamill
      July 5, 2012 at 10:57 am - Reply

      Thanks Dan for taking the time to comment and in such detail. Much appreciated.

      I agree totally with you that a major education and knowledge transfer programme is required for Scottish companies to maximise the global marketing potential of all things ‘digital’ and yes e-commerce should be a major part of that.

      Your mention of exports is spot on. Used effectively, ‘being digital’ can help to overcome many of the traditional barriers to exporting faced by SMEs. See previous posts on this topic – http://energise2-0.com/category/social-media-smes/internationalisation/

      Indeed, i would go a step further. I think there is real potential in Scotland for building an International Center of Digital Excellence – a Center that would provide education and training, not only to Scottish companies, but internationally as well. We have the combined skills and experience in Scotland to do this.

      Would there be an international demand for this? I have no doubt that there would be. Over the last few years, i have been involved in two major EU funded e-Skills projects (in Russia and Malta) valued at approx 5m Euros. If you look around the ‘digital’ sector in Scotland, we have the skills to make this work.

      Re the wider digital issues mentioned in the article i.e. social, connectivity, cloud, mobile, ecommerce, internationalisation – these will form the ‘Agenda’ for the 2 day ‘Digital Conference’ being organised as part of the forthcoming Glasgow for Business Week – see http://energise2-0.com/2012/06/05/digital-glasgow-at-gfbw/

      This will be a crowdsourced event – so very open to ideas on what should be included, looking for speakers, chair people etc. Let me know if you are interested in getting involved in some way. I will be putting the draft agenda together over the next week or so.

      I agree that SQW done an excellent job on delivering the ‘brief’. My main concern is that the ‘brief’ had the wrong focus.

      Thanks again for taking the time to respond – much appreciated.

      Take care

      Jim H

  2. Allan Barr
    July 5, 2012 at 10:06 am - Reply

    Firstly, well done on producing such a thorough and well thought through response to SE’s report. I’d like to make particular reference to this line from your post:

    “Our own view is that the single most important digital challenge facing Scottish companies today is how to do business in a world where the customer is in control. The Social Media and Mobile Revolutions have led to a massive shift of power from suppliers to customers.”

    For me you’ve hit the nail on the head here. You could argue that most companies have been aware of the implications and opportunities presented by eCommerce for at least the last 10 years. However, very few have properly gotten to grips with the cultural shift that has been predicated by the advent of social media.

    The challenges of operating in an age where the customer has far more power, in conjunction with the explosion in mobile and the onrushing wave that is ‘the cloud’, are areas that demand at least as much attention and support as eCommerce – if not far more!

    • Jim Hamill
      July 5, 2012 at 11:35 am - Reply

      Allan – thanks very much for taking the time to respond, much appreciated.

      I agree that most companies recognise the power shift that has taken place; but, as you say, has the ‘mindset’ and cultural shift yet taken place?

      In my days at Strathclyde, I taught ‘Customer Management’. I always opened the first session with the following quote:

      ‘The first challenge of the twenty-first century is to master the changes that come with customers being in control’ Nykamp, The Customer Differential, 2001.

      Notice the date of that quote, 2001. Since then, i think we would both agree, that social media, the cloud, mobile etc represent customer empowerment on steroids.

      A second quote supports the comment you make about the cultural shift required:

      ‘Most managers and companies have heard the wakeup call, and they believe that customer centricity is the key to success in the future. The hard part now is becoming fluent in alternative thinking, strategies, and tactics – breaking away from the responses and policies that our parents and grandparents taught us for the past 100 years’ (Newell, 2000)

      Social, mobile and the Cloud provide us with the platforms for innovative new customer led approaches to business and I agree totally with you that these are of equal if not more importance than e-commerce.

      My main concern with the SE Report, and its narrow focus on e-commerce, is the fact that it will divert attention away from these other very important issues.

      Thanks again for taking the time to comment – I will be in touch soon about Glasgow for Business Week.

      Take care.

      ps – would also be interested in your thoughts on the International Center of Digital Excellence idea – see my response to Dan above.

      Jim H

      • Allan Barr
        July 5, 2012 at 12:11 pm

        It’s hard not to make the point about narrow focus without it seeming as if we’re criticising the report, but, as you’ve said already, the problem is more about the remit rather than the content.

        I agree that the very real danger of this report is that it diverts attention away from the wider, and arguably more important, issues surrounding Scotland’s digital economic future.

        As to your point about a proposed International Center of Digital Excellence – makes perfect sense. I would suggest that not only would there be the demand to justify such a initiative, but more importantly we have the indigenous skills, knowledge and experiences to deliver it successfully!

  3. Jim Hamill
    July 5, 2012 at 1:29 pm - Reply

    Thanks Allan.

    Yes Allan, our main concerns are with the remit of the Report rather than the content. I found the content very interesting. Unfortunately, with a narrow remit you get narrow recommendations and i think that is what many of us are concerned with.

    Take care

    Jim H

  4. fraser ferguson
    July 5, 2012 at 2:59 pm - Reply

    Content all been said before, for me this is like looking at a report from the mid to late 90’s where we had great vision and even greater challenges. Our old business Ecosse IT not only developed E-commerce platforms for some major organisations as did many small businesses, who never really got the “slap on the back” they deserved, we also ran a very successful VISP, however the real challenges back then were connectivity.

    “It is our opinion that the evidence presented is simply not strong enough to support the case for e-commerce being the focal point of future digital policy in Scotland. For example, taking the headline figure of 200,000 direct jobs and £31 billion in e-commerce sales per annum”

    12 years or so on, I’m reading the same info in a report that most probably cost thousands to produce. They should ask themselves this, what about connectivity, what about the cloud, what about Social media which is becoming a low cost and easy to use “21st Century” e-commerce platform or am i talking out my A**E these are the real drivers for job creation and doing business globally

    If we want a true connected Scotland, less academic input and stat gathering which always results in narrow thinking and never about what we should have achieved, have actually achieved and, importantly what we can achieve.

    Digital Scotland is here, has been for years and If you want to create jobs and success. please ask the folks that are doing it, implementing it and most of all understand it

    apologies for the rant energise

    • Jim Hamill
      July 5, 2012 at 4:31 pm - Reply

      Thanks Fraser. No apology required. The purpose of the post was to stimulate open, honest and constructive debate around the Report.

      I think you are being open, very honest and constructive.

      Given that you have been involved in all things ‘e’ since the mid 1990’s, I think you have a great contribution to make to this debate.

      Thanks for taking the time to comment, much appreciated.

      Hope things are good at Kube Networks.

      Take care.

      Jim H

  5. Peter Mowforth
    July 7, 2012 at 9:28 pm - Reply

    It’s good to see the social community joining in with the debate.

    For the last decade there has been very little interest in e-commerce in Scotland. Government agencies have, until now, classified e-commerce in the same category as retail. Retail businesses are not allowed to receive grant support due to rules about displacement. For that reason there has been no direct support at all for e-commerce. The recent re-thinking has been spurred by things such as:

    – Boston Consulting Group showing that UK is global number 1 for e-commerce
    – Scotland being significantly behind the rest of the UK on the e-commerce supply side
    – Other countries using e-commerce as the central plank for export strategy (e.g. China plans e-commerce value to be $2.8 Trillion by 2015 (hence, the biggest thing for those who want to do business today))
    – Just one company (Amazon in Scotland) created 2,000 jobs in the past 12 months.

    I remain puzzled why the social media community has found it so hard to engage with e-commerce. Facebook has found it difficult to develop significant levels of e-commerce from their site (though they continue to try). When people have decided they want to buy something they tend to leave social channels and move to channels such as Amazon, eBay, Google Shopping, price comparison sites, etc to find the best products at the best prices.

    INDEZ looks after twenty six 6, 7 and 8 figure turnover e-commerce businesses. All make use of all the usual social channels yet over the past 12 months these social channels have contributed, on average, only 1.8% of channel sales. Why so low? I do not know.

    I fully recognise that social media has an important role to play in online business. My only point is that the practice of e-commerce (that is all about buying personas, goal analytics, site internationalisation, conversion optimisation, supply-chain balancing, user-testing, channel segmentation, etc) is worth investing in. As the Scottish Enterprise report says, there are currently no centres providing training or skills in this area and most e-commerce attempts fail because those involved simply don’t know what needs to be done to succeed.

    Peter Mowforth, CEO, INDEZ.


    • Jim Hamill
      July 10, 2012 at 11:28 am - Reply

      Peter – thanks for taking the time to comment.

      I don’t think anyone is trying to down play the importance of e-commerce to the future of the Scottish economy; or the need for knowledge transfer/training/education in this area. The main concern expressed in the article is that public sector ‘digital’ support should not be completely focused on a narrow definition of the importance of transaction based e-commerce. There are other aspects of ‘Digital Scotland’ that are of equal if not more importance – connectivity, the Cloud, mobile, social etc.

      Digital technology has a major impact on all value chain activities of a company. We need to think much wider than just selling online, as important as that is.

      The reference you quote in relation to China actually supports this line of argument. It states very clearly that the main drivers of e-commerce growth in China are ‘broadband, next-generation national information infrastructure, cloud computing and networking, intelligent search and social networking applications’.

      We will be discussing the wide range of ‘digital’ issues impacting on the Scottish Economy during the 2 day Digital Glasgow event as part of Glasgow for Business Week in October – see http://www.glasgowforbusinessweek.com/events/2012/october/monday-digital-glasgow-(1)

      We would very much welcome a contribution from your good self on e-commerce at one of the sessions. Just let me know if this is of interest to you.

      Thanks again and take care.

      Jim H

  6. Scottish Enterprise e-Commerce Report 2012: Comments Welcome | My Kube Networks
    July 10, 2012 at 11:01 am - Reply

    […] A month or so ago, Scottish Enterprise published what was described as a ‘landmark’ Report on the state of e-commerce in Scotland. Following publication of the Report, a very interesting debate has started to emerge on the Energise 2-0 blog. […]

  7. Peter Mowforth
    July 10, 2012 at 1:51 pm - Reply


    I guess much of this stems from accountability (in the literal sense).

    We deeply recognise the value that social media plays with the businesses we support – especially in the areas of brand development and customer loyalty. The problem is that it’s often difficult to put numbers (sales, jobs) against such things.

    A big advantage that e-commerce has is that you may do something and there is an almost instant ringing at the tills quickly followed by job adverts.

    Government agencies have been given clear guidelines to focus on the creation of wealth by local companies, job creation and, most important of all, exports. With that remit it’s no-brainer where they have chosen to focus the application of new resources.

    The agencies look at authoritative lists of top UK e-commerce companies (eg. via Hitwise) and reasonably expect that with Scotland having 8% of the UK population it would have 8 Scottish businesses in the UK top 100. According to the stats there are none in the top 200. Frightening.



    Ref: http://www.hitwise.com/uk/press-centre/press-releases/imrg-hitwise-hot-100-may-2011/

  8. Social Media a place for chit-chat | Energise 2-0Energise 2-0
    November 23, 2012 at 4:25 pm - Reply

    […] The themes within this article are also relevant to the discussion current taking place around the positioning of e-commerce within Scotland, we’ve detailed our views within Scottish Enterprise e-commerce report: our response […]

  9. Social Media a place for chit-chat | Energise 2-0Energise 2-0
    November 23, 2012 at 4:32 pm - Reply

    […] The themes within this article are also relevant to the discussion currently taking place around the positioning of e-commerce within Scotland, we’ve detailed our views within Scottish Enterprise e-commerce report: our response […]

Leave A Comment