The future is looking bright for UK SME (small and medium-sized enterprise) online retailers, with 70 per cent saying they experienced an uplift in sales in 2017 compared to the previous year and 74 per cent expressing confidence that sales will increase in 2018, according to a study commissioned by Royal Mail.
The health and beauty sector saw the highest increase in sales with 78 per cent, followed by electronics (73 per cent). Increasing their social media presence (43 per cent), running more promotional offers (39 per cent) and introducing new products/services (29 per cent) are the main ways retailers are planning to achieve growth in 2018.
The main concerns for UK SME online retailers in 2018 are the ability to make a profit (27 per cent), increase sales (26 per cent) and reduce costs (23 per cent). 69 per cent of retailers expect costs to be higher in 2018 and the biggest costs expected are purchasing (34 per cent), logistics/delivery (32 per cent) and advertising (27 per cent).
The study also finds 68 per cent of UK SME online retailers currently sell overseas. Eighty per cent of these retailers sell to Europe, followed by USA (35 per cent), Canada (31 per cent) and Asia (17 per cent). In the fashion sector, 88 per cent sell to Europe, 53 per cent to USA, 28 per cent to Canada, and 25 per cent to Asia. Seventy-eight per cent in the electronics sector sell internationally, followed by 72 per cent of health and beauty and 67 per cent of fashion retailers.
The States lead the charge
The USA is the where retailers sell the most to, followed by France and Germany. The most popular European destinations to sell to are France, Germany and Spain.
In 2018, 64 per cent of UK SME online retailers intend to increase their international sales revenue. In the electronics sector the percentage is higher at 78 per cent. In health and beauty it is 69 per cent and in fashion 68 per cent. Key ways of increasing international sales revenue will be by simplifying the sales/ordering/delivery and payment process (45 per cent), selling more to the markets they already sell to (28 per cent) and targeting new markets and countries (20 per cent).
Nick Landon, managing director of Royal Mail Parcels, says, ‘It’s great to see the level of business confidence from UK SME online retailers at the start of 2018. Although obvious challenges exist, retailers are grasping the available opportunities for growth and have a clear view of the actions they need to take to win new customers at home and abroad. At Royal Mail, we already support many retail businesses in delivering against exactly these opportunities and we look forward to working with even more of these great businesses this year.’
UK SME online retailers are planning to target Europe (50 per cent), USA (34 per cent) and Canada (28 per cent) in 2018 due to demand, good e-commerce structure and the ease of shipping and delivery. Europe holds the greatest opportunity, according to UK SME online retailers.