E-commerce must be a priority in the industrial strategy to boost export growth in small businesses, new report finds

A new report by the Social Market Foundation, for the E-Commerce Trade Commission, highlights three key opportunity areas the government should prioritise to stimulate growth as part of the industrial strategy, in order to help boost export growth for SMEs across the UK.

The report found that boosting the adoption of trade technology, increasing support for targeting emerging markets and instigating the development of an initiative to help female-led SMEs start to export would all make a significant difference to the number of UK SMEs exporting.

Fresh research

The report, entitled ‘Small business, big world: Ways to boost UK small business exports’, is one of the most extensive pieces of research ever conducted on the UK ecommerce market.

In-depth roundtables and surveys were held with 525 ecommerce businesses across the UK to examine the main barriers small businesses face in developing a successful export strategy.

The report will be officially launched by the Chartered Institute of Export & International Trade, which chairs the E-Commerce Trade Commission, at its parliamentary reception tonight (9 September) marking the awarding of chartered status to the institute by His Majesty Charles III.

‘Vital’ research

Marco Forgione, director general of the Chartered Institute of Export & International Trade and chair of the commission, said: “This research is vital to help policy makers understand what support businesses need to boost their export potential through ecommerce.

“The importance of empowering small businesses to reap the benefits of global trade is a must, it is a key we use the power of trade tech to harness this potential and explore emerging markets.

“The findings of the report highlighted the need for an all-encompassing resource hub to support small businesses through every stage of their exporting journey, utilising opportunities across all three areas. The commission is pleased to announce we are developing this tool to be launched in the next 12 months to provide this much needed support.”

Exports minister Gareth Thomas said:

 “When our exporters thrive, the UK economy grows, and this report from the Commission highlights just how important e-commerce exports are as a driver of growth to the economy. 

 “We are working with industry to boost digital trade so that more small firms can export right around the world and our modern Industrial Strategy will help us deliver long-term, stable growth that supports skilled jobs. Initiatives such as the one-stop-shop, will be an invaluable resource to both new and existing exporters.”

Trade tech

The report was authored by the Social Market Foundation, a cross-party think tank, and supported by the commission.

It suggests six comprehensive recommendations for the government to boost SME exports.

The findings showed that trade tech was beneficial for small businesses who wish to access emerging markets. The technologies which make the most significant positive impact were digital payments (49%), ecommerce platforms (41%) and data analytics (40%).

However, external obstacles – such as regulatory compliance, customs procedures and tax issues – were cited as factors impeding both trade tech adoption and intensification of use amongst SMEs.

The report recommends that the government supports exporters by boosting the amount of digital advice made available through the Department for Business and Trade’s export support services.

It also calls for the introduction of grant funding for investment in trade technology to help speed up its adoption by businesses.

Female-led firms

Trade tech is also identified as one of a raft of key enablers for supporting female-led firms.

The report argues that a national export mentoring scheme for female-led small businesses who are considering exporting (‘considerers’) could be established, by government and industry working in partnership with each other.

This would maximise reach amongst female-led considerer firms and help to address the challenge identified in the previous Social Market Foundation Report – 'Just a click away: How e-commerce can boost UK exports and growth' – that there are 70,000 small businesses who could be exporting through ecommerce but currently aren’t. 

Emerging markets

For those firms already exporting to emerging markets, existing demand for the kind of products they sell (33%), and the presence of trade agreements (27%) are key reasons why emerging markets are attractive.

In developing economies consumption is growing at between 6% and 10% per year, in contrast to less than 1% growth in high income countries.

Amongst exporters who are considering emerging markets, the two most frequently cited attractions were the possibilities of, as yet, untapped demand in those economies for their goods (28%) and relatively low-cost logistics (28%).  

Therefore, the government should ensure that an integrated industrial and trade strategy should include a plan for seizing the opportunities presented by the growth in emerging markets.

Richard Hyde, senior researcher at Social Market Foundation and author of the report, said “the vast majority of British businesses are smaller businesses, but too few of them are exporting at present.”

“Achieving higher levels of exporting should be a key lever for the government’s growth mission, and it should take the steps necessary to ensure more SMEs are able to contribute to this aim.

“Our research shows that trade tech would be a particularly potent tool that smaller firms are keen to adopt, to not only ease general constraints on trading, but helping them reach emerging overseas markets and enable more female-led small businesses begin exporting."