Government urged to support SME trade tech adoption as a route to increased trade and growth

The government should support the “adoption and intensification” of trade tech use among SMEs, according to a new e-commerce report.

‘Small business, big world: Ways to boost UK small business exports’, written by the Social Market Foundation with the support of the Chartered Institute of Export & International Trade and the E-Commerce Trade Commission, advised that greater adoption of trade tech could support more SMEs to export.

The findings are based on a survey of 525 e-commerce exporters and SMEs considering selling their goods overseas (“considerers”), in addition to expert testimony and two focus groups.

Recommendations

Among the paper’s six recommendations, one specifically urges the government to encourage the “adoption and intensification of the use of trade tech by SME “considerers” and exporters”.

It proposes two main methods of doing this:

·         First, by increasing the amount of digital advice about trade tech available through the Department for Business and Trade’s (DBT) export support services

·         Second, by introducing grant funding for the 70,000 considerers to purchase and upskill in trade tech

Creating an external environment more conducive to SME trade tech adoption was also highlighted, with an increase in technology among governmental trade bodies and other actors in the value chain linked to greater uptake among SMEs.

Barriers

The recommendations follow findings that among all respondents cost was the most prohibitive factor against trade tech adoption.

Of those surveyed, 35% of considerers and 31% of exporting SMEs cited the cost of investing in new technology, such as using e-commerce platforms, digital payment systems, cloud technology and digital documentation, as their biggest barrier.

Opportunities

However, the authors also note that many SMEs are eager to adopt technology, with around half of both considerers (50%) and existing exporters (49%) reporting that they expect technology to have a positive impact on their business in the coming years.

Among considerers, e-commerce platforms (77%), digital payment systems (73%) and 5G (70%) were the trade tech cited as most likely to make an impact.

E-commerce platforms in particular were touted by exporters as an important source of overseas customers, with 64% of current exporters surveyed reporting this benefit.

Current adoption

Despite being perceived positively by respondents, e-commerce platforms weren’t the most widely used type of trade tech. Digital payments were most utilised by current exporters (49%), followed by e-commerce platforms (43%).

Process automation (10%) had the least uptake, while distributed ledger technology (16%) and document digitisation (26%) were also less popular. The Electronic Trade Documents Act, which entered into force last year, creates the potential for increased adoption of digital documentation in future.

Overall, the report found strong uptake among all the exporting SMEs, with 9 out of 10 reporting that they use at least one type of trade tech to sell overseas.

Routes to growth

The whitepaper highlights research that found a 1% improvement in a country’s domestic digital connectivity was linked to a 1.5% increase in international trade, making the case trade tech adoption to be part of strategies to increase trade growth.

This report also follows SMF findings from 2022 which showed that if 70,000 SMEs with the potential to export began selling overseas, it could add £9.3bn to the UK’s national income.

The authors suggest that if more SMEs can be encouraged to export it would therefore make a “considerable contribution” to the new government’s plans to increase economic growth.