Getting SMEs that are not currently selling overseas to start exporting using online marketplaces could boost the UK economy by £9.3bn, a report by the Social Market Foundation in 2022 found.
The same paper found that there are currently 70,000 SMEs that fall in this bracket.
In a new monthly feature, the IOE&IT Daily Update will look at the UK’s progress in getting these SMEs to start exporting online, as well as the latest trends and stats from the e-commerce sector.
To help guide us through this month’s trends and reports, we got insights and analysis from Susan Roe, an international trade specialist and the secretariat lead for the E-commerce Trade Commission, which the Institute of Export & International Trade (IOE&IT) convened in June 2023.
1: Global e-commerce predicted to rebound
A report from Insider Intelligence predicts that the global digital ecommerce market will expand by 8.9% this year, followed by 9.4% growth next year.
This follows a slowing of growth in the sector in 2022, when worldwide online sales grew by only 6.5% - the slowest pace since Insider Intelligence started tracking global sales in 2011.
Does this make it a good time for UK SMEs to start thinking seriously about e-commerce again? Roe argues there’s “never a bad time”.
“Economies and sectors dip and increase all the time,” she says. “It’s up to businesses and entrepreneurs to make the most of the opportunities that are out there online.”
“In truth, there’s never a bad time to start selling online, because there are so many different online platforms that can be leveraged to start and grow online sales.”
2: M-commerce on the rise
Insider Intelligence also reports that mobile sales will account for almost half of US e-commerce sales by 2027. It also finds that 65.5% of smartphone users in the US will use mobile shopping apps this year.
Should businesses be making any particular changes to adapt to this trend? Roe says not necessarily.
She says many websites are mobile-friendly by default these days, particularly commerce sites, but companies may want to tailor their web experience for different audiences and devices. She explains:
“It largely depends on what platforms businesses are using, but businesses should always adapt their efforts to reach and appeal to their different target audiences. For example, some companies may have a mobile-specific website just for consumers that doesn’t feature everything that the main, desktop version of the site has.”
3: Will creators cut out the middle man?
David Sandstrom, the chief marketing officer of Klarna, recently wrote on Forbes that the next phase of e-commerce development could see creators dealing directly with their customers more frequently, rather than through retailers.
He talks about three phases in the development of e-commerce so far:
- E-commerce 1.0 in which people search for goods to buy using online search
- E-commerce 2.0 in which online platforms recommend goods to users based on their search and buying patterns
- E-commerce 3.0 in which platforms increasingly connect product creators directly with their consumers, reducing their reliance on retailers and stores
Roe comments that personalisation is a must, saying “that’s what consumers want now” and that businesses of all sizes need to “inject it somewhere in their customer journey”.
“Google can now predict how we search so that I might only need to put in a keyword or two and it will predict what I want,” she explains. “This is called user intent and it predicts what I want based on what else I’ve done on the internet.”
On the prediction that creators might increasingly cut out the middle man, Roe says that this approach could help creators to “have more margin” but points out that distributors perform other functions which are of value.
“The chances are, if you sell direct to consumers, they may not speak your language and that’s one area where retailers can help,” she says.
“For countries where selling is a bit more difficult, distributors and retailers are of much more importance.
“When we were in the EU some businesses were starting to go direct to consumers in markets like Germany and were cutting out that middleman. But now that we’ve left the EU, it’s become more difficult to do this, so producers are starting to go through distributors and retailers again.
“The other downside of this trend, for producers, is that they end up with more work to do if they’ve not got the middleman to promote their goods in the market. You win back a bit more margin, but other costs will go up, like marketing, for example.”
4: E-commerce Trade Commission meets
The E-commerce Trade Commission also recently held its first board meeting since launching in June, which Roe said was a “very positive meeting”.
The Commission, which was convened by IOE&IT, counts Amazon, Alibaba, eBay, Google and Shopify among its members, and advises the Department for Business and Trade (DBT).
It has a two-year remit to make recommendations on how to support UK SMEs to start exporting using online e-commerce platforms. Roe says a lot of the discussion at the meeting on 12 September was centred on how the Commission will go about achieving this goal.
“The foundations have been laid, now it’s time to start building,” she said.
5: E-commerce Expo
Roe will also be attending the E-ecommerce Expo conference at ExCeL, London, next week (27-28 September) and will be speaking on a panel titled ‘Cross-Border eCommerce: Unlocking Global Growth’.
“I’m going to be discussing what would-be online sellers need to consider, as well as the opportunities that are out there,” she says.
The conference describes itself as “the UK’s only event that covers everything related to online trade” and features a jam-packed programme of keynote speeches, panel discussions and networking opportunities.
Roe’s panel will be chaired by DBT’s lead on strategic partnerships and alliances for digital commerce, Emma Jones. They will be joined by:
- Deepak Anand – general manager for UK and Europe at Shopline
- Ralph Aoun – global marketing manager at Meta
- Jennifer McCloskey – senior manager of global government affairs and public policy at Google
McCloskey is also on the E-commerce Trade Commission’s board.
The event is free and you can sign up to it here.