Increasing SMEs’ access to e-commerce could boost UK exports substantially and add billions to the economy, according to a recent report.
The report – entitled ‘Just a click away: How e-commerce can boost UK exports and growth’ –identifies the “significant untapped potential” of UK businesses and highlights several barriers and benefits to increasing online sales for exporters.
The Social Market Foundation (SMF) think-tank and retailer Amazon co-sponsored the paper, with contributions from the Institute of Export & International Trade (IOE&IT).
Noting that Britain had suffered “a somewhat unique decline in its exports” post-Covid, the report highlights that e-commerce could be a vital tool in rebooting the country’s foreign trade.
Polls and data
Data modelling shows that even a moderate increase in e-commerce exports could create 76,000 full-time jobs and boost economic output by £4.6bn.
The research also featured polling of 506 SMEs, with an equal split of exporting and non-exporting businesses.
Barriers
According to this poll, 30% of non-exporting businesses think customs issues were the main barrier to selling goods abroad, with others citing logistics (25%) and tariffs and taxes (jointly 23%) as major inhibiting factors.
However, exporting companies also cited the benefits of e-commerce, which include customer trust (33%), reduced payment risks (31%), ease of resolving problems/disputes with customers (30%) and higher general brand awareness (29%).
UK businesses lagging
Lower costs associated with selling online were described as an opportunity for British SMEs, which currently lag larger counterparts in terms of trading internationally.
The study found they’re also behind international competitors, with only 8% of UK companies with over 10 employees making cross-border e-commerce sales to EU countries, compared to 14% and 18% for their Dutch and Irish counterparts.
Support for SMEs
When looking at ‘rest of world’ sales, this figure for UK businesses drops to 6% in contrast with 9% in Austria and 12% in Ireland.
Writing in the foreword to the report, Marco Forgione, director general of the IOE&IT, says:
“Small and medium sized enterprises (SMEs) are central to the UK’s export performance and its economy overall. For a number of small businesses, online sales are a critical component for entering new export markets and maintaining and growing market share. We must do all we can to support these companies.”
Conclusions
The report makes several recommendations, including:
- A specialist e-commerce office within the Department of International Trade
- A “starting exporting” grant scheme for SMEs to encourage more exporters
- The ratification of a WTO e-commerce agreement
‘Trade Key’
The calls to boost international trade capabilities for SMEs comes as the UK faces an extended economic recession.
Forgione noted the “concerning news” that the UK was facing an extended period of economic malaise, with the Bank of England warning of the longest recession in a hundred years.
He said that strengthening exporting businesses could help the UK grow out of the recession, adding that, "Trade will be a key tool in helping this country’s economy through some difficult months to come,” echoing his previous calls for border investment and support for traders.