A growing army of UK small businesses unlocked £11bn in UK export growth in 2016 by trading internationally on online marketplaces like Amazon and eBay, a new report has found.
The report also forecasts that international sales amongst this group could double to £21.3bn by 2020 – equivalent to almost 20 times the annual budget of the Foreign & Commonwealth Office.
More than half sellers said they had experienced growth in the last 12 months, with 29 per cent experiencing revenue growth of 20 per cent or more. Almost one in ten also saw their total revenues from exports increase by more than £500,000.
Two in five of all businesses that sell online are trading internationally and a quarter of these businesses do so through online marketplaces. This growing group have the potential to power the UK’s economy and trading relationship with the rest of the world. The EU is the most popular trading destination for online sellers, with 86 per cent of businesses trading with the bloc, followed by the United States.
This growth is being supported by the use of online marketplaces which are helping small businesses target new customers in new international markets whilst enabling them to compete with both bigger and local businesses. Platforms such as eBay and Amazon are used by a quarter of businesses selling online, with the report also finding that one in five of all small businesses in Britain intend to expand their presence on marketplaces in the coming year.
The findings also suggest that sellers are planning to raise employment levels over the next 12 months, with over two in five planning to hire more staff. The burgeoning e-commerce market is therefore set to continue expanding, not only by total sales values and turnover, but also in terms of employment numbers, positively impacting the UK economy.
However, despite growth opportunities on offer, online sellers face a number of challenges that need to be addressed to support their growth – especially when selling internationally.
For example, more than one in five small businesses cite difficulties with logistics and shipping as the main barriers to selling internationally online, whilst 17 per cent highlighted the risk associated with doing business across multiple currencies as a significant issue affecting their bottom line.
Jeremy Cook, Chief Economist at WorldFirst commented: “It’s well known that online sales are rising year on year and a key driver of that growth is a band of online sellers that are using marketplaces like Amazon and eBay to build high-growth, multinational businesses. Marketplaces like Amazon and Etsy make it as easy for UK businesses to sell to customers in Berlin as Birmingham or Miami as Manchester.
“Marketplaces can be a relatively low-risk gateway to the world and these businesses are benefiting from this access to target new customers in new markets – and they’re reshaping UK exporting in the process. Financial services providers have an opportunity to facilitate this trade and help this new wave of mini-multinationals to grow. These ambitious businesses need access to services that reflect their new, international business models, in particular making it easier for them to manage multiple currencies and handle cross-border transactions.
“While Brexit has brought uncertainty, the devaluation of the pound has meant UK sellers have never been more competitive. Whether you are selling sportswear to China or IT equipment to Germany, there has never been a better time for entrepreneurs to turn their ideas into reality.”