International confidence is high among the UK’s small online retailers with over half (56 per cent) aiming to increase international sales in both new and existing markets in 2016, according to Royal Mail’s annual tracker study into their ambitions.

SMEs look further afield for international growth

Australasia has seen the most significant increase in interest as an export destination with 23 per cent of small online retailers believing it holds the greatest opportunity for export sales growth, compared to just 5 per cent last year. 20 per cent plan to target the region in 2016 compared to just 7 per cent last year.

Asia has also increased in importance as an export destination; 26 per cent believe it holds significant sales opportunities, up from 12 per cent last year.

Europe remains the main target for exports: nearly half (48 per cent) of SME retailers are aiming to sell their products in the Eurozone in 2016. This compares to just a third last year (30 per cent). Meanwhile the USA is seen to present the greatest opportunity for UK small online retailers in the next five years by 30 per cent of SMEs interviewed.

Case study

World of Books began as a small online retailer of second-hand books and by expanding through an export-based strategy. It now sends out about 5 million books to customers throughout the world every year. 

Stephen Boobyer Managing Director, World of Books said:“We started back in 2008 as a small online book seller and have expanded rapidly to become one of the largest sellers of used books in the world.  Now, 25 per cent of our books are sold to customers overseas and Royal Mail deliver for us to some 100 countries throughout the world. Customer feedback counts for a lot when exporting as it effectively defines your brand in a country where customers may not have heard of you before. My advice to small businesses looking to export abroad is to find a delivery partner that is reliable and able to offer a broad range of delivery options. This has a very positive impact on feedback ratings and can lead to a rise in revenues.”

Factoring in Success

UK small online retailers are targeting new markets to capitalise on growing international demand for British products and services. 42 per cent cite this as the primary reason for their expansion plans followed by 35 per cent who said they based their export plans on how easy it was to ship and deliver to those markets.

Of those who sell overseas, nearly two thirds (57 per cent) actively promote their international delivery service to attract foreign customers. A third only offer international delivery options at check-out and do not advertise beyond that, while another 10 per cent will offer international delivery only if specifically asked.

When asked about their favoured international carrier, three in five (63 per cent) said they used Royal Mail and Parcelforce Worldwide as their main carrier.

Barriers to Exporting

A lack of knowledge of international markets remains the main barrier to further export activity, holding back nearly 40 per cent. However the complexity of shipping to international markets also deterred around a quarter (23 per cent) of small online retailers from exporting.

To help UK SMEs break the barriers to exporting to China, Royal Mail last year announced the launch of its shop front on, Alibaba’s e-marketplace, Tmall Global. Royal Mail’s Tmall Global site offers British retailers the opportunity to access the Chinese market while removing the logistical challenges that many companies would otherwise face. These can include the cost and complexity of accessing Chinese e-commerce sites, the challenge of providing local customer support service, as well as managing customs duties, documentation, shipping and logistics.

This follows the UK Government’s recently launched “Exporting is GREAT” initiative which aims to inspire and support 100,000 additional exporters by 2020.

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Source: Royal Mail