UK small businesses unlocked £11bn in UK export growth in 2016 by trading internationally on online marketplaces like Amazon and eBay.
A new report commissioned by international payment experts WorldFirst 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.
The report, The Rise of the Global iStreet, was conducted by the Centre for Economics & Business Research (Cebr) and identifies a new generation of ‘iStreet sellers’, small businesses with less than 50 employees that are selling goods and services using online marketplaces. More than half of iStreet sellers said they had experienced growth in the last 12 months, with 29% experiencing revenue growth of 20% or more. Almost one in ten also saw their total revenues from exports increase by more than £500,000.
Two in five (40%) 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% of businesses trading with the bloc, followed by the United States (66%).
Marketplaces: a low-risk gateway to the world
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 iStreet sellers are planning to raise employment levels over the next 12 months, with over two in five (43%) 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.
Barriers to growth
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% highlighted the risk associated with doing business across multiple currencies as a significant issue affecting their bottom line.
WorldFirst recently launched a brand new solution – World Account – to address the shortcomings with existing international banking solutions for small businesses selling online. The platform makes it easy for businesses to manage funds in and payments out in multiple currencies, all from one easy-to-use platform. The platform is designed to save international businesses both time and money.