There has been a surge of businesses joining GS1 UK to sell their products via online marketplaces.
The number of business joining membership organisation GS1 UK to secure their unique identification numbers in order to trade on sites such as Amazon, Google Shopping, and eBay has jumped 300% year-on-year.
More than 2,400 businesses joined GS1 UK, the supply chain standards organisation, to sell via online marketplaces in 2017, compared to 800 in 2016 and 450 in 2015.
Amazon is the most popular online marketplace for new joiners with 75% looking to sell on the site, while 41% are looking to use eBay.
The average revenue of businesses joining GS1 UK to use online marketplaces has fallen 15% year-on-year, from £1.3m in 2016 to £1.1m in 2017 as more small businesses look to sell products via third-party platforms.
The growth in the use of online marketplaces looks set to continue with more than half (53%) of UK retailers planning to do more business through online marketplaces in the next five years. Just 3% of business plan to use online marketplaces less often and 24% said they don’t use these third-party platforms now and have no intention of starting.
Monica Bird, Head of Marketplaces for GS1 UK, explains: “Online marketplaces are fast becoming the top choice for businesses looking to sell their products around the world. Many SMEs are now choosing these sites as their first route to market, with some using them as their only sales channel, as they provide access to millions of consumers, without the costs of developing their own website.
“While online marketplaces offer businesses the chance to increase exposure and sales, each site is different and comes with its own unique capabilities. Businesses must ensure they use a tailored strategy for each site to increase profits and make to most of the opportunities available.”
GS1 UK has also published new research into the personas of businesses using online marketplaces, and how businesses can get the most out of these sites: The rise of UK’s digital entrepreneurs: harnessing the power of online marketplaces.
A further study earlier in the year among 1000 retailers in the UK by GS1 found that a great deal of export growth is coming from online marketplaces. Online e-commerce platforms have greatly increased the variety of goods and services that can be bought and sold cross-border.
According to Gary Lynch, chief executive of GS1 UK: “The boom in cross-border e-commerce is so significant that it can be gauged by the success of express-delivery firms. At the end of January 2017, UPS revealed record revenues for the fourth quarter of 2016. Since 2008 half of the increase in express-delivery volumes has come from shoppers buying items online from another country.”
Lynch continues: “Jack Ma, the boss of Alibaba predicts that a wave of small Western firms exporting goods to Chinese consumers will go some way to redressing the balance of the past two decades of massive Western firms importing goods from China. Royal Mail announced it was joining Alibaba’s Tmall Global’s online marketplace, linking small British companies with Chinese consumers, back in 201534 – offering British exporters an entry point into China.
“The majority of businesses that GS1 UK surveyed are focusing on eBay, Amazon, Google Shopping or Alibaba. When we polled them about their use of online marketplaces, more than three quarters of them said they would be conducting business via marketplace platforms (76%) within five years’ time, with just 24% saying they didn’t use marketplaces now and didn’t plan to in the future.
“There are businesses who envisage conducting less business via marketplace platforms. One in twenty five (4%) of the super-exporters we polled (firms with exports representing more than half of their sales) said they would be using marketplaces less in the future. Given some marketplaces, for instance, charge third-party merchants a referral fee for each sale, this is understandable.
“But e-commerce platforms are clearly delivering a great deal for businesses, including, for example, access to a large global customer base.”
In a report on cross border trade published by GS1 UK, “Defending Cross–Border Trade: An Agenda For Export”, James Storie-Pugh of Pivot International said: “The proliferation of global marketplaces has led to a definite shift in the attitude of UK brands and retailers towards seeing them as easy to access, low cost channels into new markets. The upshot is that marketplaces are becoming a core component of a successful strategy. They typically allow merchants to glean a host of insights into the demand for their products, while diversifying their core revenue streams. Our opinion is that there is little doubt that marketplaces will continue to play an increasingly important role in the growth of cross border trade.”