Michelle Lau, Managing Director, Alibaba.com, France, discusses why so many UK SMEs are looking to change suppliers this year, the increasing digitalisation of sourcing and the drivers behind this, and the top priorities for SMEs when it comes to sourcing and the reasons for this
What are the drivers behind UK SMEs looking to switch suppliers?
UK SMEs are becoming increasingly more strategic when it comes to sourcing. Our research, which surveyed 1,000 sourcing decision makers at SMEs in the UK, noted more than half (57%) of UK SMEs plan to change suppliers, largely due to the accessibility of online sourcing.
Through our research, it has become increasingly clear that previous methods of finding suppliers, such as in-person trade shows, catalogues and directories, are becoming outdated in favour of digital sourcing. We found just under two thirds of SMEs (59%) said digital sourcing was more important for them now than compared with last year.
Ultimately, SMEs want to retain their margins and drive efficiencies, while not conceding quality or innovation. Moving to digital platforms like online B2B marketplaces to find suppliers can help support these priorities by having a larger choice of suppliers, leading to competitive prices and access to innovative products, as well as faster communication channels that allowing greater reliability and accountability.
What are the key sourcing trends you are seeing among UK SMEs?
At Alibaba.com we have seen a noticeable shift in favour of digital sourcing, with a 39% year-on-year increase in the number of orders placed by UK SME buyers during March Expo, Alibaba.com’s flagship sourcing event.
We found that SMEs are increasingly aligning their sourcing strategies with changing consumer trends. Most notably, the rise in consumer demand for sporting goods which is expected to grow at an annual rate of 6% between 2024 and 2029 mirrors the increased order growth during March Expo. In particular, casual sports shoes increased by 173%, while football attire rose by 124%. Across Europe we’ve seen rising interest in new and emerging sports – from padel to women’s football – and SMEs are tapping into these emerging product trends.
Similarly, order growth on Alibaba.com was particularly high in ready-to-wear product categories. The product category with the largest increase in order growth was Footwear & Accessories which more than doubled (+105%), followed by the Apparel & Accessories category which increased by nearly half (+48%). Such trends reflect the desire amongst SMEs to source products quickly and at lower costs, allowing them to focus on scalability and growth.
How is digital sourcing impacting SMEs’ procurement strategies?
SMEs don’t always find themselves in a position to spend extra budget to invest in bespoke technology for their businesses. This has often left them feeling disillusioned when competing against large, well-established businesses that have significant resources. However, the rise of digital sourcing methods means that SMEs are able to cost-effectively become equipped with tools that help them compete on a global stage.
A great place for SMEs to start to upgrade processes is via digital sourcing, which leverages AI and technology, offers a gateway for SMEs to evolve and innovate their product sourcing strategies. Online sourcing platforms, some of which have AI integrated tools, offer access to technology that can streamline sourcing decisions at virtually no extra cost. For example, our B2B search tool, Accio, spans over 7,600 product categories, which helps businesses to rapidly source by turning vague product ideas into actionable plans in minutes. We’ve found ools like these help SMEs make data-driven sourcing decisions, cutting both time and costs.
Looking ahead, what are SMEs’ top priorities for the year when it comes to sourcing?
It is essential for SMEs to continue to reevaluate and innovate their operations to future proof their businesses. Sourcing is one function that has been pinpointed by SMEs to focus on in the year ahead.
Our research has found that SMEs procurement priorities for the year include, becoming cost-efficient (43%), finding trusted suppliers (40%), finding sustainable products (32%), and sourcing new and trendy products to acquire new customers (31%). While being cost effective remains a top objective for SMEs, beyond this, our research shows they are actively looking for innovative products to appeal to consumers and help supercharge growth.
For SMEs, B2B sourcing platforms like Alibaba.com, can offer much easier access to a virtually limitless catalogue of products from suppliers all around the world, allowing SMEs to shop around and get specialised products as well as the best deals. As SMEs look to the year ahead, we believe unlocking digital sourcing tools available to them will be essential to hitting sourcing expectations such as cost and product specification, and driving business growth.
