Why SMEs should consider e-commerce

Tuesday 16 August 2016

Despite the growing digitisation of everyday life in the UK, a significant number of the nation's small and medium-sized enterprises (SMEs) still lack an online presence.

According to research from domain name provider Go Daddy, some 60 per cent of SMEs with five or less employees do not even have a website, meaning they are missing out on the opportunities the internet and e-commerce can provide.

By overlooking e-commerce, UK SMEs are missing out on one of the largest, fastest-growing markets in the world. According to research from PFS Web, the British e-commerce sector was worth $99 billion (£75 billion) in 2015, making it the largest in Europe and third largest in the world. This figure is expected to have reached $132 billion by 2018. Further highlighting the impressive size of this market is a Shop Direct study that found 95 per cent of Britons have now shopped online.

By failing to embrace e-commerce, SMEs are missing out on a lucrative market opportunity and run the risk of falling behind those organisations that do establish a strong online presence.

Why else is e-commerce worthwhile for SMEs? A major advantage is that having an online presence gives a business a geographic reach that simply isn't possible otherwise. An e-commerce website is accessible from anywhere in the world and opens up new customer opportunities both at home and abroad.

PFS Web found a significant proportion of the UK's online sales are cross-border, with customers in the US and China accounting for the greatest share of international trade. Meanwhile, a study from OC&C Strategy Consultants, PayPal and Google revealed Chinese shoppers tend to spend 2.7 times more than their British counterparts when buying from UK online retailers, while the figure is 1.7 times higher for German shoppers. With the looming shadow of Brexit casting doubt over SMEs' trade opportunities with Europe, e-commerce is an ideal way to tap into an international customer base.

A third factor that SMEs should consider when debating the merits of e-commerce is potential cost benefits. Selling online requires significantly lower overhead costs than traditional commerce and with e-commerce sales growth vastly outstripping that of the high street, this represents a far more cost-effective investment for many businesses.

Brookson and the cost-effective accountancy services we provide can ensure you have the sound financial footing on which to take advantage of the e-commerce opportunity.

By Victoria McDonnell

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