UK’s online SME retailers hope for better sales growth in 2018: Royal Mail

January 21, 2018: The future seems to look bright for UK's small and medium-sized enterprise (SME) online retailers with 70 percent said they experienced an uplift in sales in 2017 compared to the previous year, and 74 percent expressed confidence that sales will increase in 2018, according to a study commissioned by Royal Mail.

The health and beauty sector witnessed highest increase in sales with 78 percent, followed by electronics (73 percent). Increasing their social media presence (43 percent), running more promotional offers (39 percent) and introducing new products & services (29 percent) are the main ways retailers are planning to achieve growth in 2018.

The main concerns for UK SME online retailers in 2018 are the ability to make a profit (27 percent), increase sales (26 percent) and reduce costs (23 percent). About 69 percent of retailers expect costs to be higher in 2018 and the biggest costs expected are purchasing (34 percent), logistics & delivery (32 percent) and advertising (27 percent).

The study also found 68 percent of UK SME online retailers currently sell overseas. About 80 percent of these retailers sell to Europe, followed by USA (35 percent), Canada (31 percent) and Asia (17 percent).

In the fashion sector, 88 percent sell to Europe, 53 percent to USA, 28 percent to Canada, and 25 percent to Asia. About 78 percent in the electronics sector sell internationally, followed by 72 percent of health and beauty and 67 percent of fashion retailers.

USA is the country where retailers sell the most to, followed by France and Germany. The most popular European destinations to sell to are France, Germany and Spain.

In 2018, 64 percent of UK SME online retailers intend to increase their international sales revenue. In the electronics sector the percentage is higher at 78 percent. In health and beauty, it is 69 percent and in fashion 68 percent.

Key ways of increasing international sales revenue will be by simplifying the sales, ordering, delivery and payment process (45 percent), selling more to the markets they already sell to (28 percent) and targeting new markets and countries (20 percent).

Nick Landon, managing director of Royal Mail Parcels said: "It's great to see the level of business confidence from UK SME online retailers at the beginning of 2018. Although obvious challenges exist, retailers are grasping the available opportunities for growth and have a clear view of the actions they need to take to win new customers at home and abroad. At Royal Mail, we already support many retail businesses in delivering against exactly these opportunities and we look forward to working with even more of these great businesses this year."

UK SME online retailers are planning to target Europe (50 percent), USA (34 percent) and Canada (28 percent) in 2018 due to demand, good ecommerce structure and the ease of shipping and delivery. Europe holds the greatest opportunity, according to UK SME online retailers.