Helping more small businesses export online can unlock £9 billion in economic growth

The findings of the independently prepared report by the Social Market Foundation (SMF), Just a click away show that ‘significant’ gains can be made for the UK economy by helping more businesses generate export sales through e-commerce.

“E-commerce gives even the smallest business the opportunity to sell to new customers in other countries,” said Richard Hyde, senior researcher at SMF. “Our modeling shows that action to help more UK businesses do e-commerce exports could give the economy and jobs a real boost.”

The research showed that exports of goods to other advanced economies have increased by 3.5% since the end of 2019, but those of the UK have fallen by 21%. SMF modeling shows the potential gains for UK business, employment and GDP, and there could be up to 70,000 more SMEs exporting, increasing their turnover by £12.4bn, resulting in an economic gain of £9.3bn and more 152,000 jobs supported. More than 85,000 UK small and medium-sized businesses sell on Amazon, with more than half already exporting overseas. While these small businesses generated more than £3bn in export sales in 2021, total exports fell from £3.5bn in 2020, partly due to the pandemic and the increased administrative burden for cross-border sellers and customers post-Brexit was. However, exports to countries outside the EU are growing by 15% compared to 2020 among SMEs selling on Amazon.

Amazon encourages small businesses to explore export opportunities in the EU and around the world and offers a range of products and services to support them, including a Global Selling Scheme that allows UK businesses to sell products in any of the 21st countries List and sell Amazon businesses including the US, Australia and Japan with access to over 200 million Prime account holders. Meanwhile, Amazon’s European Fulfillment Network, which allows sellers to transfer inventory across Europe, is already helping tens of thousands of SMEs sell between the UK and the EU.

“Online stores like Amazon are a fantastic way for small businesses to reach more customers – both here in the UK and abroad,” said John Boumphrey, UK Country Manager for Amazon. “Taking advantage of e-commerce and the export opportunities it brings can help small businesses and boost the UK economy. We are very keen to work with government and industry at large to help more small businesses capitalize on the opportunities that e-commerce exports can offer.” The SMF report is based on an Opinium survey at 500 UK SMEs and in-depth interviews with entrepreneurs from across the UK. It finds that smaller UK businesses are less likely to sell online than their equivalents in high-export countries. Only 6% of UK mid-market companies say they make e-commerce sales to the rest of the world. This compares to 9% in Austria and 12% in Ireland. Among the companies not currently exporting, customs issues were the most frequently cited obstacle to doing so (30%), followed by logistics (25%) and customs (23%) in second and third place. Based on the experiences of these companies, the SMF recommended a number of changes to UK export and trade policies to boost e-commerce exports. Recommendations include the establishment of a temporary task force on e-commerce exports, bringing together relevant industry, academia and civil society representatives, to help identify priority policy areas, which could include:

• Development of customized guidelines for small businesses wishing to participate in e-commerce exports
• Build an industry-wide information and awareness strategy so that companies receive the right information and support
• Exploring other collaboration opportunities for governments, business groups and e-commerce companies.

Greg Hands MP, Secretary of State for Trade Policy, said: “Small businesses are the backbone of our economy and this report shows why it is so important that we continue our efforts to get more British companies to export around the world.

“We know that exporting companies means more jobs, higher wages and a stronger economy, which is why this government is helping more of them climb the export ladder through events like International Trade Week.”

The findings of the report are supported by the Institute of Export & International Trade. Marco Forgione, Director-General of the Institute, said: “SMEs are the lifeblood of the UK economy, with 99.9% of UK businesses classified as small or medium-sized, but less than 10% of UK SMEs in cross-border trade. Research shows that exporting companies are more profitable, more sustainable and employ more people than their non-exporting peers.

“It is vital that UK SMEs have access to the resources they need to increase their exports and e-commerce and online marketplaces are excellent tools to do this. Policy makers need to understand the barriers currently preventing greater use of these platforms and invest in resources to build trust in businesses and encourage greater use of these platforms. The joint SMF and Amazon report, to which we were happy to contribute, underscores the urgent need for decisive action to encourage SMEs to export, the benefits this would bring and the important role that e-commerce plays have to play.”

Read the full report’Just a click away: How e-commerce can boost UK exports and growth‘.