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The percentage of small firms selling online expected to increase in 2018

PUBLISHED: 13:31 27 December 2017 | UPDATED: 13:31 27 December 2017

Online shopping. Photo from Pexels/Negative Space

Online shopping. Photo from Pexels/Negative Space

Pexels/Negative Space

Britain’s small and medium-sized businesses could see higher sales next year if they follow through with plans to expand online in 2018, a new report found.

The number of small and medium-sized enterprises (SMEs) trading online is set to rise to 88% over the next 12 months, compared to the 64% that currently take advantage of e-commerce, a report by Capital Economics and commissioned by Amazon has found.

A growing proportion plan to offer online sales via their own company’s website next year, up from 50% this year to 68% by the end of 2018, while a growing number of SMEs plan to increase the use of their own mobile apps to boost trade, up from 13% to 24%.

Meanwhile, the number of firms looking to sell through third-party platforms is set to increase from 21% to 27%.

Firms that embrace e-commerce expect faster revenue and jobs growth over 2018, with online retail adopters expecting a 1.9% rise in sales compared to a 0.6% rise among firms that do not trade online. SMEs with e-commerce operations are forecast to see a 0.8% rise in jobs growth, compared to 0.4% from those without online sales.

Amazon’s UK country manager Doug Gurr said: “The contrast in performance between businesses who use e-commerce and those that don’t is significant, so it’s reassuring for the UK economy to see small businesses investing in digital.

“The impact digital tools and services have on a small business cannot be underestimated.

“They can improve productivity, boost revenue growth and provide real export power for SMEs.”

However, Ofcom recently found that around 1.1 million, or 4%, of UK properties still cannot get decent broadband to meet their needs, with 230,000 SMEs hampered by slow internet connections.

But the communications watchdog said that coverage was improving and said it was taking steps to improve broadband coverage by promoting industry-wide investment in a full-fibre network, and setting requirements in operators’ licences relating to speed and coverage.

Amazon’s SME Growth Tracker for the fourth quarter used data from a YouGov survey that measured the optimism and health of more than 1,000 SMEs.

Amazon’s report found that confidence in the UK economy “slightly deteriorated” in the final months of the year, but was “largely stable” among small business owners, which saw their business confidence index score come in at minus 7 versus minus 8 in the third quarter.

However, that is still worse than the reading of minus 4 in December last year.

But the prospect of returns from online retail seems to be boosting optimism among SMEs.

“Our thermometer of SME confidence remains below zero, with few owners and managers still seeing a lot of headwinds in the economy,” said Mark Pragnell, chief project economist at Capital Economics.

“But while the figures show confidence remains low among SMEs as a whole, e-commerce users are less pessimistic about business conditions over the next 12 months.

“This is perhaps due to their expected increase in revenue over the festive period from online sales.

“Given these results, it is no wonder that more SMEs expect to start using digital tools to sell goods and services in 2018.”

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