- Global iStreet Sellers – businesses selling using online marketplaces like Amazon, eBay and Etsy – added £11bn to UK exports from international sales in 2016 with a forecast that this will double to £21.3bn by 2020
- 714,000 (13%) small businesses in the UK now sell through an online marketplace with one in ten (9.4%) a mini-multinational, using marketplaces’ global reach to sell on the global iStreet
- 55% of iStreet sellers have experienced growth in last year, with one in ten seeing revenues increase by more than £500,000
- One in five of all UK small businesses intends to expand on the global iStreet in the coming year
A growing army of UK small businesses unlocked £11bn in UK export growth in 2016 by trading internationally on online marketplaces like Amazon and eBay, a new report commissioned by international payment experts WorldFirst has found. The report also forecasts that international sales amongst this group could double to £21.3bn by 2020 – equivalent to almost 20 times the annual budget of the Foreign & Commonwealth Office.[1]
The report, The Rise of the Global iStreet, was conducted by the Centre for Economics & Business Research (Cebr) and identifies a new generation of ‘iStreet sellers’, small businesses with less than 50 employees that are selling goods and services using online marketplaces.
More than half (55%) of iStreet sellers said they had experienced growth in the last 12 months, with 29% experiencing revenue growth of 20% or more. Almost one in ten (9%) also saw their total revenues from exports increase by more than £500,000.
Two in five (40%) of all businesses that sell online are trading internationally and a quarter of these businesses do so through online marketplaces. This growing group have the potential to power the UK’s economy and trading relationship with the rest of the world. The EU is the most popular trading destination for online sellers, with 86% of businesses trading with the bloc, followed by the United States (66%).
Marketplaces: a low-risk gateway to the world
This growth is being supported by the use of online marketplaces which are helping small businesses target new customers in new international markets whilst enabling them to compete with both bigger and local businesses. Platforms such as eBay and Amazon are used by a quarter (25%) of businesses
selling online, with the report also finding that one in five (20%) of all small businesses in Britain intend to expand their presence on marketplaces in the coming year.
Supporting jobs
The findings also suggest that iStreet sellers are planning to raise employment levels over the next 12 months, with over two in five (43%) planning to hire more staff. The burgeoning e-commerce market is therefore set to continue expanding, not only by total sales values and turnover, but also in terms of employment numbers, positively impacting the UK economy.
Barriers to growth
However, despite growth opportunities on offer, online sellers face a number of challenges that need to be addressed to support their growth – especially when selling internationally.
For example, more than one in five (21%) small businesses cite difficulties with logistics and shipping as the main barriers to selling internationally online, whilst 17% highlighted the risk associated with doing business across multiple currencies as a significant issue affecting their bottom line.
WorldFirst recently launched a brand new solution – World Account – to address the shortcomings with existing international banking solutions for small businesses selling online. The platform makes it easy for businesses to manage funds in and payments out in multiple currencies, all from one easy-to-use platform. The platform is designed to save international businesses both time and money.
Jeremy Cook, Chief Economist at WorldFirst commented:
“It’s well known that online sales are rising year on year and a key driver of that growth is a band of online sellers that are using marketplaces like Amazon and eBay to build high-growth, multinational businesses. Whilst these businesses are not on your local high street, they are making waves on the global iStreet that has in part replaced it. Marketplaces like Amazon and Etsy make it as easy for UK businesses to sell to customers in Berlin as Birmingham or Miami as Manchester.
“Marketplaces can be a relatively low-risk gateway to the world and these businesses are benefitting from this access to target new customers in new markets – and they’re reshaping UK exporting in the process. Financial services providers have an opportunity to facilitate this trade and help this new wave of mini-multinationals to grow. These ambitious businesses need access to services that reflect their new, international business models, in particular making it easier for them to manage multiple currencies and handle cross-border transactions. The World Account enables online sellers to manage their international accounts in one single platform wherever and whenever they want.
“While Brexit has brought uncertainty, the devaluation of the pound has meant UK sellers have never been more competitive. Whether you are selling sportswear to China or IT equipment to Germany, there has never been a better time for entrepreneurs to turn their ideas into reality.”
ENDS
Methodology:
All figures are taken from The Rise of the Global iStreet, produced by Centre for Economics and Business Research (Cebr) and commissioned by WorldFirst. As well as economic modelling by Cebr, the findings are supported by exclusively commissioned research conducted by YouGov. Total sample size was 2007 small business decision makers. Fieldwork was undertaken between 7th – 18th August 2017. The survey was carried out online. The figures have been weighted and are representative of British business size.
[1] Annual FCO budget stands at £1.1bn, Foreign Office Settlement