The UK could generate £9.3 billion in economic value and create more than 150,000 jobs by helping more small and medium-sized enterprises (SMEs) to export goods through e-commerce, new research shows today.
Economic modelling from the Social Market Foundation (SMF) shows that there are “significant” gains to be made for the UK economy by helping more firms to generate export sales through e-commerce. The findings of the independently produced report, Just a Click Away, have been supported by the Institute of Export & International Trade. The SMF said that by increasing SME e-commerce exports, ministers could raise economic growth and help ease the pressure on public finances.
While merchandise exports across other advanced economies are up 3.5% since the end of 2019, the UK’s have fallen by 21%1. SMF modelling shows the potential gains for UK businesses, employment and GDP could see as many as 70,000 more SMEs exporting, with their turnover rising by £12.4 billion, resulting in an economic gain of £9.3 billion and supporting an additional 152,000 jobs.
More than 85,000 UK small and medium sized businesses sell on Amazon, of which more than more than half already export overseas. While these small businesses generated more than £3bn in export sales in 2021, overall exports declined from £3.5bn in 2020, partly as a result of the pandemic and increased administration for cross-border sellers and customers following Brexit. However, exports beyond the EU are growing amongst SMEs selling on Amazon, up 15% from 2020.
Amazon encourages small businesses to look at export opportunities in the EU and around the world and provides a range of products and services to support them, including a Global Selling programme, which allows UK businesses to list and sell products on any of Amazon’s 21 stores including the USA, Australia, and Japan, with access to over 200 million Prime account holders. Meanwhile, Amazon’s European Fulfilment Network, which lets sellers transfer stock across Europe, already helps tens of thousands of SMEs to sell between the UK and EU.
The SMF report is based on an Opinium survey of 500 British SMEs and in-depth interviews with business owners from across the UK. It finds that smaller British firms are less likely to sell online than their equivalents in high-export countries. Only 6% of UK medium-sized firms report making e-commerce sales to the rest of the world. This compares with 9% in Austria and 12% in Ireland2. Among businesses that do not currently export, customs issues were the most frequently mentioned obstacle to doing so (30%), with Logistics (25%) and tariffs (23%) second and third.
Based on the experiences of those businesses, the SMF recommended a series of changes to UK export and trade policy to boost e-commerce exports. Recommendations include establishing a time-limited e-commerce exports taskforce, including relevant industry and academic and civil society representatives, to help identify the priority policy areas, which could include: 1) developing more tailored guidance for small businesses looking to participate in e-commerce exports, 2) building an industry-wide information and awareness strategy so businesses can be signposted to the right information and support, and 3) exploring further opportunities for government, business groups and e-commerce firms to collaborate. Also proposed is the creation of a new Office for E-Commerce and Digital Trade (OE-CDT), sitting within the Department for International Trade, to lead on policy with respect to cross-border e-commerce (See notes for a full list of recommendations).
Richard Hyde, senior researcher at the SMF, said: “E-commerce gives even the smallest business the scope to sell to new customers in other countries. Our modelling shows that policies helping more British firms to conduct e-commerce exports could deliver a real boost to the economy and jobs.
“That’s a valuable prize at the best of times, but when ministers having to take tough choices to balance the public finances, boosting growth jobs and tax receipts by helping British firms sell more abroad should be a high priority.”