By Roland Palmer, General Manager of UK, Benelux and Nordics, Alibaba Group
In an ever-evolving business landscape, small and medium-sized enterprises (SMEs) are considered the backbone of the UK economy, with their performance critical to UK business growth and prosperity.
However, there’s no doubt SMEs are facing major challenges, including rising costs and reduced revenue. Against this backdrop, diversifying their revenue streams through global digital export could have a transformative impact.
Relying solely on a single market can pose some challenges for SMEs. It is important to recognize that exports offer a remarkable opportunity for these businesses to thrive and achieve sustainable growth. Economic downturns, supply chain disruptions, or changes in consumer preferences are all factors that can potentially affect local markets. By embracing the power of exporting, SMEs can significantly reduce their vulnerability, expanding their reach into multiple markets and thereby diversifying their sources of revenue. This diversification not only helps safeguard the business against unexpected economic shocks but also creates a foundation for stable and sustained growth. This strategic approach not only benefits the individual business but also contributes to the overall economic strength of the region.
In our recent study of more than 3,000 UK businesses, conducted in partnership with the Institute of Export and International Trade, over four in five (81%) UK businesses surveyed said exporting had made their business stronger, while 80% said it was ‘critical’ to the future of their business. Some 79% said exporting had relieved the pressure of doing business in the UK.
Exporting opens doors to expansion into new markets and customer segments, enabling businesses to reach broader audiences with varying needs and preferences. Adapting business practices to meet the needs of these international customers also fuels innovation Our research indicates that businesses which export have introduced more innovation, developed new products, and hired more people as a result of this exporting. The positive impact of export is far-reaching and profound.
Yet misconceptions around exporting persist, and many SMEs in particular perceive obstacles that could stand in the way of their export ambitions. Nearly a quarter (24%) of SMEs surveyed do not currently export goods. Supply chain and logistical issues topped the list of SMEs’ perceived barriers, followed by lack of cultural awareness or familiarity with an overseas market and increased paperwork and red tape. Limited product availability also ranked high on the list of SMEs’ export challenges.
It’s vital that businesses – especially SMEs – get the support, tools and confidence they need to take their business global. The digitalisation of global trade simplifies access to new markets, reduces trade complexity, and presents a significant opportunity for SMEs to punch above their weight on the international stage.
Alibaba.com, our leading platform for global B2B ecommerce, enables British businesses to scale up and trade cross-border to 200 countries and regions around the world. Our research shows that businesses see online marketplaces, such as Alibaba.com, as key in helping to lower the potential barriers to export. More than seven in 10 (73%) businesses surveyed are currently using online marketplaces to boost their export sales. Three in 10 (30%) started working with online marketplaces during the pandemic, with the pandemic proving a catalyst for many businesses to adopt digital tools.
Over a third (32%) of British businesses say working with online marketplaces has provided them with richer competitor and market insights, in addition to better inventory planning and expansion into new geographic markets.
Digital trade routes enable SMEs to respond opportunistically to demand wherever in the world it appears. Looking ahead to 2024, tapping into the global digital export opportunity can turn SMEs’ ambitions of international expansion into a reality, boosting resilience and fuelling innovation in the process.