Report: E-commerce still major UK enterprise force

March 8, 2010

PayPoint.net’s Powering Small Business Britain report identifies channel shifts in enterprise and small business activity

Businesses that don’t keep up with the escalating trend towards e-commerce are doomed to fail as the internet takes an ever-greater share of global business, according to a newly published report.

But, with nearly half of all small British businesses having no online strategy or presence, and nearly two-thirds losing out in the battle for web visibility, small business Britain is at risk of falling behind its international competitors, according to PayPoint.net.

The online payment service provider’s Powering Small Business Britain report revealed a broad range of changes that are forecast for British entrepreneurship over the next five years.

PayPoint.net and YouGov surveyed over 800 UK small businesses about the critical business issues they face today. The findings provide a snapshot of business thinking and highlight a number of changes that have to take place as the UK economy emerges from recession.

E-commerce still synonymous with opportunity

Among the report’s key findings, over two thirds (35%) of small businesses across all sectors see the majority of their revenues coming from online income over the next five years. Over half (58%) predicted that the greatest growth in their turnover will be through online sales.

Access to more customers was seen as the top benefit to moving online for 59% of survey respondents. And 36% of businesses have been able to grow through access to global markets as a result of trading online.

In addition, the report identified a number of key themes in consumer behaviour that will affect entrepreneurialism:

· Open innovation with risk sharing partners will be the norm for start-ups and small businesses;

· Co-creation with core consumers to drive entrepreneurial thinking to deliver products consumers want and need;

· Use of cloud computing will dramatically increase for e-retail as greater fraud protection and increased security make this a reality.

Not all plain sailing

However, there were also some issues identified by the small businesses surveyed. Surprisingly, 57% of the companies questioned felt that generating traffic and getting customers to their site was their greatest challenge.

Not having enough contact with customers to build a strong commercial relationship was cited as a barrier to business growth by nearly a third (31%) of respondents, though this can be offset with moves to bring customers into the development process. More predictably, the threat of fraud (33%) and the complication of keeping pace with regulatory change (22%) were highlighted as being especially challenging. PCI Compliance is a particular issue, as, having recently become regulated, the cost of non-compliance has risen considerably.

Looking forward, over a quarter (27%) of the businesses covered see e-commerce as the future for their business but have not yet made it central to their commercial activity. Meanwhile, 44% acknowledge the importance of online revenues but are still only at the early stages of developing an on and offline presence to maximise revenue opportunities.

As well as undertaking substantial research with YouGov, PayPoint.net has worked with IMRG to provide additional consumer insight into the e-retailing market, highlighting three exceptionally entrepreneurial companies, which have overcome the many challenges of trading online to become best-in-class growing e-commerce businesses.

Proof in retail customer success

Firebox.com, WAYN.com and UrbanIndustry.co.uk are all British success stories in the online world. With the assistance of PayPoint.net, these businesses have grown rapidly over the last few years and demonstrate the qualities that businesses will need to survive and thrive in the future.

Michael Norton, managing director of PayPoint.net, said: “With the Powering Small Business Britain report, we have provided a valuable contribution to the enterprise debate in the UK.

“In the case studies we showcase in the report, we have shown how our online payment systems, coupled with exceptional entrepreneurs, have created strong sustainable businesses.”

David Smith, director of operations at IMRG, added: “We welcome Powering Small Business Britain from PayPoint.net. It adds an interesting new dimension to the discussions and debates we have with our members as we look at online businesses surviving and thriving in the UK. Clearly, the current economic conditions have had an adverse effect on business development in the UK. However, we are hopeful that this report shows that there is a very encouraging future for e-commerce in the UK.”

The report is available to download in full at www.poweringsmallbusinessbritain.co.uk.