SME online retailers to combine Clicks with Bricks to boost sales in 2014
One in six UK small to medium sized online retailers are planning to open physical stores in the coming year as online competition for sales grows, according to research by Royal Mail.
The study found that 16% of SME e-retailers expect to either open a physical store or seek space in one to increase sales in 2014. In addition, 15% of UK SME e-retailers are planning to expand by using online marketplaces to sell their goods.
In total, 40% of the UK’s SME online retailers said they were planning to start trading from new channels in the coming 12 months to increase sales.
Royal Mail’s annual tracker study into the expectations and challenges facing UK SME online retailers revealed that more than half (56%) are confident that sales will increase in 2014, compared to 64% a year ago. Royal Mail attributes the decline to a rise in the number of new market entrants leading to an increase in online competition.
The study found that 54% of more than 400 of the UK SME online retailers surveyed said they believed competition for online shoppers was becoming more intense. Six in ten blamed a rise in the number of online competitors for this while 57% cited customer price sensitivity as a reason for the increased competition.
In addition, the research shows that pricing more competitively has overtaken expanding the range of goods available as the top priority for increasing customer satisfaction. Improving the quality of products was the third most popular priority for 2014 despite being ranked the top reason by UK SME online retailers for customer satisfaction both last year and in 2012.
Nick Landon,managing director of Royal Mail Parcels, said: “Royal Mail’s annual tracker study of UK SME online retailers shows that while the majority expect to increase sales, competition is more intense than it was last year.
“UK SME online retailers are thinking carefully about how they can develop their businesses during 2014. They are concentrating on exploiting as many channels to market as possible, adding space in physical premises and online marketplace listings to complement their existing web channel. In addition, they are concentrating on how to price competitively while increasing the range and quality of their goods.”
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