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UK SME e-retailers reveal growing business confidence for 2016

New research has found that eight out of ten small to medium sized online retailers are confident they will increase sales in 2016.


UK SME e-retailers reveal growing business confidence for 2016

New research has found that eight out of ten small to medium sized online retailers are confident they will increase sales in 2016.

Royal Mail’s annual tracker study reveals a growing business confidence with the figure rising from the seven out of ten e-retailers who expressed confidence last year.

The study found that 74% of SME e-retailers grew their sales last year to mark the highest level for three years. This compares to 58% reporting increased sales in 2014 and 49% in 2013.

The companies polled also felt confident about their customer satisfaction levels with 63% believing their customers have become more satisfied in the last year.

The most common factor in driving customer satisfaction was found to be on-time delivery which was cited by 66% of respondents. This is more than double the number of SME e-retailers who considered quality of products and the price of goods as key drivers of satisfaction.

In addition, SME e-retailers rated the payment process as the fourth most important factor for customer satisfaction, up from eighth place in 2015. They also recognised the importance of a good returns process with 49% believing it will make consumers more likely to be more satisfied with their service. As a result, one in four SME e-retailers plan to simplify their returns process in 2016.

The overall increase in confidence among SME e-retailers comes despite 53% claiming that competition is more intense this year and 45% stating that levels of competition remain unchanged.

The study found that SME e-retailers identified new factors for competition this year. Some 47% cited the rise of on-the-move smartphone shopping while 44% highlighted price promotions which lead shoppers to seek out the best prices.

However, the main drivers of competition remain the same this year with 52% SME e-retailers naming consumers’ price sensitivity and an increased number of websites as the main reasons for increased competition.

When looking at ways to become more competitive and grow sales in 2016, seven in ten online retailers plan to increase the number of channels they sell through. Some 85% are planning to list on additional online marketplaces. Half of SME online retailers intend to launch their own website.

For those intending to sell items in a physical store, 41% SME e-retailers expressed a preference for having their products stocked in an established retail outlet compared to 26% who preferred opening their own store.

Nick Landon, managing director of Royal Mail Parcels, said: “Royal Mail’s annual tracker study of SME online retailers shows that confidence is continuing to grow this year and that technology is playing an ever more important role in the retail world.

“Technology is influencing how people shop, where they shop and what they define as an excellent shopping experience. Our research shows that SME online retailers are plugged in to the needs of the shopper and they are taking actions to enable them to meet the demands of the discerning online consumer.”

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