New research from the Federation of Small Businesses has revealed the scale of problems that firms are facing when it comes to using online marketplaces such as Amazon, eBay and Facebook.
After the busy festive period, small firms are reliant on these online platforms to succeed but are dealing with a number of barriers to growth and trading around the world.
Small businesses use online platforms for cross-border trade because they help to promote their products in untapped markets at a reduced risk, raise brand awareness, foster consumer trust, and reduce the associated costs with internationalisation.
- One in five small firms who digitally trade (20 per cent), do so using online marketplaces such as Amazon and Facebook
- Small businesses’ experiences using online platforms is not without problems, with the most commonly reported problems being fake reviews (21 per cent) and sudden changes to terms and conditions (19 per cent)
- More than a third (38 per cent) of small firms say that local delivery problems for tangible goods is their top problem affecting their exports
- Non-tariff barriers, such as local taxes and regulations, are the top barrier for exports when it comes to intangible goods and services
- Germany, France, Ireland and the US are the priority markets for exporting small firms
Claire Reading, Federation of Small Businesses (FSB) development manager for South Yorkshire, East Yorkshire & the Humber,said: “Digital trade is taking the UK small business community by storm. Businesses are using the online opportunities being offered to them to grow and expand their firms. But huge difficulties lie ahead.
“When small firms trade digitally across the world, they are highly exposed to global market forces and disruptions to trade flows.
“It’s vital that Government both listens to small businesses about their exporting needs and considers them as part of any response to the ongoing digital trade revolution.
“Domestically, this means having access fast and reliable broadband and mobile coverage across Yorkshire and the Humber, but also requires upskilling employees’ and business owners’ digital skills.
“Internationally, this will require the government to push to remove barriers to digital trade encountered in overseas markets, such as data localisation measures and weak intellectual property protections, at both the WTO and in the government’s future bilateral trade negotiations.
“At the moment, around 20 per cent of current small business exporters and importers use online platforms to trade internationally, but this could expand hugely if the environment for them was improved.
“Crucial to small firms are websites like eBay, Amazon and Facebook who are central to advertising, sales, and their exporting aims.
“However, small businesses’ use of online platforms is not without problems, and still too many encounter problems such as fake or malicious reviews, problems with intellectual property, and sudden delisting of their products. We would urge the Government to monitor these trends in small businesses’ use of online platforms as the e-commerce market continues to expand.
“Small and micro-business owners are ready to take on the opportunities presented by the global digital economy and are on hand to unlock the benefits of the cross-border digital economy, but this can only work if the markets and tools available are welcoming to them.”