For online retailers 2016 should be all about exports and digital business. Here's how your small business can take advantage of both in the next 12 months.
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British wintertime prompts many to think of foreign climes, as they endure the UK’s chilly temperatures. But for ambitious British SMEs, this year’s international ambitions are more likely to be of a business nature. Smaller online retailers, in particular, are realising they could use technology to give their operations a new spark, and expand into lucrative overseas markets.
Digital driving growth
Retail growth has moved firmly from the high street to the internet. Online retail markets in Britain, the US, China, and Germany will double in the next three years, research shows, with UK sellers set to earn £28 billion annually from overseas internet sales by 2020.
Four out of ten Britons shop on their smartphones, Deloitte estimates, and about 60 per cent browse goods this way. Going mobile first, or even mobile only will increasingly set successful retailers apart from their traditional, shop-bound peers.
Better technology topped the list of expected drivers of SME growth in 2016, recent research by Barclays Business found, while having a digital presence, and using state-of-the-art payment technology were also relevant. The message is clear – retailers who want to succeed should be online, mobile-enabled, and looking beyond Britain’s shores for success.
These things are key to retail success this year
One of the first challenges is choosing a market. There is a huge appetite for ‘Brand Britain’ in many parts of the world, with great profits for those who get their pitch right. Larger companies, such as Cath Kidston and Burberry, have tapped into a desire internationally for the perceived quality, tradition, and quirkiness of British goods. Smart smaller business owners will also exploit the unique Britishness of their company to maximise sales.
Ask yourself, is there a genuine demand for your product or service in a given country? Are there competitors already selling online there? You also need to understand local culture, how your industry works in that geography, and your market niche. Much of this will come from visiting the location, so sign up for trade fairs or missions to experience the place, people, and potential problems in person.
Start your research on the Government website run by UK Trade & Investment (UKTI) Exporting Is Great, with its country guides, advice, and links to potential export opportunities. UKTI organises foreign visits, as does the British Chambers of Commerce with its Export Britain service.
Even if you’re operating online, you might need a local partner to deliver goods locally, or to deal with returns or complaints. Online fashion portal ASOS enabled its global roll-out by having local warehouses for distribution and returns, as well as using different pricing in various countries.
Again, established business networks can be a good means of introduction to potential business contacts in a chosen spot. But if you develop any overseas agreement, always make sure contracts are legally watertight, clearly defining who has responsibility for what.
Decide which country’s legal system to use, and the set-up of your company in a foreign territory – is it a joint venture, subsidiary, or are locals merely employees? Talk to an experienced lawyer, or a notary, an internationally-recognised lawyer who can independently certify international trade documentation.
What customers want
To win the battle for shoppers, small companies must offer top quality customer service backed up by social media. Building consumer trust at a local level is vital, as is offering customers their preferred form of payment, while equalling – or bettering - local competitors on delivery times.
British clothing retailer Boden uses local warehouses in the US for speed of service, plus it prioritises PayPal payments there, while using open invoicing in Germany, where that is a popular method of payment. Being adaptable, and ready to learn aids success.
Treat your customers like this and they'll come back time and again
- Easy to use. Shoppers wants a website that’s simple to find and navigate, while products and prices are easy to compare.
- Good quality, helpful advice. Customers expect a retailer to demonstrate expertise, and to respond quickly to queries.
- Quick payment systems. Those shopping online are impatient, and want to pay quickly.
- Efficient problem-solving. If there is a hitch, customers expect a fast, effective after-sales service, offering quick solutions.
- Joined-up thinking. Services across digital platforms and physical stores should be seamless.
Make sure your website is well-designed, fully transactional, and, again, mobile-enabled. Companies such as Shopify will help you to create your own basic, template-based web presence cheaply, but an agency could draw up a bespoke offering, though always shop around, and ask for referrals from contacts.
Then, choose the best social media platform for your demographic and location, and train employees to respond to any messages quickly, and appropriately. Online retail operates 24 hours a day, so you need to be equipped to handle queries out-of-hours from different time zones.
Forms of finance
Finally, all of this business growth will require cash to get plans off the ground. Fortunately, digital technology has not only revolutionised the way we shop, but it has also opened up business finance.
These days, a business owner looking to raise capital has the choice of crowdfunding platforms, peer-to-peer loans, short-term, unsecured lenders, such as us at Boost Capital, as well as the more conventional routes of bank loans, overdraft facilities, and the support of friends and family.
Upfront finance will be needed to cover research, invest in digital and physical infrastructure in the UK and abroad, customise the business, plus advertising and marketing. But it may take time to turn a profit in your new region, so make provision for funding to keep the operation afloat, and cashflow healthy in the intervening months.
There are plenty of alternative finance providers keen to work with smaller retailers who demonstrate the right ambition, have a strong business plan, and want to expand their horizons in 2016. All of which gives British SMEs much to be optimistic about, even in the midst of the winter chill.