Q4 SME Growth Tracker: Nearly 9 in 10 UK SMEs plan to sell online by end of 2018

Research finds number of SMEs selling online set to rise from 64 per cent who say they do now to 88 per cent who say they plan to by the end of next year

Almost 1 in 4 SMEs plan to sell via their own mobile app by end of next year, up from 13 per cent today

Small business owners that use e-commerce expect three times faster revenue growth and two times faster jobs growth next year compared to those that don’t

London – Wednesday 27 December – Nearly 9 in 10 small and medium sized enterprises (SMEs) expect to be selling online by the end of next year compared to 64 per cent of SMEs who say they sell online today, according to the Q4 2017 SME Growth Tracker, a report by Capital Economics commissioned by Amazon UK and Enterprise Nation. The report now in its second year and informed by a comprehensive YouGov survey of over 1,000 SMEs, provides an assessment of the confidence and health of British SMEs and monitors key financial and economic trends of businesses that account for 60 per cent of UK private sector employment.

SMEs using e-commerce set to benefit this Christmas and in the year ahead
The significant increase in the number of SMEs planning to use e-commerce in the coming year is primarily driven by a surge in business owners planning to sell via their own company website (rising from 50 per cent to 68 per cent) and their own mobile apps (increasing from 13 per cent to 24 per cent). More businesses also expect to sell via third party online retailers (rising from 21 per cent to 27 per cent).

SMEs who use e-commerce anticipate significantly faster revenue and jobs growth next year. Compared to SMEs that don’t use e-commerce, those who do are expecting more than triple the revenue growth (+1.9 per cent compared to +0.6 per cent) and double the jobs growth (+0.8 per cent compared to +0.4 per cent).

“The contrast in performance between businesses who use e-commerce and those that don’t is significant, so it’s reassuring for the UK economy to see small businesses investing in digital,” said Doug Gurr, UK Country Manager, Amazon. “The impact digital tools and services have on a small business cannot be underestimated. They can improve productivity, boost revenue growth and provide real export power for SMEs. That’s why next year we’ll re-double our efforts to help businesses of all sizes embrace the digital economy, with programmes like the Amazon Academy, to ensure the UK remains globally competitive long term.”

The Q4 SME Growth Tracker also finds that almost a third (32 per cent) of small business owners who use e-commerce believe digital tools and services will increase their sales this Christmas, with online sales up 0.4%, compared to SMEs that don’t use e-commerce forecasting a -0.4% decline in Christmas revenues. 
“Greater digital adoption brings greater Christmas cheer for Britain’s small businesses which is good news for all,” said Emma Jones MBE, Founder of Enterprise Nation. “With the uncertainty of Brexit and the turbulence of the global economy, small business owners understand the need to adapt and innovate to stay ahead of the curve, and digital adoption is a key enabler of this.”

SME confidence remains negative
SME confidence in the broader UK economy has slightly deteriorated this quarter with the SME Growth Tracker Economy Confidence Index score edging down to -24 compared to -22 in the third quarter and -15 in the fourth quarter of last year. This year, confidence in the economy was lowest in the second quarter soon after the general election, when the Economy Confidence Index score fell to -27.

Confidence of small business owners in the prospects for their own business is largely stable this quarter with an SME Growth Tracker Business Confidence Index score of -7 compared to -8 in the third quarter. However, the index is lower than last December’s -4. The overall lack of confidence this quarter was shared by SMEs across the UK with the exception of SMEs in the West Midlands who expect business conditions for their own company to improve slightly over the coming year (score of +6).

“Our thermometer of SME confidence remains below zero, with few owners and managers still seeing a lot of headwinds in the economy,” said Mark Pragnell, Chief Project Economist at Capital Economics. “But while the figures show confidence remains low among SMEs as a whole, e-commerce users are less pessimistic about business conditions over the next twelve months. This is perhaps due to their expected increase in revenue over the festive period from online sales. Given these results, it is no wonder that more SMEs expect to start using digital tools to sell goods and services in 2018.”

- Ends -

Notes to editors

For more information, please contact:
FTI Consulting 
Rob Mindell Rob.Mindell@fticonsulting.com / Adam Davidson Adam.Davidson@fticonsulting.com 
+44 (0)203 727 1000

Notes to Editors

• The SME Growth Tracker is commissioned by Amazon UK and Enterprise Nation. However the views expressed remain those of Capital Economics and are not necessarily shared by Enterprise Nation and Amazon UK.
• While every effort has been made to ensure that the data quoted and used for the research is reliable, there is no guarantee that it is correct, and Capital Economics Limited, Enterprise Nation, Amazon UK, their subsidiaries and affiliates can accept no liability whatsoever in respect of any errors or omissions. The SME Growth Tracker is a piece of economic research and is not intended to constitute investment advice, nor to solicit dealing in securities or investments.
• All figures, unless otherwise stated, are from YouGov Plc. or are calculated by Capital Economics using figures from You Gov Plc. Total sample size was 1,071 senior decision makers in SMEs. Fieldwork was undertaken between 17 November 2017 and 1 December 2017. The survey was carried out online. The figures have been weighted and are representative of all Great Britain businesses in terms of size (i.e. number of employees). Numbers may not add up due to rounding.
• The share of those selling online is a sum of all of those that currently use and expect to still be using in twelve months' time one of: email, own company website, own company mobile app, third party retail website, third party social media website or app or fax, to sell to clients. The sum also includes SMEs who do not currently use any of the above digital tools but plan to use at least one of them in the next twelve months.

Capital Economics SME Growth Tracker: Business and Economy Confidence Index scores
The Confidence Index score is calculated on the basis of responses to the question: "Do you think overall business conditions (e.g. economic growth, customer demand, employment etc.) will have improved, deteriorated or will have stayed about the same for my company?" The Confidence Index score would be +100 if every SME expected business conditions for their company to improve significantly and -100 if every SME expected them to deteriorate significantly. The scores allocated to each answer were: +100 for "significantly improved", +50 for "somewhat improved", 0 for "stayed about the same", -50 for "somewhat deteriorated" and -100 for "significantly deteriorated".

Capital Economics
Capital Economics is one of the leading independent economic research companies in the world. They provide country and regional research on the US, Canada, UK, Western Europe, Japan, China, India, Latin America, Emerging Europe, the Middle East, Africa, Emerging Asia and Australia and New Zealand. They also provide overview services covering the global economy and financial markets, and have dedicated services providing research on commodities and on the property sector. Founded in 1999, Capital Economics has gained an enviable reputation for original and insightful analysis and have built up a diverse and distinguished client base. Overall, more than 1,500 institutions around the world subscribe.