UK SMEs grew ecommerce revenues by more than a quarter in 2021, 70% expect the same level of growth over the next three years, 30% anticipate higher growth

·       Six in ten UK ecommerce SMEs only sell domestically today, but nearly nine in ten say growing revenue internationally is a very important/important strategic priority

·       British SMEs trail their European counterparts on integrating sophisticated capabilities into their ecommerce offerings

Mollie, one of the fastest growing payment service providers in Europe, today reveals the average growth rates of UK small and medium-sized (SME) ecommerce merchants in 2021 and insight into their future plans. The data indicates impressive growth and encouraging ambitions, including major international expansion. However, it also suggests a potentially critical blindspot when competing with global ecommerce giants: the limited integration of third party software and capabilities into UK SME ecommerce technology stacks.

UK SMEs enjoyed an average of 27% ecommerce growth during 2021, with smaller firms experiencing 12% growth and larger firms 34%. 70% of UK SMEs expect that level of growth to continue in the next one to three years. However, 30% believe that their ecommerce activities will grow faster than in 2021 -  39% faster, on average. Not a single SME, from a sample of 500, felt that its growth in the next three years would be lower than it was in 2021, suggesting high levels of ambition and confidence.

To drive this growth, UK SMEs are looking beyond their domestic markets. 88% say that growing revenue from customers outside of the UK is a very important (43%) or important (45%) key strategic priority. Today, only 37% of UK SMEs sell outside of England, Scotland, Wales and Northern Ireland. Those companies generate an average of 17% of their revenue from customers based in the EU, ranging between 12% for the smallest merchants to 19% for the largest. UK SMEs have ambitious plans for international expansion, but this will require an extension of both technology and operations. 

Expanding into new geographies, especially Europe, means SMEs must accept the payment types consumers in those countries expect and prefer. This includes a number of local payment methods – like iDEAL in the Netherlands, Sofort in Germany, and Bancontact in Belgium – that just do not exist in the UK market. 

Speaking about the challenges around internationalisation Dan Marsden, co-founder of Lounge Underwear, explains that “iDEAL is really popular in the Netherlands but, being from the UK, I’d never even heard of it. Through Mollie, it was really easy to activate.” 

Beyond preferred payment methods, there is another potential blocker to UK SME ecommerce ambitions: meeting evolving customer expectations for sophisticated shopping experiences - personalisation, seamless shipping, simple returns etc. When competing with the likes of Amazon, eBay et al, it’s imperative that SMEs integrate their ecommerce offers with cutting edge tools that deliver the range of capabilities consumers have come to expect from large merchants. But UK SMEs are lagging behind their continental counterparts. Mollie’s European ecommerce customers have an average of 13 integrations today - a number that is increasing quickly. UK SMEs report an average of just nine integrations. Less than half of UK SME ecommerce merchants have integrated content marketing capabilities (46%), shipping (44%), returns (41%), customer relationship management (43%) and enterprise resource planning (38%).  

“UK SMEs have driven impressive ecommerce growth over the last year, and what’s especially exciting is their ambition to continue, or even increase, this rate of growth. But as UK SMEs look to the EU for expansion, it’s critical that they work with a payments service provider who understands European customers and the ways they want to pay,” said Josh Guthrie, UK Country Manager, Mollie. “Local payment methods are critical, especially in countries like the Netherlands, where iDEAL is more popular than credit cards, and Germany, where Sofort is very popular amongst consumers. Beyond that, UK SMEs really need to work with payments service providers and ecommerce partners that enable them to integrate exciting capabilities into their ecommerce technology stacks. This will increase the sophistication and attractiveness of their offer, allowing them to compete with the world’s largest ecommerce merchants on a more level playing field.”