Overseas online sales to generate ?28bn for British retailers by 2020

A surge in international sales of British goods is about to outpace domestic growth, and provide great opportunities for the UK’s small and mid-sized retailers.

Online sales generated by UK retailers from international markets are expected to soar sevenfold to ?28bn by 2020, according to new research published today by OC&C Strategy Consultants in collaboration with Google. Whilst in 2012 online sales from outside the UK were worth ?4bn and made up 14 per cent of total online sales, the OC&C and Google research, ?Britain?s Retail e-mpire?, predicts that international sales growth will outpace domestic growth to make up an impressive 40 per cent of total online sales by 2020.

The number of consumers searching online for British brands and retailers from outside of the UK is growing on average by 46 per cent a year since 2010. Flying the flag for British online retail abroad are well-known brands, such as Asos, Burberry, Jimmy Choo, Net-A-Porter, The Outnet, Topshop and Wiggle, who already receive over half of their traffic from overseas. But smaller UK-based retailers ? such as Farfetch, Isabella Oliver, Surfdome and Corsetzs UK ? are embracing international opportunities even more rapidly than their larger counterparts.

Small and mid-sized companies currently receive some 47 per cent of online searches for their products from overseas. They tend to ship to more countries and offer multi-lingual sites. Conversely, only 13 per cent of online searches for retailers with turnovers of more than ?250m come from outside the UK.

It was, of course, e-commerce that has transformed what once was a game of local markets into an international market. Anita Balchandani, Partner at OC&C, commented: ?There are a number of reasons why growth in e-commerce is changing the rules of internationalisation. Firstly, geographical proximity no longer determines which market is best suited for expansion ? the internet allows customers seek out the best offers from around the world. Secondly, the nature of risk has changed. International expansion is much less capital intensive and this is creating growth opportunities which have a more controlled exposure to risk. Thirdly, the speed with which companies expand has also accelerated ? over 40 of Britain?s top-100 etailers serve customers in more than 40 countries.?

This increase in the international sales of British goods by 2020 will come from across the globe, and represents a promising pool of opportunity. The majority of non-UK searches are currently coming from Europe, followed by North America and Asia.

Sales in Western Europe are expected to soar to ?9.8bn in 2020 up from ?1.5bn in 2012. These markets offer favourable trading conditions as a result of low barriers to entry through the European Union, combined with ease of delivery across the continent.

But also in the emerging economies of Central and Eastern Europe and Asia sales are predicted to reach ?6.9bn by 2020 from ?400m in 2012 and ?4.5bn by 2020, up from ?400m in 2012 respectively.

North America will continue to be the single biggest regional market for British online goods, with sales expected to increase from ?0.8bn in 2012 to ?2.7bn in 2020. However, the growth rate will be slower than other countries due to the relative maturity of the market and tougher competition from established national brands.

Retailers can use search data to identify pockets of demand and move quickly to meet the needs of customers. So far, British brands perform strongly across all sectors, with luxury goods, fashion and footwear the star performers.

Businesses such as Farfetch, an online marketplace for the world?s best independent fashion boutiques, are doing particularly well. Farfetch now offers shops from 18 countries and delivers to over 150 countries. It’s not just thanks to the product that the business has such a success story abroad to show for: “Farfetch has had an atypical story because we took a global approach from the very beginning, shipping initially from five countries to the rest of the world,? says Andrew Robb, COO at Farfetch.?

?A core part of our success has been implementing processes that work on a global scale, including customer acquisition, shipping, customs clearance and returns. We currently have operations in Europe, US and Brazil with websites in English, French and Portuguese. We strongly believe that providing a global product proposition with a localised, multichannel experience is the future.?

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