One in six e-tail SMEs are planning to expanding into physical stores over the coming year in the face of increased competition in the online retail market, a study by Royal Mail suggests.
The annual tracker study, which covers some 400 SME online retailers, found that 16 per cent expect to either open a physical store or seek space in one to increase sales. In addition, 15 per cent were planning to expand by using online marketplaces to sell their goods.
The study also found that new entrants were increasing the level of competition in the online market. Some 54 per cent of more than 400 UK SME online retailers surveyed believe competition for online shoppers is more intense than last year. 59 per cent said this was because there are more web sites to compete with. 57 per cent said customer price sensitivity was a reason for increased competition.
Not surprisingly, pricing more competitively has overtaken increasing the range of goods available as the top priority for increasing customer satisfaction.
Increasing the quality of products was the third most popular priority for 2014 despite being ranked the top reason for customer satisfaction both last year and in 2012.
Royal Mail’s annual tracker study into the expectations and challenges facing UK SME online retailers revealed more than half (
Some 56 per cent were confident sales would increase in 2014, but this is down on the 64 per cent who were confident of growing sales a year ago.
Nick Landon, managing director of Royal Mail Parcels, said SME online retailers were concentrating on exploiting as many channels to market as possible, adding space in physical premises and online marketplace listings to complement their existing web channel.
“In addition, they are concentrating on how to price competitively while increasing the range and quality of their goods.”