Page 1. Bricks Clicks. How to build a thriving ecommerce business

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1 Page 1 ricks licks to How to build a thriving eommerce business

2 ricks to licks Page 2 ontents 03 eommerce projections 04 Introduction 06 Unstoppable eommerce 08 reaking down barriers 09 Learning from others 11 eommerce success in four steps 14 In numbers 15 To summarise

3 ricks to licks Page 3 In 2017 eommerce is expected to continue to grow Growth

4 ricks to licks Page 4 Introduction UK small businesses are currently undergoing rapid change due to challenging and uncertain times. However, within every challenge lies opportunity, and for small businesses the potential to grow through eommerce is now more relevant than ever before. Online sales in 2017 are set to grow by an impressive 10.79% to reach a record breaking 93 billion 1. That s up from a figure of 84bn in 2016 and represents the largest market for online shopping in Europe. UK consumers now account for over a third (34.5%) of all eommerce sales in Europe 2. With these figures in mind, it s perhaps no surprise that UK SMEs are wasting no time in setting themselves up to sell online. In fact, over a third of the eommerce SMEs we spoke to recently began selling online immediately after starting their business. And that figure rose to 50% going digital within a year of launching. In particular, UK start-ups established in the past three years were even more likely to do so: 82% having gone online within a year of forming. This trend isn t true across the board. A significant 20% of SMEs with a POS presence took between five and 10 years to move their business online. We can therefore split the SME market into two broad categories: *The information in this report is built around research conducted by Worldpay in 2016 with insight from 270 SME businesses.

5 ricks to licks Page 5 Digital Natives Young companies usually established in the past two years. They re either online-only businesses or those with both a bricks & mortar and online presence. Digital Dawdlers Those that have taken more than two years to establish an online presence. To find out more about why SMEs are increasingly selling online, the barriers to establishing a successful eommerce business, and some best practices to help overcome common challenges, Worldpay commissioned new research. We interviewed over 270 SMEs from a representative mix of industries, company sizes, trading channels etc. The results have helped us compile the following guide. *The information in this report is built around research conducted by Worldpay in 2016 with insight from 270 SME businesses.

6 ricks to licks Page 6 Unstoppable eommerce The UK s SMEs are quickly moving online in their droves. Why? ecause they want to serve customers across a broad mix of channels and they re focusing their efforts on increasing sales through greater visibility, i.e. online. It s much easier for a prospective customer to find your business via an online search than by any other means today and shopping aggregation sites such as Google Shopping have made that process even simpler. The appeal of eommerce for small businesses is also driven by the prospect of reaching new types of customers whether that s different age groups, those living in different parts of the country, or the world, the potential to expand your customer base and reach a varied type of audience is undeniable when operating an online business. For example, over half (56%) of UK SMEs now sell abroad. What would have been impossible with a bricks and mortar store suddenly becomes a reality thanks to the web, and the wonders of modern delivery services. In short, the web is levelling the playing field so smaller firms can compete with their bigger rivals, and that s great news for the UK s SMEs. Some businesses are also looking to establish an online presence because the start-up costs are often less prohibitive. There s no rent to pay, and staff costs can be slashed two of the largest costs for businesses.

7 ricks to licks Page 7 So, are small businesses seeing a return on their investment online? Absolutely. We found: 57% rated improved access to geographical markets 56% saw access to new demographics 52% trumpeted the ability to sell new products Additionally: SMEs selling online saw an 11% increase in sales on average as a result and a 7% reduction in operating costs. The bottom line is that selling online can help drive sales and lower your operating costs, making a compelling case towards setting up an online business in the UK.

8 ricks to licks Page 8 reaking down barriers The fact is that not all UK SMEs start selling online immediately after setting up their business. The key barriers for them are: Lack of time / capacity Lack of internal expertise Lack of funds w 83% this is especially true of Digital Dawdlers, older companies, and larger SMEs (10-49 employees) 4 70% z see left 62% this particularly affects Digital Natives, smaller firms (<10 employees) and newcomers Evidently, even once small businesses get online, they can be challenged by not having the time, money or skills set to hand to develop their eommerce business effectively.

9 ricks to licks Page 9 Learning from others Faced with the challenge of operating and adapting a small business and establishing an active and successful online channel can be daunting and often overwhelming for many SMEs. Though, as overwhelming as it can be, there are resources and support in place to help. We asked those SMEs who have already reaped the rewards of going digital what advice they would give to help your business maximise its potential online. They overwhelmingly recommended three pieces of advice: Develop a clear strategy This will make sure you stay focussed on the bigger picture and keep your outsourced provider in check. Allow plenty of time utting corners will only hurt you in the long run. Work with a subject matter expert They re experts for a reason, so know when to outsource.

10 ricks to licks Page 10 To this, we d add another important piece of advice: Make sure you get the price right. Going digital might mean cheaper start-up costs than setting up a bricks and mortar store. ut starting a new business whatever the channel is always going to mean a significant outlay. In fact, we found the average cost of settingup online is 6,784. Roughly how much time did you spend setting up your eommerce business? Less than a week 1-2 weeks 2-4 weeks 1-2 months 2-3 months 3-6 months 6-12 months > 12 months 5% 5% 11% 13% 12% 16% 16% 21% Average number of weeks to setup

11 ricks to licks Page 11 eommerce success in four steps: 1 Strategy No two SMEs are the same, so strategies will vary between each business. ut SMEs who ve been there and done that agree that it s vital to spend plenty of time planning as a first stage. Most seem to start small and gradually build out their capabilities. For example, start with marketing and mobile compatibility; and then add SEO, social elements and customer logins. Mobile payments can then be considered once you re more firmly established. 2 Time Think you can set up an online business in just a few days? Think again. It takes 13 weeks on average for UK SMEs before they re ready. And the longer you leave it, the more time it will take. Online only Digital Natives got their business set up in just 10 weeks, as opposed to Digital Dawdlers who waited three or more years to go online (15 weeks). The key takeaways from SMEs we interviewed is that there are no easy shortcuts here. It takes time to formulate a business strategy, find the right experts to bring in, and to refine and tweak things as you go. Even if you bring in those experts, there ll be a fair amount of learning on the job and getting familiar with some subject areas you ve never approached before. Unsurprisingly, building and designing the website was rated the most time-consuming and challenging task of all.

12 ricks to licks Page 12 3 Expertise From setting up the website to sorting out shopping cart, payments, security, sales and logistics, there will certainly be enough to keep you busy. ut where is the best place to start? The biggest challenges for small businesses can be around the technical side of things. After all, who knows how to code? That s why designing and building the website was the most popular task our respondents either outsourced or sought help with from external consultants. Second to this was getting an expert in to deal with payments. There s no right or wrong way to approach this. Every business is likely to have a different mix of in-house skills to utilise. So find out what those skills are, set up a small centralised team to focus on what you re good at, and outsource the rest. Remember: outsourcing doesn t mean losing control. You can and should keep a close eye on your provider to make sure they re sticking to your plans. 4 Funding Last but not least, there s the all-important question of how much to spend on your new online business. Don t make the mistake of underestimating just how much you ll need. Despite the average cost of setting up reaching 6,700, over 70% of SMEs spend less than 5,000. The longer you take to get online the more it will cost: Digital Natives spent 6,054 while Digital Dawdlers invested 7,176. There are not just the initial set-up costs to consider. SMEs reinvest just over a quarter (26%) of turnover back into their business each year. ut the longer you re online, the less you re likely to invest over time. Therefore, newcomers might plough back 31% into their company, while for veterans the figure drops to 24% See chart on page 13 for areas where external experts were used < 1,000 1k - 1,999 2k - 4,999 5k - 9,999 10k - 19,999 20k - 49,999 50,000 >

13 ricks to licks Page 13 Areas where external experts were used Key Payments Website set-up Sales strategy Supply chain and logistics Web design Payment solution set-up Finding payment processor hoosing hosting provider Online business strategy Security requirements compliance Website build Payment integration Shopping cart set-up hoosing domain name Mobile compatibility set-up ustomer returns set-up Shipping and logistics set-up ustomer loyalty strategy 0% 5% 10% 15% 20% 25% 30% 35% 40%

14 ricks to licks Page 14 In numbers 50% 82% 42% 52% 56% of SMEs began selling online within a year of establishing of SMEs who are less than three years old moved online within a year of SMEs say eommerce has lowered their operating costs of SMEs say eommerce has helped them sell new products of SMEs say eommerce has helped them access new demographics 26% 11% 7% Find more resources here of an SMEs turnover is reinvested (on avg.) from eommerce back into their website each year increase in sales (on avg.) from having an eommerce website reduction in operating costs (on avg.) as a result of eommerce

15 ricks to licks Page 15 To summarise Getting online will help you sell more, operate more efficiently and reach markets and customers far beyond the world of the high street. Tackle key challenges by developing a clear strategy from the outset, outsourcing where necessary and setting aside enough time and money to build your company. Remember: the longer you leave it, the more time and money it ll take. Manage it correctly and eommerce can be your fast-track to business success.

16 ricks to licks Page 16 From start up to growing businesses we have a secure online payment solution to meet your needs: Secure online payments The perfect solution for websites and apps. Designed with simplicity and flexibility at it s core. Accept online payments Phone payments Need to accept payments over the phone? Virtual Terminal is perfect for sole sales agents or teams. Take phone payments payments No more chasing payments? Send customisable and trackable payment links in seconds with Pay y Link. Explore payments References This document and its content are proprietary to Worldpay and may not be reproduced, published or resold. The information is provided on an AS IS basis for information purposes only and Worldpay makes no warranties of any kind including in relation to the content or sustainability. Terms and onditions apply to all our services. Worldpay (UK) Limited (ompany No / FA No ), Worldpay Limited (ompany No / FA No ), Worldpay AP Limited (ompany No / FA No ). Registered Office: The Walbrook uilding, 25 Walbrook, London E4N 8AF and authorised by the Financial onduct Authority under the Payment Service Regulations 2009 for the provision of payment services. Worldpay (UK) Limited is authorised and regulated by the Financial onduct Authority for consumer credit activities. Worldpay, the logo and any associated brand names are all trade marks of the Worldpay group of companies.