New research launched today by global payments provider Klarna reveals that online SME retailers in the UK might be small in size, but are increasingly open to new technologies and innovation to help drive growth over the next year.
The research — conducted across 100 UK SME decision makers at online retailers in 2019 — shows the UK’s SMEs understand the need to embrace flexibility and innovation. Over the next 12 months they plan to prioritise investing in flexible payment options (49%) and e-commerce capabilities (48%) to meet consumer demand for a frictionless shopping experience.
SMEs eager to cater to the ‘want it now’ generation, but must overcome blockers to new tech adoption
Despite their ambitions, the research shows online retail SMEs face a myriad of challenges preventing them from fully embracing innovation. Over half (53%) said the cost of introducing flexible payment options was the biggest barrier to adoption.
The UK’s current turbulent landscape is also inhibiting tech spend; whilst SME online retailers have budgets set aside for investment in new technologies, almost half (48%) cited uncertainty around Brexit as the main reason they’re currently halting investment. This was followed by not knowing what tech will provide the best return on investment (31%).
But SMEs who let this stand in the way could be damaging their bottom line in the long run, especially given 54% said competition from bigger players and online giants is the biggest external challenge currently impacting them.
Enhanced customer experience is key to boosting loyalty
Encouragingly, the research shows that online SME retailers are thinking ahead and have plans in place to boost customer experience within their businesses over the next 12 months. As well as recognising the potential of innovative technologies, they also understand the importance of an omnichannel presence, with three quarters (74%) having created some form of physical experience for their customers in the past.
Yet whilst customer loyalty remains stable, the research shows SMEs are losing more customers than they should during the checkout process; one in five (21%) visits result in a dropped basket — leading to a loss of vital revenue.
Luke Griffiths, UK general manager at Klarna, commented: “Shoppers today demand a frictionless buying experience from browsing to checkout, so it’s encouraging to see that so many online SME retailers are looking to bring new technologies into their businesses to enhance customer experience.
“Introducing new tech, like Klarna’s Pay later and instalment options, is an investment that will pay off in the long run — ultimately leading to greater sales, higher basket value and increased customer loyalty. Being small in size doesn’t have to mean small-picture thinking. SMEs have the advantage of agility, and are often better equipped to do a fast integration than their larger counterparts.”