US, China and India earmarked for UK e-commerce expansion, new report shows

UK e-commerce business leaders are turning their attention to high growth consumer markets in the US, China and India, according to a new report commissioned by business process outsourcing provider (BPO) arvato and World Business Research (WBR).

The research, which surveyed 78 UK e-commerce CEOs, managers and executives working in the beauty, fashion, FMCG and luxury sectors, reveals that 37% of British firms are looking to grow their e-commerce offerings in the US, with 33% and 30% targeting the Chinese and Indian markets respectively.

In addition, 24% are planning to expand their business into Europe, with a third of the companies researched already having an online presence on the continent.

UK firms in fashion and beauty e-commerce are set to be the most active in the US, China and India, with 42 % and 40% respectively planning for expansion in these markets. However, more than one in three companies across both sectors have undefined timescales for growth, with 15%  looking to implement their strategies over the next one to two years.

In comparison, 24% of businesses in luxury and fast moving consumer goods (FMCG) plan to develop an offering in the US, China and India, with seven per cent looking to expand over the next couple of years.

Tony Matthews, head of e-commerce at arvato UK, said: “International markets have a lot to offer British firms in e-commerce thanks to increasing activity on digital channels and a growing volume of digital savvy, middle class consumers with high purchasing power. However, establishing a new market presence can be a considerable challenge, and the high percentage of undefined timescales highlights nervousness among companies when it comes to expanding into new regions. In light of this, UK firms are increasingly looking for help, and are turning to external partners for assistance in handling parts of their e-commerce business.”

The research found outsourcing to be a popular strategy for firms handling e-commerce with 47% using an external provider to deliver one or more functions – online marketing, logistics and fulfilment as well as website operation and development are the most popular functions for businesses to source outside the firm.

A high proportion of those in fashion – 57% – are using an outsourcer, with 37% contracting out their website development, which is more than double that of the other three industries researched. However, while only 24% of those in the luxury sector have an outsourcing partner, over a third engage an external supplier to deliver their online marketing.

Over half of firms considering external providers plan to use them in their operations on the continent, with the main focus on customer care and forward and reverse logistics. This is in contrast to 14% in the US and 29% across APAC.

Matthews said: “International growth into new regions requires in depth regional knowledge, technical capability and supply chain expertise, and external providers can help companies deliver successful market entry. Outsourcing can lower the barriers businesses face when expanding into new markets, providing the necessary economies of scale and local know-how to deliver successful expansion.”