The' Britain’s Retail e-mpire’ study by OC&C Strategy Consultants, published in collaboration with Google, finds that while online sales from outside the UK were worth £4bn last year –14% of total online sales – international sales growth is set to dramatically outpace domestic activity to make up 40% of total online sales by 2020.
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. British brands performed strongly across all sectors, with luxury goods, fashion and footwear the star performers.
This increase in the international sales of British goods by 2020 will come from across the globe, and represents a promising pool of opportunity from a range of geographies.
Sales in Western Europe are expected to soar to £9.8bn in 2020 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.
As the emerging economies of Central and Eastern Europe and Asia continue to expand, sales are predicted to reach £6.9bn by 2020, from £400min 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.
The OC&C and Google study also shows that the number of consumers searching online for British brands and retailers from outside of the UK is growing on average by 46% a year since 2010.
Peter Fitzgerald, director at Google, said: "We have seen a significant increase in the volume of searches for British retailers and brands coming from overseas. The majority of non-UK searches are currently coming from Europe, followed by North America and Asia, driven by the increased popularity of British brands abroad. Retailers can use search data to identify pockets of demand and move quickly to meet the needs of customers."
The research reveals that many smaller UK-based retailers – such as Farfetch, Isabella Oliver, Surfdome and Corsets UK – are embracing international opportunities more rapidly than their larger counterparts. Small and mid-sized companies currently receive nearly half (47%) of their online searches from overseas, tend to ship to more countries and offer multi-lingual sites. Conversely, only 13% of online searches for retailers with turnovers of more than £250m come from outside the UK.
Anita Balchandani, partner at OC&C, said: "E-commerce has transformed what was once a game anchored in local markets – with retailers choosing to expand internationally when they reached saturation nationally – into one where they can pursue internationalisation at the same time as domestic expansion.
"It is perhaps no surprise that companies like Amazon and eBay now generate about half of their revenues from international markets in a fraction of the time that it has taken the likes of Walmart and Tesco.
"There are a number of reasons why growth in ecommerce 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."
Google search statistics for circa .500 of UK’s most prominent and interesting UK e-tailers from 2010-12 were analysed to highlight country / region consumer demand trends and retailer / category success stories.
Demand indicators were cross-referenced with primary research recording UK e-tailer international supply including delivery destination, lead times & language options and market growth projections from analyst firms.
This was supported through retail executive interviews adding operational insight from many of the UK’s internationalising stars.