UK ecommerce brands cite shipping costs as biggest risk to growth

Rising shipping costs, that are currently surging due to currency fluctuations, fuel surcharges and inflation, pose the biggest risk to small UK brands, according to ShipBob and CensusWide.

The research reveals that, when asked to rank the challenges that posed the biggest risk to their business growth over the next 12 months, 48% of UK brands selling consumer goods online said rising shipping costs was the most critical factor.

In addition, 42% cited reduced consumer spending and 36% said post-Brexit red tape on EU shipments posed a key risk.

UK ecommerce entrepreneurs have also seen the cost of shipping a shoebox-sized parcel to America rise by nearly a third since May 2021, from £15.73 to £20.56.

This steep rise poses a significant challenge to UK brands’ ambitions to expand into the world’s largest consumer market.

READ MORE: China continues to lead global ecommerce market with over $2 trillion sales in 2022

The report also reveals that North America is the second biggest export market for growing UK brands, with 25% of UK brands currently exporting to North America and 59% selling in Europe. A further 23% of founders said that they would be prioritising the North American market over the next 12 months.

Despite concerns, 92% of UK ecommerce firms expect their revenues to grow within the coming year and 54% predict revenue growth of at least 15%. Moreover, 51% plan to hire at least three new employees over the next 12 months.

“Ecommerce entrepreneurism is booming in the UK but turbulence in the shipping sector is posing a significant threat to this latest generation of online brands,” ShipBob EMEA GM Enda Breslin said.

“Tomorrow’s ecommerce brand unicorns will be the ones that get international sales correct today and we always advise founders to think globally from the start, but external factors like currency fluctuations and fuel surcharges are currently making this more difficult than usual.

“Small brands should still look to expand ambitiously but should pay extra care to do so in a resilient way, making use of the sophisticated ecosystem of ecommerce partners to punch above their weight in the multi trillion-dollar global shipping industry.”

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