- Almost half of UK retail SMEs want to invest in flexible payment options (49%) and e-commerce (48%) over the next year
- But cost, market uncertainty and uncertain ROI are barriers to adoption
London 14 August 2019 — 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.”
For more insight on the research, download our full report here: https://www.klarna.com/uk/independents/
Klarna’s top tips for embracing innovation and staying ahead of the game:
- Put faith in flexibility
Flexibility and speed is the new differentiator. In a rapidly evolving and competitive retail market it’s what can set businesses apart. Our research shows that online retail SMEs are worried about the cost of introducing flexible payment options and fear that they’ll lead to an increase in returns.
However, alternative payment methods shouldn’t be associated with spiralling costs and logistical nightmares. Klarna’s research shows that pay later transactions are more cost effective for retailers than card payments, by creating an uplift in sales volume and increased customer loyalty.
- Lean on expert partners to fill knowledge gaps
The very nature of being a small business means having less members of staff on the ground. Whereas larger businesses may have a whole department responsible for looking after transactions, for smaller retailers it may fall to an individual — or to no one at all. Online retail SMEs should look for external insight and lean on partners to help easily integrate innovative payment methods into their checkout processes. This will free up their time to concentrate on other things.
- Investment is key for growth
Given the wider market uncertainty and fluctuating levels of consumer spending, it’s not surprising that some smaller merchants are cautious with their cash. And when it comes to investing in new technologies, our research shows that many online SME retailers feel like they are too small to benefit from investing in new technologies.
But the value of embracing innovation speaks for itself. Innovation can help advance the business goals of any organisation — regardless of shape or size. It’s about having the confidence to take the leap of faith. With a fifth of visits ending in dropped baskets for small retailers, not investing in their e-commerce ecosystem will likely damage the bottom line in the long run.
Beth McHugh / Hannah Collett firstlight PR,
+44 20 3617 7240
About the research:
Survey of 101 UK SME decision makers at online fashion and home retailers conducted by Censuswide in May 2019.
Klarna, the leading global disruptor of payments and banking, and provider of smoooth retail services, was founded in Sweden in 2005. Klarna currently holds a post money valuation of $5.5 billion, which ranks Klarna as the largest private fintech in Europe and one of the largest private fintechs globally. Klarna provides merchants with a flexible range of preferred payment alternatives that enable consumers to easily and securely pay when and how they want everywhere – online and in-store. Over 130,000 merchants, including ASOS, Peloton, Abercrombie & Fitch, Michael Kors, Superdry, Gymshark, Samsung, Topshop, Agent Provocateur and many more have enabled Klarna’s innovative shopping experience, that stretches beyond the actual transaction and also allows consumers to take control over their personal finances. Klarna has 2,500 employees and is active in 14 countries.
For more information, visit: www.klarna.com I @KlarnaUK I #Klarnait