By Roland Palmer, General Manager of UK, Benelux & Nordics, Alibaba Group
SMEs are currently facing a perfect storm of macroeconomic challenges, most notably rising costs and supply chain disruption. These are having a significant impact on the usual course of business. In light of these challenges, many SMEs have turned to – and adopted – new ways of working. Online sourcing is one such example. In fact, according to Wunderman Thomson, 49% of all B2B spending is now online – a figure expected to increase to 57% within five years.
Whilst B2B online marketplaces are still lagging behind their B2C counterparts – 46% of global B2B buyers say they are frustrated with buying B2B products online – they do much to help SMEs build resilience against – or even solve – painstaking procurement challenges. This will remain a key area of focus for many UK businesses throughout 2023, as global supply chain disruption continues to cause havoc.
One of the biggest challenges facing SMEs is fulfilment disruption. A recent survey by RSM UK found 38% of UK businesses that have experienced supply chain problems have seen an overall decline in customer satisfaction, and 28% have lost one or more key customers. In response, over the past year, more than 44% of businesses have switched to a new supplier, with 13% citing demands for a larger product range; 12% citing logistical reasons; and 12% citing difficult returns processes. Online B2B marketplaces help de-risk supply chains, connecting businesses with an almost unlimited number of suppliers around the world. In this way, SMEs can build an ecosystem of suppliers, reducing the risks associated with sourcing from just one supplier, or location. Ultimately, this helps fulfil orders on time, maintain customer satisfaction and ensure return customers.
Another key challenge for SMEs is inflation. In the UK, prices rose by 10.4% in the 12 months to February – the fastest for 30 years. This is having a profound effect on prices of products and materials. During this period, therefore, keeping costs down and maintaining margins will be a key driver of growth for SMEs. B2B online marketplaces are a great solution; with a multitude of different suppliers in operation, competition is fierce, and prices are kept low. SMEs can shop around and compare the most competitive prices from suppliers from around the globe, enabling them to cut costs and maximise returns.
Lack of product differentiation is an additional challenge for SMEs. B2B marketplaces provide access to millions of new products from suppliers across the globe. In this way, SMEs can find the most innovative and cutting-edge products and continue to surprise and delight their customers. At this year’s Alibaba.com March Expo, the categories that achieved the highest year-on-year growth include apparel (27%), home and garden (27%), personal care and household cleaning (24%), pets (14%) and mother, baby and toys (12%). These figures clearly indicate a strong desire amongst buyers to shift to online sourcing as an opportunity to drive growth. Product customisation is also a rising trend. Powered by technology, buyers are able to build their own personalised products with 2D and 3D design tools on B2B marketplaces. This presents a significant growth opportunity for B2B buyers to truly differentiate their offer.
Online sourcing is clearly the future. The advantages that online B2B marketplaces provide and the way in which they mitigate risks traditionally associated with SME growth means they are a reliable way for businesses to harness their full growth potential. Those who choose not to source in this way may risk being behind.