What is the ‘Shopify effect’ and how can it positively impact your small business?

Ecommerce platforms like Shopify continue to help spearhead the online business evolution. We consider how Shopify can help your small business combat the UK’s cost of living crisis.

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Working with Deloitte, Shopify has just updated its Global Economic Impact report to reveal some fascinating and encouraging insights into the ecommerce world.

The fallout from COVID has been so severe that ONS figures published last year revealed that the total volume of retail sales fell by 1.9% in 2020 compared to 2019 – the largest fall since records began.

And yet Shopify merchants in the UK created 197,100 jobs and contributed £12.6bn to the national GDP in 2021. So what explains this uptick, aside from a surplus of office coffee?

The ecommerce platform itself describes this as the ‘Shopify Effect’ – a ripple impact of entrepreneurship that extends far beyond the borders of individual businesses, stretching out to their local communities, families, employees, and suppliers.

To sum it up – for every £1 made by Shopify last year, its merchants made £38.

But how is this so? Deloitte’s Shopify report even suggests that the cost of living crisis is biting online sales. And with ONS figures revealing that consumer price inflation rose by 7% in the 12 months leading up to March – the fastest hike in 30 years – how are ecommerce businesses trading so well?

One of the primary factors is exports. The impact report found that compared to 2020, exports from UK merchants reached £2.7bn in 2021, a huge 43% increase from the previous year.

Exports have become a major earner for retailers as their focus turns to international sales. There might be a cost of living crisis in the UK that is affecting consumer buying habits, but that certainly isn’t the case for every country in the world.

Let's take a closer look at how you can optimise your ecommerce empire and face off the UK’s precarious retail industry by handling exports and selling internationally.

How to set up your business for international sales

Setting up your ecommerce business to sell overseas isn’t as difficult as you might believe. A recent study by consultancy.uk found that over 375,000 UK SMEs are not selling internationally despite having exportable goods.

Whether these businesses are put off by a lack of knowledge or issues caused by Brexit is debatable. What isn’t debatable is the success UK ecommerce businesses are having through exports.

So what are you waiting for? Follow these simple steps to start selling internationally and watch those sales come flooding in:

Choose the right ecommerce platform for your website

Work with a provider that offers high-end customer support and guidance when it comes to shipping internationally. Shopify and Wix are our top recommendations.

Visit our review of the best ecommerce platforms for small businesses to find out more.

Identify your target markets

Consider carefully what countries you want to begin exporting to. Market research is vital – think about your target demographic.

Is your product even desirable in a particular country? You wouldn’t make much money selling loft insulation in Qatar now, would you?

Devise a relevant marketing strategy

A well-established business in the UK may have a foolproof marketing strategy already in place. That is all well and good, but once you start selling internationally you need to also market internationally.

This means your strategy may change depending on the country you are marketing in. In European countries, Instagram is significant and widely used.

Find out how to use Instagram for business with our in depth guide.

Choose payment options carefully

Ensure you offer various payment methods as this will make it easier for international customers to buy from your store.

Pick an order fulfilment centre

One of the biggest headaches of selling overseas is organising the packaging and shipment of your products abroad. By using an order fulfilment centre, you can reduce the time and cost it takes to deliver customer orders.

The centre will hold your stock near your target location, before packing the item and sending it on your behalf when the order is received.

Find out more about order fulfilment services here.

Understand tax rules and regulations

Be sure you get to grips with the latest duties and taxes for each country you are operating in. Laws and regulations change from country to country and mistakes can prove costly for your business. You can usually find this information on government websites.

Figure out your shipping and returns policy

Returning items from overseas is one of the trickier aspects of selling internationally. Order fulfilment companies can offer you an option for returns which can really help.

Otherwise, be incredibly clear about how your returns policy works and the charges involved before any sale is made, as this will keep your customers happy.


The best ecommerce platforms for small businesses

There are two ways you can sell internationally. The first way is using an online marketplace, such as Etsy or eBay. Although this has its advantages, the cost of exporting goods on these platforms can be costly.

However, you can often avoid some of the hassles that come with international expansion, as many marketplaces offer auto-currency conversion and auto-translation.

The second way is by using your own ecommerce website, which can be built using an online store builder such as Shopify or Wix.

This method is less costly and comes with a wide range of customer support options, as well as online resources to help you navigate the world of exporting.

Below is a table summary of the best ecommerce platforms for small businesses. To read more about each platform be sure to check out our dedicated review.

0 out of 0
BEST FOR
Overall Score
Based on our in-depth research and user testing
Pricing
Visit

Wix

Shopify

Squarespace

Square Online

BigCommerce

GoDaddy

All-round ecommerce platform for small businesses

Best range of apps and extensions

Best for ease of use and great design

Best value – start selling for free

Best sales features

Creating a simple online store

4.8
4.6
4.6
4.3
4.2
3.9

£13-£22 per month
£6.50-£11 until 26th of May

$29 – £299 per month

(approximately £21-£220 per month)

£15-£30 per month

Use code “STARTUPS10” to receive a 10% discount on all Squarespace plans

 

£0-£54 per month

£22-£216 per month

£13.99 per month (first term savings available)

Final thoughts

The ‘Shopify Effect’ is real and in the UK especially the move to exporting is helping small businesses combat the volatility of the retail market – caused in large part by the cost of living crisis.

To recap, when setting your business up for selling internationally, be sure to:

  • Choose the right ecommerce platform for your website
  • Identify your target markets
  • Devise a relevant marketing strategy
  • Choose payment options carefully
  • Pick an order fulfilment centre
  • Understand tax rules and regulations
  • Figure out your shipping and returns policy

For further guidance and help on running an ecommerce business, we have a whole content suite of expert articles and information available. If you are just starting out, why not check out our simple guide to setting up an online store.

Ross has been writing for Startups since 2021, specialising in telephone systems, digital marketing, payroll, and sustainable business. He also runs the successful entrepreneur section of the website.

Having graduated with a Masters in Journalism, Ross went on to write for Conde Nast Traveller and the NME, before moving in to the world of business journalism.

Ross has been involved in startups from a young age, and has a keen eye for exciting, innovative new businesses. Follow him on his Twitter - @startupsross for helpful business tips.

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