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Small brands will prioritise working with retail partners across a range of channels over the next year – ahead of selling direct to their customers: study 

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Almost half of small retail brands say they will prioritise working with retail partners through their marketplaces, stores and websites over the next year, rather than selling direct themselves, a new study suggests. The study also found that reshoring manufacturing could be a priority for many as the cost of shipping rises. 

The CensusWide study, carried out for International fulfilment company ShipBob, questioned 750 founders of UK retail brands that sell online and have between one and 50 members of staff, and found that 47% would prioritise working with retail partners to sell via third-party websites, shops or marketplaces. Selling direct themselves was a priority for fewer than one in five (19%). The rise comes as customer acquisition costs continue to rise. In 2022, suggests the study, brands lose an average of £24 for every new customer they acquire – following a 223% rise in customer acquisition costs since 2013. 

Four in 10 (40%) respondents said that increasing their domestic sales would result in the fastest growth in the coming year, while 38% said moving their manufacturing operations to the UK from overseas would help them to avoid the challenges and costs of importing and shipping goods. Just under a third (31%) said overseas exports would provide the most growth for their business. 

When asked which changes in consumer habits they had most noticed over the last year, just under a third (32%) found shoppers were less willing to pay for shipping than before, while a similar proportion saw customers ordering more frequently (31%) and with higher expectations of fast delivery (30%). 

Enda Breslin, EMEA GM of US-based cloud logistics platform ShipBob, says: “Spiralling shipping costs are now strangling the growth of the UK’s blossoming ecommerce entrepreneurship sector as brands begin to neglect cross-border commerce. International sales are the quickest way to grow an ecommerce business, so while it’s understandable that many will look to protect bottom lines by focusing inside British borders, it will mean that UK brands won’t scale as fast as they should be. Small brands should still look to expand ambitiously but should pay extra care to do so in a resilient way, as making use of the sophisticated ecosystem of ecommerce partners. Choosing fulfilment partnerships carefully will help small brands position themselves closer to their overseas customers and level the playing field with local competitors when it comes to shipping speed and cost.”

In context

The study comes at a time when more large retailers are shifting from the role of retailer to the role of platform, adding third-party brands to their range via marketplaces or brand-led retail sites. B&Q and Superdrug are among the retailers that have recently launched marketplaces in order to expand their ranges – attracting brands through the scale of their own reach – while Next chief executive Simon Wolfson has said the internet now enables new brands to grow more quickly than in the past, but that businesses like the one he leads can benefit by taking on the role of online aggregator instead.

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