By Jonathan Davies

UK online retailers's confidence in their ability to grow international sales is on the rise, according to Royal Mail.

Two thirds (65%) of UK small and medium-sized enterprise (SME) online retailers are aiming to increase international sales in 2015, the research by the postal service found. This is up two thirds on a year ago when just four in ten (39%) said they were planning to increase overseas sales in 2014.

Royal Mail’s annual tracker study into the expectations and challenges facing UK SME online retailers revealed that they will be targeting new international markets to support their growth. Eight in ten (84%) of companies surveyed said they plan to target new countries they do not currently sell to.

SME online retailers revealed are in positive mood for the year ahead with seven in ten businesses expecting overall sales to increase. The optimism for growth — which is up nine percentage points on last year - is despite 76% of SME online retailers saying competition is more intense than a year ago.

The USA has overtaken Europe as the top target for online retailers looking for new international markets, suggesting UK SME online retailers believe there are greater opportunities in the USA. The US economy is forecast to grow at 3.6% in 2015 compared to 1.2% in the Eurozone. Meanwhile, the dollar has strengthened while the Euro has weakened, meaning sterling is more competitive in the US than Europe.

Four in ten (39%) of SMEs surveyed said they would be targeting the USA - up from 23% a year ago. Meanwhile, 30% said they would target European countries.

The study found that Canada ranked third in new international target markets for UK online retailers. Despite the falling value of the rouble and the economic sanctions, 15% of SMEs said they would target Russia this year. Last year only 9% said Russia would be a new target market in the year ahead.

As the best way to develop new sales opportunities, online search activities and targeted direct mail or catalogues ranked top.

Over half (56%) of UK SME exporters said they plan to invest in online search improvements to win new overseas business, up from 32% a year earlier. Meanwhile, 47% of SMEs surveyed said they would use targeted direct mail or catalogues, a rise of ten percentage points on 2014.

Nick Landon, Managing Director of Royal Mail Parcels, said: “Royal Mail’s annual tracker study of UK SME online retailers shows that there is growing confidence that they can grow international sales.

“There is a marked increase in the percentage of UK SME online retailers aiming to grow international sales in 2015, compared with 2014. The study found that UK SME online retailers believe there is strong potential in the USA, which has overtaken Europe as the top target for businesses looking for new international markets.”

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