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Smaller firms need to up their online sales drives

Smaller UK firms produced online trade figures of £36 billion last year, but that is a fraction of what could be achieved, a new report has suggested.

Despite the multi-billion pounds worth of sales, a new study from the Centre for Economic and Business Research (CEBR) has revealed that small businesses managed to conjure a mere 2.4 per cent their yearly turnover electronically.

This compares unfavourably with their larger counterparts. Firms with more than 250 employees enjoyed £394 billion of online business activity, representing some 18.7 per cent of total turnover.

A survey of 500 smaller firms found that a significant number are failing to take advantage of the benefits that internet retailing, sales and marketing have to offer.

Some 46 per cent of small business respondents made no money online at all, while 38 per cent made no investment in such internet opportunities as email promotions and search engine optimisation.

Those who fought shy of the internet said they did so because they doubted the benefits it would bring to their businesses (46 per cent) or because they thought online trading was best suited to larger enterprises (35 per cent).

The research comes against a background of increasing consumer access to high-speed broadband and a greater willingness among shoppers to purchase online.

Phil Kingsland, of knowthenet.org which commissioned the study, said: "Small businesses are beginning to make considerable amounts of money online, [but] many don't yet see its full potential.

"There are limitless possibilities for small businesses to profit here - either by selling goods and services directly, or by marketing themselves to customers."