This Week's Ecommerce News In Brief - Oct 31

The Stable team have rounded up the top five stories of the last week in one place so you can stay on top of the latest trends impacting UK ecommerce businesses.

TikTok launches ‘Shop Local’ scheme aimed at UK SMEs

Link: Ecommerce News

In a nutshell: To promote products offered by UK SMEs, TikTok have launched a new programme and funding competition dubbed ‘Shop Local’. To be in with the prospect of being awarded one of five grants of £150k each, UK businesses must create and share a TikTok video showcasing their offering to their local community, including a hashtag and @-mention, as well as sell local products, employ no more than 250 people, and not yet be active on TikTok Shop.

Why it matters for finance leaders:

• UK SMEs can access a large consumer-audience channel (TikTok Shop) specifically for local UK goods to drive incremental revenue.
• CFOs will need to evaluate the incremental marketing, fulfillment and platform-fees cost vs. the revenue uplift. For example, do margin and cash-flow hold up when using this channel?
• It also means revisiting channel strategy, particularly the risk of it displacing other channels or requiring new fulfillment and inventory models (impacting working capital).
• The scheme comes with support from TikTok (from a £750k fund) for five selected businesses, meaning finance teams should assess eligibility, associated commitments, and how this can be leveraged.

Research: Nearly half of UK SMEs plan to increase spending on product innovation despite cost-pressures

Link: PR Newswire

In a nutshell: Nearly half of UK-based SMEs surveyed by the Chinese ecommerce behemoth Alibaba plan to increase investment in product innovation and R&D over the next 12 months, even while facing cost-pressures and economic uncertainty. Among those investing more, the focus is on improving existing product quality, responding to customer needs, and gaining competitive advantage. However, key barriers remain: half of SMEs say innovation is too costly, 58% cite high costs for sourcing new products, and 32% say they lack the resources or pace to keep up with change.

Why it matters for finance leaders:

• Innovation investment (R&D, new product lines) is a strategic cost with delayed return. CFOs must model the pay-back horizon carefully, especially in an uncertain economy.
• Budgeting pressure: allocating funds to innovation means less allocation elsewhere (such as marketing and operations), so CFOs need to assess opportunity cost.
• Risk & financing: many SMEs cite the cost of innovating/financing innovation as a barrier, so finance teams should evaluate whether to deploy internal cash flow, borrow, or seek grants or tax credits (such as R&D tax relief).

Returns behaviour: UK online sellers making headway against ‘serial returners’

Link: Startups.co.uk

In a nutshell: The share of UK online shoppers classified as ‘serial returners’ has dropped from 12% to 8%, saving retailers an estimated £1.7 billion. This shift is giving smaller ecommerce brands breathing room to tighten returns policies and reduce the drain on profits, cash-flow and logistics.

Why it matters for finance leaders:

• Returns and refunds are a hidden drag on profitability, working capital and forecasting. The reduction in returns means potential improvement in net revenue retention and lower cost of returns processing.
• Impact on cash-flow: fewer returns mean fewer refunds, less reverse logistics cost, less inventory returning to stock. Finance directors should update forecasts to reflect this tail-risk reduction.
• Margin improvement: If returns shrink, margin leakage from returns (shipping, restocking, markdowns) reduces, which should be reflected in margin modelling.

Financial literacy gap among UK business owners flagged as hampering growth

Link: Startups.co.uk

In a nutshell: A survey conducted by Xero found that 38% of UK SME owners didn’t know whether their business was profitable in the last month, and 55% admitted they avoid dealing with their finances. These financial-literacy gaps are leading to mistakes, missed opportunities, and weaker cash-flow management for their businesses. 

Why it matters for finance leaders:

• If founders/CEOs of SMEs lack sufficient financial knowledge, it increases risk: poor cash-flow management, weak forecasting and oversights in cost allocation. The finance director/CFO must often fill this gap, raising the bar for governance and internal controls.
• This means finance teams should consider how to build internal training, robust reporting and dashboards to mitigate risk, especially in e-commerce which has so many moving parts (platform fees, returns, inventory, fulfilment).
• External funding & investor credibility: investors and lenders may judge an SME’s growth potential by its financial maturity, so weaker financial literacy may increase the cost of capital or limit access.
• Strategic planning: CFOs must expand beyond the typical remit of their roles and ensure the business understands the financial implications of e-commerce channel shifts, returns and fulfillment costs.

External finance use by smaller businesses remains stable while SMEs face ongoing pressure

Link: British Business Bank

In a nutshell: Use of external finance among UK smaller businesses remained largely stable in 2024, with usage dipping marginally to 45 %. Meanwhile, the proportion of these businesses that are open to seeking external finance for growth rose by five percentage points to 38%, though 19% still believe obtaining such finance would be difficult.

Why it matters for finance leaders:

• Even though e-commerce growth is strong, many SMEs are topping up growth or working capital via external finance. Finance directors must evaluate not only growth investments but the cost and structure of that financing.
• Some SMEs may be holding back (less aggressive growth) due to financing constraints. CFOs should assess whether their business is financing-constrained and if that inhibits e-commerce expansion.
• Rising cost of capital means that finance leaders must stress-test scenarios: if growth slows, servicing debt becomes more onerous. This is highly relevant in e-commerce where cash-flow can be volatile due to returns and seasonality, in particular.