How easily can new businesses reach consumers online?

A new survey has highlighted the main challenges that new businesses face when attempting to reach consumers online.

Respondents to the new report, commissioned the Competition and Market Authority (CMA) – a government body set up to promote competition for the benefit of consumers – said a lack of working capital and in-house digital marketing support made it difficult for companies to set up a successful online business.

A small group of participants, with a turnover of less than £10 million, also felt that finding professional SEO support could be a genuine difficulty, particularly in terms of assessing whether work by SEO consultants was improving rankings.

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More established businesses – in terms of both age and scale – were felt to have an advantage over newer entrants in a number of ways, including working capital and in-house marketing support.

Established businesses also explained that they had an advantage over newer businesses because their web content had been optimised for a longer period of time. As a result, Google was more likely to pick up keywords from their websites when ranking web pages.

High rankings were harder to achieve for new entrants operating in competitive sectors and to address this issue, new entrants looked for other ways to acquire customers – via paid search, for example.

A number of respondents, who had experience of changes in Google policy affecting their search engine rankings, felt that changes to the way in which Google ranks search terms were also a potential barrier for new entrants,” the report added.

In addition, a very small number of respondents felt that SEO was more challenging for new entrants since the top rankings were now taken by paid search entries.

Barriers to expansion were perceived to be similar to some of the barriers to entry, i.e. building the capital needed to invest in increasing visibility via digital marketing, as well as building the capital needed to improve systems to support increased demand.

The overall aim of the survey, which was carried out by Research Works, was to gather businesses’ views on certain aspects of online competition, in order to help the CMA improve its ability to carry out its statutory functions in a world of many online businesses.

The research design comprised 60 individual depth interviews with a sample of online businesses retailing goods and/or services to customers in the UK.

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