Australian small businesses seek global growth amid challenges

A new survey by Sendle has found that Australian small businesses are increasingly looking overseas for revenue growth amid high interest rates and inflation.

Almost two-thirds (65%) of small business owners predict up to a quarter of their total revenue growth will come from international markets this year. According to the survey, 61% of respondents reported that inflation has significantly impacted their businesses more than expected.

Laura Hill, Managing Director of Sendle Australia, said, "As cost of living bites consumers at home, we're seeing growing demand from small businesses to expand their reach in markets like the US. The data shows that attracting new customers continues to be the top challenge for small businesses, so diversifying their customer base across different markets is a sound strategy to weather any economic downturn and future-proof their business in the longer term."

Despite the challenging economic environment, almost half (48%) of small businesses are forecasting growth up to 25% in FY25, a notable increase compared to 23% in 2024. This optimism appears to be driven by opportunities for growth overseas, with 80% of small businesses reporting an increase in revenue growth from international markets over the past six months.

To attract customers in new markets, small businesses are likely to leverage social media as a primary growth driver. A quarter (25%) of the surveyed businesses plan to grow their social media presence and engagement, prioritising these efforts over changes to pricing strategies or negotiations with third-party suppliers.

Nevertheless, concerns remain, as 44% of small businesses are worried about slowing customer demand due to cost-of-living pressures. The survey also revealed that many small businesses might not be adequately preparing for the peak sales season, with the majority (59%) planning for it only 1-2 months in advance.

Hill commented on the trend, "Australian shoppers are increasingly bringing forward their Christmas shopping to October and November to take advantage of key sales events. Our advice to small businesses is the earlier you can plan for peak, the better. Start looking at your sales, marketing, and shipping strategies now to ensure you're in a position to capitalise on consumer demand later."

The survey also explored strategies small businesses are adopting to attract consumers. Over half (58%) plan to offer free shipping this year, with the popular threshold being an AUD $100 Average Order Value (AOV). There is also a growing emphasis on sustainability, with almost a quarter (24%) of small businesses prioritising it highly. An additional 82% plan to implement sustainable packaging in the next six months.

Delivery options and infrastructure sharing among couriers are also significant concerns for small businesses. Over half (53%) use multiple couriers to get the best price, and 55% want more e-commerce parcel delivery options to and from regional and rural areas. There are calls for infrastructure sharing with low-cost carriers (51%), regulation to drive down prices (44%), and improved competition (44%) to enhance the postal and parcel industry in Australia.

Hill stated, "When there is no choice, small businesses suffer. The monopoly that Australia Post has over Independent Community Licensed Post Offices (LPOs) in regional and rural areas effectively locks out other competition and contributes to higher shipping prices and fewer options. That's why Sendle is calling on Australia Post to open up its taxpayer-funded last mile infrastructure to other carriers to provide more delivery options for regional and rural Australia."

The findings reflect the sentiments of a broader survey by Roy Morgan, which found that 61% of retailers in rural and remote areas believe challenges with current delivery services negatively impact their businesses.