However, many SMEs are reluctant to commit to major investments, such as in machinery or equipment, in 2025 until they have greater clarity on the UK government’s economic policy.

This lack of commitment is important given SMEs form the backbone of the UK economy: 5.5 million SMEs are active today and play a pivotal role in driving innovation and offering unique and differentiated products and services for consumers to enjoy.

In recent times, SMEs have continued to adopt legacy ways of sourcing, notably via in-person trade shows and physical catalogues or directories, despite the digital alternatives on offer. This has been driven by a myriad of factors, such as limited budgets, with businesses lacking the resources to invest in advanced procurement platforms or e-sourcing tools. Other factors include a lack of knowledge of better processes, with SMEs unaware of digital sourcing options available and/or lack the expertise to leverage them effectively, and an aversion to risk, with businesses taking comfort in their long-standing relationships with suppliers and traditional procurement methods.

However, according to a recent survey by Alibaba.com, things seem to be changing. SMEs are focused on making their operations more efficient. In the context of trade, this means putting more effort into evolving and innovating their product sourcing strategies, with the main goal being to catalyse growth and futureproof the business.

A notable example of this is the shift to new suppliers. According to Alibaba.com, in the UK, more than half of SMEs (57%) plan to change suppliers this year. The key drivers behind this are to bring down costs, respond to the latest consumer trends and ensure supplier reliability.

As part of this shift, there has been increased adoption of digital sourcing channels, such as online B2B marketplaces. Such marketplaces connect business buyers and suppliers around the world, allowing SME buyers to establish relationships with suppliers from the comfort of their own homes, doing away with the need to travel.

In fact, according to Alibaba.com, just under two thirds (59%) of UK SMEs say digital sourcing is more important now compared to this time last year. This shift aligns with a broader trend across Europe, where the number of orders placed by European buyers on Alibaba.com’s marketplace in February increased by 75% year-on-year.

This comes as the platform further integrates AI technologies into its ecosystem. For example, its AI-powered search engine, Accio, leverages natural language processing to enhance the search capabilities of SME buyers, meaning they can intuitively find the products they need. With millions of suppliers catalogued worldwide, Accio connects SME buyers with suitable partners, turning product concepts into successful business ventures. Tools like these help SMEs make data-driven sourcing decisions, cutting both time and cost.

The shift to digital sourcing indicates an increased preference for direct sourcing – buying goods directly from suppliers, rather than intermediaries. This method of procurement offers flexibility, with B2B buyers able to make sourcing decisions at the click of a button, saving time and money. It also offers much easier access to a virtually limitless catalogue of products from suppliers all around the world, allowing SMEs to shop around and get the best deals, overcoming inflationary pressures and driving margin growth.

With SMEs increasingly re-appraising their product sourcing strategies, never have their growth prospects been stronger. However, it is crucial that SMEs adopt direct sourcing in earnest if they are to truly catalyse their growth. What delivers the best return on investments? How can operations be futureproofed to ensure resilience business continuity? All questions point to direct sourcing.

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