NEARLY HALF OF UK SMES TO DOUBLE DOWN ON PRODUCT INNOVATION DESPITE BATTLING RISING COSTS
-New research from Alibaba.com reveals increasing importance of product innovation as it gears up for CoCreate Europe, its flagship SME event-
LONDON, Oct. 23, 2025 /PRNewswire/ -- UK small and medium-sized enterprises (SMEs) are planning to invest more in product innovation over the next 12 months, according to new research from Alibaba.com, a leading platform for business-to-business (B2B) e-commerce.
The research of 1,000 decision makers across SMEs in the UK revealed that nearly one in two (48%) is planning to spend more on product innovation and research and development, despite economic uncertainty and rising costs. Over three-quarters (86%) of UK SMEs surveyed said product innovation was an important factor in the growth and success of their business, underlining the positive impact of coming up with new ideas and making those ideas a reality.
Of those SMEs planning to invest more in product innovation, more than a third said their investments would focus on improving the quality of existing products (35%) and responding to customer needs (33%). Just over a quarter (27%) of SMEs are hoping to leverage product innovation to gain a competitive edge over other businesses.
While UK SMEs demonstrate a strong innovation mindset and determination to differentiate themselves, they face several barriers. Half of all UK SMEs (50%) said that the cost of innovating or financing innovation is too expensive, and almost two-thirds (58%) cited high costs as a challenge to sourcing new products. This reflects broader macroeconomic challenges facing UK SMEs – according to the British Chamber of Commerce, 57% of UK businesses are concerned about inflation.
A lack of resources was also a noticeable barrier to product innovation. Nearly a third of UK SMEs (32%) said that they struggled to keep up with the pace of change which deterred them from focusing on product innovation in their business. Meanwhile, over a quarter (26%) lack the in-house resources to drive it forward, and one in five (20%) said they don't have the necessary expertise or knowledge. This echoes the UK Government's Small Business Plan, which highlighted that SMEs need better support to identify and adopt digital technologies.
To address this, UK SMEs are turning to AI tools to support product innovation. According to the research from Alibaba.com, nearly two-thirds (59%) of UK SMEs feel confident using AI tools for product innovation.
The new findings come as Alibaba.com prepares to host CoCreate Europe, its flagship B2B event in Europe. After several successful editions in Las Vegas, Alibaba.com will host the event in Europe – taking place in London on 14 November – for the first time. This will bring together SMEs, entrepreneurs, manufacturers and investors for a full-day programme of product innovation and business building, offering advice on how to cut business costs, build resilient supply chains, and harness AI for growth.
CoCreate Europe will also host CoCreate Pitch – the world's largest product-based pitch competition. On the 14th November, 30 finalist SMEs will pitch their most innovative product innovations to a judging panel. Ten winners will receive $20,000 worth of prizes, while the grand winner will receive $200,000[1] to help develop their product, out of a total global prize pool worth $400,000[1].
Kuo Zhang, President, Alibaba.com, said, "Our findings underline a simple truth: for UK SMEs, product innovation is the path to growth. They're pushing ahead despite costs and resource pressures, asking us to take the friction out. "
"With CoCreate Europe in London this November, we're answering that call, bringing entrepreneurs, SMEs and manufacturers together with practical, hands-on advice for 2026: quicker supplier discovery, lower-risk pilots and AI that amplifies small teams, enables faster concepting and smarter supply matching. London's creative heartbeat and Europe's ingenuity make this the ideal place to learn, test and build - together."
CoCreate Europe will provide insights on - and access to - Alibaba.com's cutting-edge tools, supplier network, and AI-powered sourcing tools AI Mode and Accio that automate the entire sourcing process, connecting buyers with 200,000+ verified suppliers across 76 industry categories and 200 million product listings. In addition, it will highlight its Trade Assurance which helps SMEs gain greater confidence and reliability in their supply chain. Combined, these offerings save SMEs time and allow them to focus on growing their businesses.
CoCreate Europe will take place on 14 November 2025 at the InterContinental London at the O2. Tickets are available to purchase at https://www.alibabacocreate.com/
| [1] CoCreate Pitch total cash pool comprises 50% non-dilutive prize and 50% in credits and support. |
About Alibaba.com
Launched in 1999, Alibaba.com is a leading platform for global business-to-business (B2B) e-commerce that serves buyers and suppliers from over 200 countries and regions around the world. It is engaged in services covering various aspects of commerce, including providing businesses with tools that help them reach a global audience for their products and helping buyers discover products, find suppliers and place orders online fast and efficiently. Alibaba.com is part of Alibaba International Digital Commerce Group.
Notes to Editors
Methodology:
The research was conducted by Censuswide, among a sample of 1,000 SME Decision Makers (aged 30+) across the UK. The data was collected between 13.10.2025 - 20.10.2025. Censuswide abides by and employs members of the Market Research Society and follows the MRS code of conduct and ESOMAR principles. Censuswide is also a member of the British Polling Council.
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