A quarter of SME online retailers plan to focus on improving their delivery and returns processes in 2013 as the sector becomes more competitive.

A study commissioned by Royal Mail revealed that small online retailers will prioritise improving their delivery and returns services above improving the range and quality of products they sell and pricing more competitively.

Over half of the small e-tailers questioned saw an increase in sales last year. Some 64% are confident that sales will rise in 2013, despite 57% stating that attracting new customers is their biggest challenge in regard to increasing sales.

The research also found that 36% feel that building customer loyalty is a "key challenge".

Royal Mail Parcels MD Nick Landon said: “Our study shows that online retailers are responding to the needs of shoppers to grow sales in an increasingly competitive marketplace.”