Small businesses predict major digital shift
Almost half of Australian bricks-and-mortar small business owners (48%) predict their business will operate entirely online in the future, with more than a quarter (26 %) of these businesses foreseeing this happening in the next three years.
Regardless of their future form, 46% of all small business operators predict online channels will account for at least half of their sales in three years’ time, according to the The Economy of Shopping Small report, commissioned by American Express.
While operating solely online is a popular future strategy for Australian small business owners, particularly amongst those in the travel and retail fashion sectors, the research reveals that going digital is not without challenges. When compared to small businesses with a physical presence, today’s online small businesses are more likely to:
• Fear insolvency within the next three to five years - 37% (online) vs. 32% (bricks and mortar)
• Expect declining or flat revenue in the next year - 55% (online) vs. 34% (bricks and mortar)
• Feel less optimistic about the future of the small business sector - 33% (online) vs. 41% (bricks and mortar)
Brian Walker, CEO & Founder, Retail Doctor Group, says, “It’s promising to see Australian small businesses are considering new and agile approaches to business, but this is becoming a necessity when two-thirds (65%) of consumers believe small businesses need to go online if they are going to survive.
“Despite this, the research shows there is a disconnect when it comes to the performance of online businesses. This could be in part due to increasing competition online, as well as a need for more early stage support for new operators. With the right backing and strategies in place, small businesses can succeed both on and offline. Ultimately it comes down to providing an excellent experience that customers will come back for time and time again.”
The research also explored how prepared small business operators are when it comes to taking their businesses into the future. Only 10% state they have a forward-thinking or innovative culture, and a minority (40%) are currently investing in technology. Many small businesses today say they intend to invest in technology but have not yet done so. This includes investing in digital tools such as a website (15%), new customer service technologies (14%) and data analytics and automation (both 12%).
While most small business operators are not yet investing in transformational technology, social media is a popular avenue being pursued for growth. One fifth (20%) of small business operators state they’ve launched or have become more active on social media in an effort to grow in the past year and an additional one third (31%) would like to do so.
Lisa Belcher, Vice President of Small Merchants for American Express, says, “While the future of Australia’s small business sector is still to be written, we can’t take these businesses for granted. Whether they be online or physical stores, we need to ensure there is adequate support in place to help businesses navigate these changes and ultimately thrive.
“Encouraging a forward-thinking and innovative small business community will not only help future-proof the 2.1 million* Australian small businesses that serve our local communities, but will help to drive positivity in both consumers and small business owners.”
To learn more visit www.americanexpress.com/au