• 05.07.23

Five reasons to invest in small business e-commerce

E-commerce is surging all over the world, and it’s taking small retail businesses with it. As more consumers embrace the slick experience of buying online, small businesses with e-commerce stores can put their products and brands on a global stage and connect with a huge audience of potential customers.

But not every small business has the tools or the knowledge to take advantage of the opportunity. As e-commerce becomes an increasingly vital part of running a retail business, it’s up to the companies that support small businesses to invest in empowering entrepreneurs to succeed online.

1. Almost a quarter of retail sales in 2025 will be online

The more digital our lives become, the more our use of e-commerce grows. According to an Insider Intelligence report on the global e-commerce market, online sales accounted for a fifth of all retail sales worldwide in 2022. By 2025 that share is expected to rise to 23.6%, with the total of online retail sales projected to exceed $7 trillion.

While today’s major online retailers will take a significant share of those sales, so too will small businesses. Even though the majority of SMEs have fewer than 10 employees, they are the backbone of the global economy, accounting for more than 90% of all businesses worldwide.

The more that larger companies invest in helping small retail businesses get online, the more they will be able to take advantage of the e-commerce boom. Because while they may be small businesses today, the global market they can reach via e-commerce will set them on the road to becoming the big brands of tomorrow.

2. 48% of consumers want small businesses to offer better prices

A 2021 Avions report into US e-commerce habits found that close to half of consumers want small businesses to focus on offering fair prices as a way of gaining more trust. On top of that, 27% also said they expected an easier online purchasing experience. While that sounds like something for the businesses themselves to solve, it’s also an opportunity for the companies that support them.

Affordable digital tools like white label website builders and e-commerce stores can be part of the solution. If the companies supplying software to small businesses develop their own from scratch, it usually comes at a higher cost – a cost that small businesses have to pass on to their customers to make a profit. But white label solutions are a cost-efficient way to offer those tools, and can have a domino effect in bringing down prices for the end consumer.

Banks can also play a role here by uniting e-commerce and open banking. By connecting online stores to open banking APIs, small business owners can bolster their online customer experience with lower transaction costs, faster payments, and greater security for customer card details.

3. 73% of Gen Z consumers will happily pay more to sustainable brands

Generation Z is often perceived as being more driven by their values than older generations, and that’s regularly reflected in their buying habits. A report from First Insight found that 62% of Gen Z consumers prefer to buy from sustainable brands, and almost three quarters would be happy to pay more to support them.

The rise of values-driven shopping presents an opportunity for small businesses to seize the attention of the next generation. With the right support to get them into the e-commerce market, small businesses have a digital platform to promote their purpose and their ethical products to a global audience that’s ready to pay more for what’s right and trusts small businesses to deliver it.

4. Only 4.3% of e-commerce sales happen on social media

Social selling or social commerce has become a hot topic in the e-commerce world in recent years, with social media platforms like TikTok and Instagram adding the ability for users to buy products directly through the app. But while social e-commerce is on the rise, according to Business Insider it still only accounts for 4.3% of retail e-commerce sales in the US.

That number will surely grow as more platforms integrate shopping and checkout features to their apps and consumer trust evolves. The digitally native Gen Z will also play a part, particularly as their younger members enter the workforce and their purchasing power increases.

But for now, it shows that social media selling isn’t necessarily a way for small e-commerce businesses to shortcut getting online. For the large companies that support small businesses, the goal should still be helping them to build websites and e-commerce stores, even if those are supplemented with social selling.

5. More than 2.5 billion e-commerce shoppers are in Africa and Asia

While the e-commerce boom is a global phenomenon, the shape of things in Africa and Asia is especially interesting for small businesses and their supporters. According to a 2021 ecommerceDB report, Asia has by far the largest share of e-commerce shoppers with more than 2.3 billion regular users. Meanwhile Africa’s e-commerce market is growing fastest of all as smartphone adoption soars across the continent.

This illustrates the possibility e-commerce represents for the small business market. Not only can existing small businesses potentially reach customers in every corner of the world, but budding entrepreneurs can also launch successful e-commerce businesses wherever they’re located.

For the companies that champion small business success, that also means there is a vast global market of e-commerce business customers waiting to be served. Whether that’s banking, telco and hosting partners offering additional digital tools to get entrepreneurs online or super apps building a hub for new small businesses, the opportunity is there to help small business owners catch the wave of e-commerce.

We’re on a mission for tech democracy for small businesses – are you in? Request a demo of our software, or get in touch to see how we could collaborate.

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