Small businesses who adopt online retail channels earn 2.2 times more than those who do not, according to new research by Mandela. While offline businesses have an average revenue of $1.7m, those who have online channels make $3.6m – a steep difference.
Not only are these tech-savvy entrepreneurs earning more, they are also 45 per cent more productive than their offline counterparts. Of the Australian businesses selling on third-party platforms, apps, or marketplaces, 37 per cent export overseas. In comparison, just two per cent of offline-only businesses exported.
It’s clear that the online space can be a massive boon for small businesses. Despite this, just 12 per cent of all small businesses in Australia use online retail channels.
Why are so many staying offline? Mandela partner Dr Adam Triggs cited lack of awareness as a big barrier to adoption.
“Too many businesses don’t know how these online channels work and what they can deliver for them,” he explained. “The same is true for other digital technologies where the biggest barriers are more often than not a lack of awareness and understanding.”
The report also cited lack of time, business-owner age, business stage, and poor internet connectivity as common reasons for businesses to stay offline.
What if more small businesses took the plunge?
According to the report, if SME adoption of online retail channels rose by just three per cent, it could have enormous impacts on the economy. Triggs said that even a small rise would lead to a $1.6 billion increase in Australian GDP, equivalent to $154 per household per year.
“Online retail channels have revolutionised the way small businesses can compete, but the exciting thing we see in this research is just how much potential we still have left,” said Triggs.
“We know Australian consumers are now well and truly primed to make purchases online so we could achieve economy-wide productivity gains through the implementation of policy settings that encourage SMBs to adopt online retail channels.”
