Small businesses run big risk in the face of digital economy

Small businesses are failing to embrace technology in the age of the digital economy, and many seem oblivious to larger and online businesses who threaten to take them out of business, according to the American Express Economy of Shopping Small: Keeping it in the Community report.

Only 38 per cent of small businesses feel under threat from large online businesses and a similar number (37 per cent) are concerned about larger bricks and mortar rivals. This begs the question: are small businesses complacent to the potential impact that tech-savvy large and online businesses pose?

Katrina Konstas, American Express’s Vice President for Small Merchants, said there is huge opportunity for small businesses to capitalise on technology innovation to support their success.

“Small businesses need to focus on what’s important for their customers in this new digital age, and offer that unique, personalised customer service that the big end of town can’t. If they don’t act now, there is a real risk small businesses will be left behind,” Konstas said.

When there is such fierce competition continually entering the market, it is a concern small-business owners aren’t prioritising investment in technology to meet customer demand.

According to the research, consumers believe that technology offers greater convenience, with the majority saying a basic website is the most important tech investment for a small business. This is followed by online sales or booking functionality and social media channels.

In contrast, only 52 per cent of small businesses have some form of website, with 24 per cent saying they have no intention of ever getting one. On a positive note, almost half of small businesses use social-media marketing and a further 24 per cent plan to do so. Twenty-seven per cent expect to incorporate more technology into daily operations and 24 per cent are targeting increased online sales.

Konstas said, “Ensuring small businesses have a good website and social media profile means they not only protect their customers, but gain further reach and opportunities for referrals, so they thrive for generations to come.”

Business owners cite funding, lack of time or technical expertise as the biggest barriers to implementation. The exception is casual and fine dining businesses, which have embraced sites like Deliveroo, Foodora and Menulog to introduce or widen delivery services.

The research also revealed that rising energy prices (55 per cent), and managing costs and overheads (53 per cent) are what’s weighing most heavily on the minds of small-business owners this year. This differs from 2016 where attracting and retaining customers was the number one concern.

“While energy costs and overheads might be keeping small-business owners up at night, it’s important they don’t lose sight of how they can keep their customers happy and loyal. That could mean investment in new ways to attract and retain customers, or finding additional distribution channels,” Konstas said.

“While small businesses have a way to go in adopting technology that meets consumer demand, I urge all Australians to support them. With almost one in 10 unable to see how they’ll stay open beyond this time next year, and a similar number often thinking about shutting up shop, Australians have a crucial part to play to ensure we have thriving small-business communities in the future,” Konstas concluded.

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