The environment is finally ripe in 2021 for your small business to transition online.
Is Your Small Business Operating Online? It Should
The COVID-19 pandemic forced hundreds of thousands if not millions of successful and profitable businesses to shut down forever. Top-quality enterprises that existed for decades were the unfortunate victim of operating in an industry that couldn’t survive during the pandemic for one reason or another.
The reality is many of these viable businesses failed to adapt to an online business model. The advancement of technology and the ability to precisely target customers online means it has never been easier to operate digitally.
Government entities and financial institutes worldwide scrambled as early as March 2020 to support the small business community’s digital shift. For example, Canada’s simmering online banking sector coupled with multiple financial support programs from all levels of government gave small businesses a fighting chance of remaining relevant.
The Time Is Finally Right To Operate Online
Operating an online business makes financial sense in theory but it wasn’t until very recently it became a viable option.
Small businesses that manufacture a product sold at a big box store, or operate their own physical brick and mortar store face extra costs that eat into profit margins.
Think about: a small business that supplies a product to a Walmart has to obviously compensate the corporate giant for the right to sell their product. Companies that operate their own storefront have to pay rent, insurance, and salespeople for the same product that can be sold online at a fraction of the total cost.
Amazon welcomed third-party sellers on its platform in 2006 but with a few major strings attached: Most notably, Amazon keeps customer information for themselves and can potentially leverage this data at any point to start manufacturing its own competing products.
Sure, selling on Amazon was a good option for small businesses but it was far from ideal. Customer data is among the most valuable and important assets. Amazon’s insistence on keeping it for himself was a dealbreaker for many small business owners.
But several key developments in 2019 and 2020 ushered in just in time an environment that has never been more favorable for small businesses to fully transition to an online model. Here are a few examples:
- Shopify announced an expansion into logistics and two-day delivery options.
- Facebook launched Shops, a free to set up online store on Facebook and Instagram.
- Etsy introduced Saved Searches, a feature that lets buyers indicate a particular interest.
The shift towards online shopping certainly predates the era of COVID-19 but the pandemic merely sped up the adaption. Billions of consumers worldwide had no choice in 2020 but to shop online. Senior citizens became just as familiar with online shopping as their millennial grandchildren in a trend that will merely continue, likely indefinitely.
Physical Retail’s Pending Demise
The future of shopping will continue shifting towards online venues well after COVID is a distant memory. According to retail expert Doug Stephens, the majority of our daily consumption will take place online by 2033.
“If you stand on any metropolitan street corner in North America, 99% of the retail you will see around you was built to succeed in the 20th century,” he said. “Sadly, this means it’s built to fail in the 21st century.”
He has a point. In 2021 and beyond, customers want to find an item with a few clicks on their phone, not spend time and effort driving to the mall. Businesses can leverage this reality and show digital customers more of their items or even have an opportunity to present a targeted offer, such as a coupon.
This isn’t to say that the death of physical retail is imminent. Surely, malls and stores will continue existing in some capacity indefinitely. But it will certainly play a different role as the future of retail will integrate augmented and virtual reality, the internet of things, among other new-age inventions.
While this reality is still many years away, small business owners will ultimately have to decide if they want to be part of this future or opt for a much easier time navigating the online universe.
Success Story Example
“Shark Tank” co-host and celebrity entrepreneur/investor Kevin O’Leary is an authoritative figure when it comes to successfully investing in small businesses. O’Leary provided an example in a blog post of how a small business that was half reliant on physical retail found success online in 2020.
The company is called Love Pop Cards and sells 3-D printed greetings cards. Once COVID struck, the company lost its entire physical retail presence, and by default, sales plummeted 50% nearly overnight.
Faced with the prospect of closing for good or surviving to fight another day, the company quickly leveraged its basic online presence to heavily promote items associated with the closest holiday, Mother’s Day.
The company created a new 3-D bouquet of roses that ended up nearly replacing all of its lost retail sales. The tens of millions of people that wanted to buy flowers for their mother during the unprecedented and scary times was difficult, if not impossible as flower distributors were mostly shut down.
The successful pivot comes with added advantages. Since the company sold the product directly to customers, it offered much higher margins. In addition, the company proved it can thrive in a digital reality so now it can start looking at how to slash unnecessary retail and physical expenses to help lift margins even higher in the future.
“This company that I would have thought would be on my list of potential failures is actually one of my best-performing assets right now,” O’Leary said.
Conclusion: Don’t Wait To Transition
As each day passes that a small business isn’t operating online, they are losing out on potential sales. Small business owners need to understand there is an entire group of customers already shopping online.
The question is do you want to start targeting them for your business today or let your competitors continue taking advantage of your weakness?
Smith Willas is a freelance writer, blogger, and digital media journalist. He has a management degree in Supply Chain & Operations Management and Marketing and boasts a wide-ranging background in digital media.