Small business trends: E-commerce lifts small retailers

Last updated: 04-22-2021

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Small business trends: E-commerce lifts small retailers

Small businesses, from mom-and-pop retail shops to local services, struggled mightily to stay afloat during the pandemic. Many didn’t make it, or will have to close in 2021. About one in five small-business owners, in fact, said they’ll have to shut their doors if economic conditions don’t improve over the next six months, according to the National Federation of Independent Businesses.

“The economic recovery continues to be uneven for small businesses, especially those still managing state and local regulations and restrictions,” Kevin Kuhlman, NFIB vice president for federal government relations wrote in a letter to congressional leaders.

But when looking at small business trends, it’s not all gloom and doom. E-commerce emerged as a bright spot for small businesses over the past year.

Online shopping helped hundreds of thousands of small businesses not just survive, but stand out and thrive. In 2020, online shopping pushed overall retail sales up nearly 3.5 percent, to $5.6 trillion, compared with the previous year, according to the research firm eMarketer. E-commerce alone grew by 33.6 percent in 2020.

Small retailers, in particular, saw a big bump in online sales during this past holiday season – an average 104% increase over last year. And from all indications, e-commerce will remain a top trend for small businesses moving forward.

But prior to March 2020, many brick-and-mortar small businesses had little to no online presence, because they didn’t need it: They depended on pedestrian traffic and walk-ins to stay competitive. That changed dramatically during the pandemic’s early days, as shutdowns and quarantines forced stores to close and social distancing guidelines led consumers to abandon popular shopping areas.

However, even as many areas opened up, it became clear that consumer behavior had changed, perhaps for good —meaning e-commerce is here to stay as an essential channel for small business success.

E-commerce makes it possible for SMBs to remain close to customers who have become accustomed to the convenience of online shopping or who remain cautious of public spaces. It also allows them to expand their market reach beyond a physical location.

It’s not easy for small retailers who previously had little digital experience to pivot to selling online, and large retailers were the ones who reaped most of the profit from e-commerce last year. Ten large retailers accounted for 68% of all U.S. e-commerce sales last year — and Amazon alone represented more than half of all online sales.

Still, thousands of small businesses figured out how to get started selling their products and services online. Luckily, it’s become much easier for small businesses to launch or upgrade their websites. Cloud-based e-commerce platforms as well as e-commerce marketplaces such as Etsy make it simple and speedy to set up an online shop.

E-commerce success requires more than just setting up a website, however.

Savvy businesses also took advantage of new technology integrations to help set up:

This shift to omnichannel sales is essential as consumers today expect options and a seamless experience between online and offline channels.

In addition, small retailers expanded their marketing efforts. They moved from communicating only by email to using online order forms, contactless payment, direct messaging, smartphone apps, and taking advantage of social media marketing on Facebook, Instagram, and even TikTok.

But for retailers who may not have paid much attention to digital, navigating the ins and outs of e-commerce, including hosting providers, social media strategies, SEO, digital advertising and email marketing, can be daunting as well as an expensive proposition.

Still for those that dive into the promise of e-commerce, the opportunities are significant enough for many to push themselves outside of their comfort zones.

A poll by Main Street America showed that e-commerce usage continues to grow among small businesses with 18% reporting that at least a quarter of their revenue came from online sales in January, up from just 7% in April 2020.

E-commerce will only become more essential for small businesses in order to stand out in a crowded local retail landscape, which, even after the pandemic recedes and pedestrians return to Main Street, will be more competitive than ever.


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