SMBs Enjoy Online Surge on Small Business Saturday

By Jack M. Germain
Dec 3, 2019 10:56 AM PT

While many retailers mull the takeaway from this year’s Black Friday Cyber Monday shopping event, others may be more interested in the action that took place on Saturday.

Online shoppers on Saturday spent US$3.6 billion dollars at both large and small retailers, reflecting 18 percent year-over-year growth and setting a new sales record for the day, according to Adobe Analytics.

Small Business Saturday originally was meant to encourage shoppers to support their communities’ local brick-and-mortar stores. However, the unexpected surge in online sales suggests that the campaign’s local shopping goals may have been lost.

Small businesses are seeing the need to be online. Shoppers may be fine with picking up ordered products locally, but online shopping is the primary outlet for many, according to Rob Enderle, principal analyst at the Enderle Group.

“Now foot traffic moves online. If small businesses are not online they are missing out on a substantial amount of sales,” he told the E-Commerce times.

“I am surprised that virtual malls have yet to develop to provide a convenient access for small business vendors,” Enderle added.

Spending Frenzy

This year’s full holiday season is showing 14.9 percent year-over-year growth, with $68.2 billion spent online between Nov. 1 and Nov. 30.

An estimated 100 million shoppers spent $19.6 billion on the 10th annual Small Business Saturday, according to Adobe. Online sales soared with a 43 percent increase on Black Friday to a record-breaking volume of $7.4 billion.

In 2019, small businesses that do not own a website or fulfill orders online are taking a big risk. The trend of online shopping versus physical retail continues to become imbalanced in favor of the former, according to Calloway Cook, president of Illuminate Labs.

“Brick-and-mortar stores can have the best of both worlds by selling at a physical location and also through their website or Amazon,” he told the E-Commerce Times. “It’s very cheap and easy to build an e-commerce website on Shopify, even without any programming experience.”

Product-based businesses need an e-commerce store. Even if sales are slow, the online presence can boost the physical presence and vice versa, Cook said.

All-Inclusive Online Buying

Businesses with less than $50 million a year in revenue saw their revenue double on Saturday compared to an average day last month, Adobe said.

Shoppers used their phones in greater numbers to contribute to the online buying trend. Smartphone revenue made up 41.2 percent of all e-commerce revenue on Saturday, the firm reported, up 22 percent from a year ago.

Cyber Monday online sales were on track to reach a record $9.4 billion, up 19 percent from last year, according to Adobe.

Small Business Basics

Small businesses must embrace e-commerce to compete in an economy that rapidly is shifting to become primarily digital and omnichannel. With more than 2 billion people worldwide projected to buy online in 2021, the drastic turn toward online activity on Small Business Saturday is consistent with the trend, noted Greg Chapman, senior vice president of business development at Avalara.

“The Internet has given consumers the added power of being able to purchase products from any retailer, from anywhere in the world, through any channel they choose,” he told the E-Commerce Times. “For small businesses that have embraced e-commerce, this surge in consumer choice significantly expands their market potential.”

These businesses no longer are limited to a market of customers defined by physical presence. Small businesses have the opportunity to sell to customers across the country and around the world through their e-commerce platform and through online marketplaces, Chapman pointed out.

Offline SMBs Pay a Price

We live in a digital-first society that has impacted significantly the way businesses of all sizes sell to customers. For most small businesses that have yet to embrace e-commerce, the uptick in online sales for Small Business Saturday means that they already have fallen behind, warned Chapman.

E-commerce does not lend itself well to all small businesses, but the majority stand to benefit from an online presence, he added.

“Consumers want to have options when it comes to making purchases, and it’s on the business to provide an equitable experience for customers,” Chapman said.

Customers want to have the option to go in-store, search online and browse online marketplaces. Small businesses are not exempt from these changing consumer preferences.

Balancing Cost With Service

Small business owners face a crossroads. Exceptional service once gave them an edge with local customers. They may view going online now as a consolation prize of sorts, observed Allen Adamson, cofounder of Metaforce and adjunct professor at NYU Stern.

“The last straw that smaller retailers were holding onto was their ability to offer a more personal and special in-store experience versus the larger retailers,” he told the E-Commerce Times. “Now that even American Express can’t get consumers off their couch for Small Business Saturdays, they have to go head-to-head against Amazon online, where competing on price and delivery speed is a non-starter.”

American Express created Small Business Saturday in 2010 as a way to encourage shoppers to support local retailers.

How SMBs Can Stay Alive

Small businesses have to do their best to stay in the game online by offering more personal services and delivering them faster, before Amazon drones end that game too, suggested Adamsom.

Small businesses, like any business, need to adapt to changing consumer behaviors. We may still discover local businesses offline, but it would be incredibly misguided to think that our relationships with these businesses should not persist online, said Apu Gupta, CEO of Curalate.

“Many small businesses have already figured this out and have extended their physical operations online,” he told the E-Commerce Times. “At a minimum, these online operations make relationships with customers who started out offline easier to grow. Taken further, these online stores enable these brands to project their influence well beyond their physical limits.”

SMBs without e-commerce or with poorly executed e-commerce will need to figure out how to make their in-store experience compelling enough to warrant the additional friction associated with visiting a physical store, Gupta said, adding that online shopping is no longer a fad.

Make It Different

Technology and e-commerce have blurred the lines between traditional shopping holiday events. “Black Friday” deals are available a week ahead of time, and “Cyber Monday” has become “Cyber Week.”

Small businesses must adapt to this new normal and be ready to be competitive for a longer period of time, suggested Andrew Scarbrough, cofounder of PriceWaiter.

“Service continues to be a key differentiator for in-store and local retailers. Some purchases are simply better in person where the level of trust is often stronger and genuine personal connections can be made,” he told the E-Commerce Times.

Leaning into that personal element is important. Using email and a simple website to bolster that differentiator can help drive more sales in-store, Scarbrough explained.

Small businesses without a strong e-commerce component likely will be hit the hardest by the changing promotions landscape, as many simply are not able to make changes as efficiently as their online competitors.

Changing prices across the store or alerting all former customers to a deeper discount can happen in a few minutes online, with increasingly strong tools and email capabilities. That simply does not always translate to brick and mortar, Scarbrough said.

4 Must-Have Factors

Small businesses need four key additives to compete with big companies for the same product online, according to Jay Hakami, CEO of Sky IT Group. This approach works to get consumer attention across any geography.

The small businesses vendor can compete with price of the product, delivery time frames, painless return policy, and ease of purchasing online, he told the E-Commerce Times. Today’s consumer typically does not know where the product is coming from, and doesn’t care as long these factors are met. “This rule obviously changes when dealing with a non-commodity product that can only be found at a specific e-commerce site,” Hakami noted.

Community-Driven Efforts

Certain traits help small businesses grow and scale in today’s competitive retail world, found a new study from GS1 US, the information standards and unique identification company best known as the administrator of the UPC barcode.

“Thousands of small brands become members of the organization in order to scale their businesses,” said Kaitlin Friedmann, director of public relations for GS1 US.

“GS1 Standards help brands meet retailer requirements, manage inventory and implement best supply chain practices,” she told the E-Commerce Times.

There are three ways small businesses can achieve success, suggests the study, “Charting the Growth Journey: From Product to Profitable Business.” They should focus on their products, become channel ready, and leverage external partners to grow.

Study highlights:

  • 58 percent of small brands said they expected changing customer habits — such as where they make purchases (online or in-store) — would impact their brand’s growth.
  • The small businesses classified as “leaders” (whose sales grew more than 25 percent in the past year) used as many as three sales channels. Those considered “laggards,” (whose sales declined in the past year), typically sold only through one channel.
  • 59 percent of leaders saw a direct correlation between providing complete product information (such as images, product origins and more) in their online listings with the number of products sold.
  • 57 percent of leaders indicated that using UPCs in their product listings helps customers more easily find their products online.
  • More than half (55 percent) of high-growth leaders agreed that partnering with a retail broker or consultant was critical to growing their business.
  • 83 percent of small brands that leveraged online marketplaces and national retailers said partnerships (with barcode services, software providers, business consultants and more) improved their understanding of product information and its impact on their business.

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open source technologies. He has written numerous reviews of Linux distros and other open source software.
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