Small businesses have become the backbone of the global economy in 2022, as according to globalnaps around 400 million Small and Medium Enterprises (SMEs) represent around half of the worldwide employment and 90% of business firms. Amazingly, most of the SMEs survived the economic devastations caused by the COVID-19 pandemic. Do you know how?
According to a comprehensive research conducted by Salesforce, more than 70% of SMEs reported substantial growth in their online businesses, and 71% of those small businesses revealed that their investment in creating an online business presence was one of the crucial reasons for their survival during the pandemic.
An interesting insight obtained from the data provided by the Top Design Firms concluded that 28% of the 30 million SMEs in the United States (i.e., more than 8 million SMEs) do not even have their business websites. Perhaps the most crucial statistic for these small businesses is that the number of online customers is increasing every year, with the figures rising from 1.32 billion in 2014 to a whopping 2.14 billion in 2021.
Rising number of online customers worldwide (Source: Statista)
It is fair to say that regardless of the nature of products or services they offer, SMEs that have no online presence at all may not be able to connect with billions of online customers. However, digital presence is not only about reaching a wide customer base.
Let’s have an insight into the reasons why an online presence is crucial for small businesses and what SMEs are missing out on by not taking their business online:
1. SMEs have reaped Substantial Profits by Going Online
Even though the devastating impact of the COVID-19 pandemic on the profitability and growth of SMEs cannot be overlooked, the pandemic forced many companies to shift their businesses online, and this proved to be a turning point for them.
A family-owned jewelry business in Indiana, Moriarty’s Gem Art, suffered a major setback when the COVID-19 pandemic forced its retail store to shut down. The company went through crisis until it went online and began live streams that were advertised through the company’s website.
The results of this online transformation from Moriarty’s Gem Art were remarkable. The online audience count surpassed 1000 during the live streams, and the firm made $12,000 in its July 2020 show alone. Another live stream during the pandemic days enabled the company to reap a whopping $20,000 from the sale of a single gemstone alone.
Moriarty’s Gem Art website traffic rise after the COVID-19 outbreak (Source: PipeCandy)
Moriarty’s Gem Art’s total revenue generated from sales through the website in 2021 and 2022 is estimated to be between $1 million to $5 million. The number of monthly orders placed on the company’s website is between 500 and 1000.
Another valuable benefit of online business is that you can conduct seamless business operations, regardless of whether there is an outbreak or a pandemic.
Netflix, which originated as an SME in the video rental industry in 1997, was way behind Blockbuster, the leader of this industry. In 1999, Netflix took its rental platform online and struck an online streaming deal with Starz in 2008 to take movies to the comfort of their customers’ homes. On the contrary, Blockbuster reinstated its unpopular late fee policy and didn’t provide online video streaming services to its customers.
Netflix’s rise after taking their video rental business online (Source: Drift)
In 2010, Netflix was worth $24 million, while Blockbuster incurred a colossal loss of $1 billion and filed for bankruptcy in the same year. The digital presence of SMEs in the shape of a website has not only helped them survive and reaped massive profits but has also enabled them to gain a competitive edge over their rivals.
2. Online Presence is Crucial for Brand Awareness & Growth
A digital presence plays a phenomenal role in enhancing the brand awareness and growth of small businesses. This is particularly true for emerging SMEs that are employing E-commerce as their medium of business operations. SMEs can use E-commerce to connect with customers living in those regions where the business is not operating physically.
Bavarian Clockworks, a family-owned cuckoo clocks venture in Florida, represents a perfect case of how E-commerce enables SMEs to increase their brand awareness. The venture was launched in 2015 on BigCommerce, a renowned E-commerce platform for SMEs, after thorough market research conducted by its founder Robert Ellis. The shift to BigCommerce reaped ample profits for Bavarian Clockworks, as the company recorded an increase in revenue from $483,171 to $ 1,448,318.
Another U.S based SME in Texas, Beardbrand, transformed its beard-care business from humble proceedings on YouTube in 2012 to prosperous E-commerce business. Beardbrand now makes handsome earnings, reaping million-dollar figures in revenue every month.
3. Online Presence Brings Priceless Advantages to SMEs that are Unavailable to Offline Customers
One of the best things about online presence for SMEs is that it brings them unmatched benefits when compared with those small businesses that are not operating online. SMEs can operate their business dealings 24/7, even outside of business hours. In-person businesses suffered the most when their business operations shut down after the outbreak of the COVID-19 pandemic.
The North Carolina-based yoga outfit, Feel Better Yoga, was forced to shift its business online shortly after the COVID-19 restrictions were enforced. The company was able to continue its business operations online, hosting 35 virtual classes weekly. This enabled the business to continue its operations despite the closure of its business location in Burlington and earn thousands of dollars in revenue.
SMEs that are only conducting their business operations on site may face business disruptions or complete shutdown due to natural disasters or many other factors. This can result in a permanent loss of their tangible records and data. One added advantage online businesses have is that they can store their valuable business data online and recover it easily if their tangible records are lost.
Another crucial advantage of digital presence is the savings SMEs can make by eluding the costs of utilities, rent, and other expenses required to maintain business operations on site.
4. Digital Presence Enables Small Businesses to Monitor Customer Preferences and Sales
Digital presence allows small business owners to monitor and track customers and sales effectively. It allows SMEs to understand and analyze customer behavior; and then strategize their online marketing accordingly.
There are many free online tools to monitor website traffic. One of the most popular online tools is Google Analytics, which can show how users found your website, the time they spent on your website, and the pages they visited, what actions they took on your website, among many more.
Google Analytics overview of website traffic for a month (Source: Freepik)
Live Traffic Feed is another handy tool that can perform real-time tracking of visitors surfing a website, the pages they view, and their location. Clicky is also a free web analytic tool for websites. It does not only monitor the web analytics constantly but also updates the metrics immediately, enabling SMEs to get a live picture of user traffic on their business websites.
The California-based party clothing outfit, iHeartRaves, boosted its web marketing by monitoring the user traffic on its website. It not only enabled the firm to monitor customer preferences, behavior and understand their needs, but it also allowed iHeartRaves to make strategic decisions related to customer personalization. The company makes $25M-$50M in revenue every year.
5. Reconnecting with Existing Customers and Attracting a Wider Consumer Base
The COVID-19 pandemic has instigated a major shift in the shopping behavior and preferences of customers. Online shopping has become the latest trend, and it is here to stay. Customers are now looking for household products, daily essentials, medicines, and personal care products online. Growth in online purchases has also spiked in several other product categories.
Growth in use of online shopping before and after COVID-19 in different product categories (Source: McKinsey & Company)
The growth in online purchases has enabled SMEs to reconnect with their existing customers and extend their customer reach to untapped regions and customer base.
6. Adapting To the Evolving World
The world is evolving rapidly due to technological developments and the different demands of customers. It is crucial for SMEs to adapt to the changing market dynamics quickly and effectively. Having a digital presence allows SMEs to easily adapt to the changes.
Sears, an American department store failed to adapt to the changing market trend, which was shifting away from the ‘general store model’ and going online. Sears eventually failed to compete against Walmart and other smaller boutiques that went online.
The Michigan-based firm, Borders Group, began its bookstore operations in 1971. It didn’t take long for the company to become a successful book brand in the market. However, Borders failed to understand the evolving market fuelled by technology and the rise of the Internet. The company never took its business online, unlike its biggest rivals, Amazon and Barnes & Noble. Borders Group declared bankruptcy in 2011, with the closure of its 399 bookstores and the lay-off of thousands of employees.
Hummer, a renowned manufacturer of military and civilian vehicles in Michigan, also made a similar mistake. The company failed to recognize that its customers were becoming more environmentally conscious in their vehicle purchases. Since Hummer’s vehicles consumed a lot of fuel, its sales went down drastically as customers opted for ‘gas sippers’ vehicles of their competitors due to their low fuel consumption and emissions. In 2009, the business was finally shut down. Online presence could have allowed Hummer to monitor the buying trends of customers and adapt to the evolving trends accordingly.
7. ‘Popping Up’ on Search Engine Results Pages (SERPs)
An increasing number of people have started to use digital search engines, especially after the outbreak of the COVID-19 pandemic. Online search engines have become effective tools on the Internet, and billions of customers are using Google, Bing, and other search engine platforms to find the products they need. In 2019, 29% of the global web traffic was driven by search engine platforms.
Share of global web traffic in 2019 (Source: Statista)
An online presence allows SMEs to appear in search engine results pages (SERPs) in the form of corporate websites and social media pages, enabling customers to access them with just a single click. A website also allows SMEs to showcase their products and services. Once customers start accessing your business website from SERPs, your website serves as a ‘24/7 salesperson’ for your business.
Appearing in search engine results can give your brand more credibility. A website can ensure this by allowing customers to post reviews and feedback about the company’s products or services. In this way, prospective customers can stay assured that the content on the website is reliable.
Most customers use Google to search for services and products. This is evident from the dominance of Google in the search engine market share for at least the last 12 years. Google dominates 83% of the market share as of June 2022.
Google’s dominance in the search engine market share from 2010-2022 (Source: Statista)
Interestingly, search, and navigation is the most critical factor in the online shopping experience because of the accompanying ease of finding services and products, followed by product reviews and ratings.
Search, and navigation is the most important feature of online shopping experience (Source: Statista)
In today’s busy world, people have hectic schedules, and they find it difficult to take out time to visit business outlets for purchasing products, especially during business hours. Customers prefer convenience and comfort, which is why online presence for businesses has become essential. The customers can access the products and services they need from the comfort of their homes.
In A Nutshell
We are witnessing the peak of a digital business world in which market competition is becoming more intense with every passing day. The survival of SMEs in today’s competitive business environment strongly depends on them shifting their business operations online. From monitoring customer traffic to reaching a wider consumer base, we have uncovered the crucial benefits of having an online business presence. Best of luck to thousands of SMEs out there!