Small Business Will Continue To Go Digital In 2022
Isadora Teich wrote this article
Half of the Americans at work right now work in the medium and small business sphere. However, while these businesses have a large economic impact, data shows that many of these businesses are lacking when it comes to resiliency.
Research from PYMNTS shows that about half of these companies are just one missed payment away from closing their doors for good.
The pandemic accelerated the push for many businesses to go digital. This is a trend which we will continue to see in 2022 and beyond. Let’s take a look at how medium and small business is expected to approach the digital world this year.
Over the past two years or so, a lot has changed about how people shop. We are seeing not only the rise in digital storefronts and e-commerce but shoppable live streams. These blend the social, commercial, digital, and video elements that people crave together.
Not only do people value a more social experience when it comes to how they shop, but video is now the preferred way that people consume content online. Blending a live social aspect and e-commerce via video is an ideal way that all of these puzzle pieces fit together.
Online shopping, in general, has boomed thanks to the pandemic, going up 80% in America alone when the pandemic began. More and more people are also finding what to buy via influencers too.
In fact, 60% of millennials (Americans between the ages of roughly 25-40) are more likely to take advice on purchasing decisions from YouTube influencers than traditional media.
86% of women cite social media as a part of their consumer journey. This includes both influencer marketing and just seeing social media content out there. This could be things like brands having a Twitter or Instagram.
The message is clear, brands need to be active on social media. The classic sales funnel has been replaced with a cluster of influencer marketing and branded social content. It is how people find out what they want to buy, not just purchase it.
Small Business Embraces Buy Now, Pay Later
Companies are not only changing how people discover and purchase products, but how they pay. On top of new ways of discovery and new kinds of shopping experiences, many businesses are offering buy now pay later options.
These apps, like Klarna and Afterpay, have their share of pros and cons. They are a fantastic option for small businesses.
“We’re seeing average order values through our BNPL service of up to 40% higher than regular checkouts,” said Erin Houston, CEO and co-founder of Wearwell, a membership platform on which customers can shop for sustainable clothes and accessories. “The increased revenue opportunity is by far the most positive impact.”
The Controversy Attached To Buy Now, Pay Later
However, controversy emerges when it comes to how they treat buyers. Many say that due to how these apps are integrated into e-commerce sites, most users have no idea what they are signing up for. Every app has different fees and rules. Some report to credit bureaus and others don’t.
You could potentially end up owing a lot of money over something small. Others claim that these sites specifically target students and people with bad credit and encourage them to overspend.
Many people have found them to have lacking customer service as well. If you buy something with a traditional credit card and have a problem, you are protected. These apps do not offer this.
On Facebook, you can find a group dedicated to trying to unravel the mysteries of the super-popular buy now pay later app Klarna. People come together to try and solve issues like inconsistent customer service and battling with Klarna for refunds.
Small Business Eyes Embedded Finance
Many small business owners already have enterprises with functioning websites and are looking for ways to improve them. As more people become aware of the pitfalls of buy now pay later apps, they may return to more traditional financing options. This can include things like pre-approved lines of credit.
The future of payment may even approve virtual cards, which eliminates the need for physical cards at all. The virtual card payment experience hit $1.9 trillion in 2021 and is expected to hit $6.8 trillion by 2026.
Some larger organizations have embraced this already, and it is likely that this trend will carry on to smaller businesses as well. For example, Nordstrom Rack now allows in-store customers to pay via text message.
Local Non-Shipping Options
In decades past, consumers were more or less limited to whatever they could find in their local shops on the shelves. These days are over. On top of people relying on shipping and delivery, a host of other experiences have emerged.
These include local quick delivery, curbside pickup, and more. How many people do you know who, especially since the start of the pandemic, have done curbside pickup for their groceries, for example?
This is one example of outsourcing delivery to consumers. While there are apps like Uber Eats, Grubhub, Doordash, and GoPuff, which allow businesses to outsource the delivery of food and other items, these apps are notoriously a rather bad deal for small businesses.
Uber Eats, for example, charges restaurants between a 20 and 30 percent fee. In light of this, it makes sense that many businesses are offering curbside or in-store pickup. It is more cost-effective for both them and customers.
The ways we shop are changing in all sorts of ways thanks to both technological innovation and the pandemic. As small businesses are closer to the people they serve and can better anticipate their needs, they have a lot of room to innovate and succeed in this arena.
Final Thoughts On Small Business And Tech In 2022
It is a tough world out there for small businesses, especially in the pandemic. However, many are starting to use tech to their advantage. There are numerous ways that entrepreneurs can use advancements in tech to their benefit.
This includes everything from low-cost marketing via TikTok and Twitter, to offering consumers more ways to pay. There is a lot of room here for growth, innovation, and bright ideas.
What do you think? Comment below!
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