The Cisco Designed Small Business Resiliency series shares stories and resources for businesses working to recover from the economic impact of COVID-19.
Besides the push to remote work, the COVID-19 pandemic massively accelerated another trend: e-commerce. Consumers spent $5.1 billion USD online over Black Friday and Cyber Monday weekend at Shopify-powered stores alone. The vast majority of consumers (84 percent) have shopped online since the pandemic started, according to a new report from Shopify.
The ongoing retail shift opens up new challenges and opportunities for e-commerce entrepreneurs. With one in four people saying they won’t be comfortable shopping in person in the next six months, according to Cisco’s Small Business Resiliency Guide, it’s more important than ever to understand how technology shifts can aid the new normal of online shopping.
Speaking to BetaKit, Shopify VP Loren Padelford shared his insights on four things e-commerce entrepreneurs need to keep in mind for 2021.
Be flexible to meet changing customer demands
While e-commerce might be the “centre of shopping at this point,” as Padelford put it, consumers have different demands for how they like to shop and what kinds of products they want.
According to Shopify’s report, 62 percent of younger shoppers want green or sustainable products. Local delivery is another critical thing that e-commerce entrepreneurs need to consider, since 57 percent of shoppers also want local delivery. With COVID-19 still on everyone’s mind, Padelford said hygiene protocols will also be crucial for reopening physical locations, delivery, or ‘buying online and picking up in store’ (BOPIS).
Padelford said these changes in how consumers want to shop can create an interesting advantage for e-commerce entrepreneurs. Where big box stores have entrenched systems, growing e-commerce businesses can pivot more easily. Padelford pointed to Great Lakes Brewery, a Southern Ontario-based beer maker that didn’t have an e-commerce presence when lockdowns started to take effect. By launching an online store with local pickup and delivery, Great Lakes was able to boost its revenues by over 10 percent, helping the business hire back people initially laid off due to lockdowns.
Leverage new growth opportunities
Finding capital is a perennial issue for entrepreneurs ready to grow. For many, the pandemic only made financing more difficult.
36 percent of entrepreneurs say that traditional financial institutions don’t understand their needs and challenges due to COVID.
“One of the things we saw happen during the pandemic was a credit and financial access crunch,” said Padelford.
According to Shopify’s report, 36 percent of entrepreneurs say that traditional financial institutions don’t understand their needs and challenges due to COVID. Further, 24 percent feel that traditional financial institutions don’t understand their needs regardless of the pandemic.
Thankfully, multiple businesses moved into the alternative financing space in the past couple of years to address the needs of entrepreneurs, such as Clearbanc, Staples, and even Shopify itself with Shopify Capital. During the pandemic, these services have become even more necessary. Shopify Capital has already committed over $200 million to support small businesses through COVID, while Clearbanc boasts it has dolled out over $1 billion to startups around the world.
In certain situations, new growth opportunities might become the only opportunity. While most big-box retailers have been allowed to remain open during pandemic lockdowns, many main street businesses have been forced to close their doors to customers. The solution, as Padelford sees it, is for businesses to expand their online presence to abide by lockdown rules while still engaging with loyal customers through tools like local delivery or BOPIS.
“As a physical door closed, [small businesses] needed to open a digital door,” said Padelford.
Don’t be everywhere; only where it matters
In 2021, merely having a website won’t be enough to drive new customer growth. Customers want to interact with brands in multiple different ways, whether that’s through social media, web and mobile, an app, or even SMS and voice chat. For instance, according to Shopify’s report, 54 percent of young purchasers say they discovered a new brand through social media. That trend goes across all age groups, with 43 percent of people aged 35-54, and 25 percent of people aged 55-plus discovering new brands through social media.
Padelford said the key to success for e-commerce businesses is not trying to be on every possible channel. Instead, it’s about figuring out where your customers like to hang out online and building there. Padelford said that when you engage in channels where your ideal customer already exists, you’re more able to build genuine relationships with existing customers and connect with potential new customers.
Tell your story
In the increasingly crowded world of commerce, Padelford said entrepreneurs can stand out with their brand story. Specifically, he recommends founders share online why they founded their business, and the story behind their products and services.
Canada is the number one country in the world where people say they shop locally to strengthen the local economy (68 percent of consumers).
“Open the digital door so customers can keep coming through it,” said Padelford.
For entrepreneurs concerned their story alone won’t be enough to stand out, there are tailwinds at their backs. Canada is the number one country in the world where people say they shop locally to strengthen the local economy (68 percent of consumers). The US is number two, with 66 percent of consumers spending locally to help the local economy.
Further, there is a discoverability gap local entrepreneurs can take advantage of. In Canada, 47 percent of people say they want to shop local, but only 40 percent do. In the US, 50 percent say they want to shop local, but only 38 percent due. For Padelford, this is an issue of entrepreneurs not being vocal enough with their story. The more you put your story out there on different channels, he said, the easier someone can find you.
This is what happened to Sister Sage, an Indigenous wellness brand based in British Columbia. The company’s co-founders used to only sell in person, but COVID stopped that. After launching an e-commerce store and a marketing campaign focused on their story, sales went up 300 percent because they were able to reach a larger audience than ever before.
The future of commerce is here and it’s not going away
The one thing all e-commerce entrepreneurs can take comfort in is that online shopping is growing rapidly with no signs of slowing down. Even after the pandemic subsides, it seems as though people’s comfort with online shopping is entrenched.
However, physical locations will become part of the regular customer experience again, and entrepreneurs need to think about building resilience into their business models for the long term. Simply existing in-person or online is not enough; brands need to build stronger experiences to stay ahead of both customer expectations and changing technology.