Digital commerce is exploding in the wake of the COVID-19 pandemic, and small to mid-sized businesses (SMBs) must claim their share of the eCommerce pie that is currently dominated by technology giants like Amazon.
Based on findings from an SMB-focused study, “The Global Digital Shopping Index,” PYMNTS examines the main changes triggered by the pandemic in four markets, including the U.K. and the U.S., while examining the different ways SMBs are adapting to these shifts alongside their customers.
The study features an Index designed to measure consumers’ satisfaction with various aspects of the shopping experience. SMBs tend to score lower than large firms, confirming one of the assumptions that smaller firms are less likely to offer wide-ranging digital services such as mobile order-ahead and store pickup options, as well as features that reduce frictions, such as long checkout lines or shipping delays.
But the research also reveals that many SMBs are as ambitious as large stores in their plans to invest in digital services like mobile order-ahead and store pickup options, and that an important subset of SMBs — those that make most of their sales in-store — perform as well as large stores in consumer satisfaction.
The findings also show that in offering digital services, smaller retail enterprises can leverage some of their unique advantages, like the connection and presence they have in the communities they serve.
UK SMBs and the Digital Divide
As compared to U.S. consumers, who are more likely to shop with SMBs in their brick-and-mortar stores, those in the U.K. are more likely to use digital channels, with nearly 50% of U.K. customers making their most recent purchases from shops operated by small business owners through digital channels.
In the category “primarily brick-and-mortar,” which refers to merchants with more than 75% of sales in stores, the data revealed that these firms represent roughly 41% of SMBs in the U.K. — similar to the three other markets analyzed — compared to 29% of large companies.
SMBs in the U.K. are no more likely than large stores to be primarily brick-and-mortar, and they make up a larger portion of stores that are omnichannel online-oriented (31% versus 26% for large stores).
The Payments Factor
The study indicated that even though card use is more prevalent in U.K. stores, consumers there are more likely to use cash when shopping with SMBs.
The research broadly revealed that compared to 38% of large-store customers in the U.S. who use credit to pay, consumers in the U.K. (60%) prefer debit cards, and are more likely to use cards with smaller merchants.
Digital wallets emerged as the more popular online payment option with SMB customers than large-store customers, with 10% of small business patrons in the U.K. using digital wallets, including services like PayPal, to pay online — nearly twice the share of large-store customers who use this method. There was no significant difference when it came to Google Pay or Apple Pay, however, as U.K. customers of large and small businesses use both to the same extent.
Overall, the pandemic has had huge effects on SMBs, which tend to lack the capital reserves and resources of larger businesses. Although smaller firms may have ground to make up in terms of offering digital services in the new emerging retail reality, PYMNTS’ research shows that they do not lack the ambition to achieve it.