The power and benefits of the platform economy are on full display during COVID-19. Technology and tech platforms have been instrumental in allowing small businesses and the self-employed to more quickly pivot to strategies for driving revenues, communicating with customers and finding new ones, and running key businesses functions – like meeting payroll and collaborating with their teams – to better navigate the COVID-19 shutdowns.
According to a June technology survey sponsored by SBE Council, 76 percent of small business owners say that cloud services, for example, have been critical to the survival of their business during the crisis. Moreover, 89 percent of cash-strapped small businesses report that cloud technology saves significant time and money.
Social media platforms have also become a lifeline during COVID-19, as 51 percent of small businesses report they have increased their online interactions with customers, according to the State of Small Business Report published by the Small Business Roundtable and Facebook. In addition, 36 percent of personal businesses that use online tools report that they are conducting all their sales online, and 35 percent of small businesses have expanded the use of digital payments.
If they were complacent about using technology prior to COVID-19, most small business owners now fully understand that having an online presence, and using digital tools are vital to survival. The pandemic is only accelerating established trends in e-commerce, and small business owners must be in a position to quickly meet customer demands during the crisis and beyond.
At the House Judiciary Subcommittee on Antitrust hearing today featuring the CEOs of Amazon, Apple, Facebook and Google, one can expect to hear a lot of concern about the “dominance” of these companies. Yes, we will hear stories of some small businesses getting unfairly treated or being pushed out of the market. But the vast majority of small-business owners throughout the country believe technology and its capacity to do many costly and labor-intensive things for them more affordably is actually a very good thing.
For example, a September 2019 digital advertising report published by my organization found that small businesses are saving significant time and money by using online advertising – nearly $163 billion annually. In addition, small-business owners report that the capital they spend using digital advertising is very effective with 89 percent expressing confidence that their online advertising dollars will yield positive results for their businesses.
Moreover, according to the same report, 73 percent of small business owners stated that without online advertising “it would impact my ability to effectively market my products and services and to grow my business.” This was especially the case for the smallest of businesses and startups. Of the startups surveyed, 90 percent agreed that “online advertising has provided my business with an affordable option to launch and/or grow my business,” and 86 percent agreed that the method is “important to my business survival and growth.”
The report also found that small businesses are investing these savings and new revenues generated by online advertising back into the business: 42 percent are investing in new growth opportunities, 31 percent in new equipment, 29 percent increased wages or benefits for employees and 22 percent increased the size of their staff.
Obviously, small-business owners are facing a very different environment today compared to the second half of 2019. However, the essential nature of their internet tools and value of the platform economy have only increased. E-commerce sales are currently surging and will reach new highs in 2020 as a result of COVID-19. Small businesses must be in a position to take advantage of this trend.
The good news, according to a Morning Consult/Bloomberg survey, is that 30 percent of Americans say they plan to buy more from small businesses than they did before the pandemic. Consumers feel safest shopping in grocery stores and small retailers, as noted by the survey, yet many small businesses will need a dual presence to compete for customers not only during COVID-19, but when things return to “normal.”
With the surge in e-commerce and more customers searching and buying online, small businesses need access to the vast tools provided by big tech to penetrate markets, reach potential customers and close sales.
According to McKinsey & Company, the online environment is ripe for small businesses, as 75 percent of customers have experimented with a new brand or shopping behavior over the past three months, and 20 percent have switched brands. Many entrepreneurs see the opportunity and are jumping on it.
For the future of American innovation and competitiveness, it would be helpful for members of the subcommittee to listen and learn about the benefits provided by big tech. Too many countries across the globe are looking to extract their pound of flesh from these U.S.-based companies; for Washington to pile on during COVID-19 would be counter-productive for our economy and its small businesses.
Karen Kerrigan is president and CEO of the Small Business & Entrepreneurship Council.
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