Opinion

Four key takeaways from this year that will change small business in 2021

- December 14, 2020 4 MIN READ
trends

The economic shock of COVID-19 made 2020 a sink or swim year for many small businesses. Most small business owners are looking forward to starting fresh in the new year and to set themselves apart in 2021 they must plan ahead and identify new, innovative strategies that align with the habits, attitudes and behaviours of consumers in this moment, writes Alison O’Brien, Head of Mid-Market & SMB, PayPal Australia.

While the pandemic’s fog of uncertainty still obscures the horizon, one thing remains clear – seamless and secure eCommerce capabilities are more important than ever. The PayPal 2020 eCommerce Index has revealed the extent of Australia’s changing eCommerce landscape, with insights on new trends and behaviours that have emerged over the past year. Here are four key lessons from 2020 to help your business succeed in 2021.

eCommerce has never been more important

It’s hard to overstate COVID-19’s acceleration of the shift to online shopping. Millions of transactions that would normally have taken place in store shifted to digital and more than 2 million Australians started shopping online for the first time.

With restrictions continuing to ease, some consumers have returned to shopping in-store again, but the rise in eCommerce is likely here to stay, with nearly two-in-five Australians (38%) saying they will continue a higher level of online shopping once the pandemic is over.

As many as two-in-five Australians (38%) have said they are consciously supporting local businesses to help them recover from the pandemic. This preference to buy local is likely to continue beyond the crisis, meaning small Australian businesses have a unique opportunity to drive greater awareness for their brands among online consumers eager to support them.

Mobile commerce remains incredibly important for the customer experience

Australians have steadily embraced mobile commerce over the past few years, but with most of us spending more time at home and less time commuting to work, there was a significant shift in purchasing via laptops and desktops this year. Currently, almost a quarter of Australians (23%) are shopping more on their laptops and desktops, rather than their mobiles.

Nearly three-quarters of Australians (73%) used their mobile devices to shop or make payments in 2019. This year, just over half of Australians (55%) are using their mobile devices for eCommerce – an 18% drop from pre-pandemic levels.

Despite this decline, mobile-friendly interfaces are still vital to the customer shopping experience, as almost half of Australians (49%) shopping on their mobiles at least once a week. Unsurprisingly, that figure jumps to two-thirds for younger shoppers – Gen Y (66%) and Gen Z (65%). We are likely to see this rise again in 2021 as many Australians resume a daily commute and return to the workplace.

The top barrier to mobile commerce is trust and security issues, with 57% of Australian consumers saying these issues make them less likely to purchase with a business on a mobile device. Some consumers will even abandon their purchase if a site becomes too complicated or overwhelming to navigate. This means it is important to master the fundamentals of mobile optimisation in order to drive sales in the future.

Businesses that don’t adapt to the growing uptake of social commerce risk falling behind

As social distancing forced everyone into different routines, social media not only helped create a sense of connection and community, it also influenced our spending habits. In fact, a quarter of Australians (24%) are making purchases through social media, a figure which increases for younger shoppers (Gen Z: 36%; Gen Y: 35%).

Despite social commerce adoption remaining relatively steady year-on-year, the average monthly spend via social across all Australian consumers has increased five-fold from $5 p/month in 2019 to $25 in 2020. And younger shoppers are spending even more (Gen Z: $51; Gen Y: $36).

For those consumers that aren’t yet comfortable making purchases directly on social media, it remains an important tool for product discovery as more than a third of social shoppers (37%) have purchased something after seeing it on social media.

With social media set to evolve into its own distinct sales channel, small business owners must adapt to the growing uptake in social commerce to stay ahead. If you’re not already using socials for your business, 2021 is a great opportunity to get started. By simply posting content that’s focused on your business regularly, you can quickly start to build out a strong following of potential customers.

Consumer spending is down but demand for discounts is up

The vast economic impact of COVID-19 saw more than half of Australians (54%) slash their spending by an average of 11%. With less spending capacity, the pandemic has fueled a greater demand for discounts with many consumers no longer willing to wait for big sales moments.

More than a quarter of Australians (28%) said they only shop when items are on sale or there is a discount code. This is a significant increase compared to 2019 when just one-in-six consumers (16%) said they only shop when items are on sale.

To attract new customers and drive conversions, businesses should offer a steady stream of online sales and promotions that are easily discoverable and leveraging promo codes is a great place to start. Smart businesses can even promote these sales across multiple channels, such as Facebook and Instagram, or perhaps through Electronic Direct Mail (eDM) to customers.

As we move into 2021, there has never been a better opportunity for small businesses to revisit their online strategies and adapt to changing consumer expectations.

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