Digital

How bricks and mortar stores faring in the online boom

- February 25, 2021 4 MIN READ
online

The pandemic and generational preferences are propelling online activity in Australia, according to research by Crazy Domains.  The Online State of Australia’s Small Businesses 2021 report reveals how Australian small businesses and consumers are embracing online and investigates the impact of COVID-19.

With nearly half of Australia’s small businesses shifting online as a strategy to ride out the impacts of the pandemic, the importance of an online presence has become crucial. From becoming more active on social media to establishing a new website, small businesses have been finding new ways to make the most of online marketing.

The rise of small business online

While 30 per cent of small business owners said the number of customers from online sources has increased, half cited trust as the key barrier when connecting with their customers. Likewise, as more consumers are purchasing online, more than half are looking to small business for confirmation their data is secure.

Dreamscape Networks (the owner of Crazy Domains) Chief Executive Officer, Mark Evans suggests while digital transformation has been happening in the small business world for years, the pandemic has accelerated the process. As lockdowns kicked in, small businesses scrambled to pivot – testing and learning along the way.

Evans told KBB, there were winners and losers.

“Take the food and beverage industry as an example, they were the most disrupted industry, and the most likely to adapt  – with two in three changing their approach to their business, sales or marketing, as a result of the pandemic,” Evans said.

“And more than half of food and beverage small business owners reported a substantial increase in their customer numbers from both online and offline channels.”

Evans says this was unexpected and a contrast to the nearly 40 per cent of all small businesses who reported an overall loss in customers during the pandemic.

“More than half of food and beverage small businesses invested in digitising their businesses, including new or improved websites and online marketing. That activity, coupled with innovations from new takeaway menus to home delivery, meal kits, outdoor dining and more, meant they’ve not only survived but many have thrived.”

Building customer trust

As stretched-thin Aussies tried to save a dollar, the study found that offering free or low-cost delivery was a big influencer on consumers’ purchasing behaviour – far more than good reviews or ratings. Similarly, as consumers tried to sift the weed from the chaff, the research discovered first impressions count.

Conveying credibility through digital channels can be tricky but there are some key signals consumers quickly pick up on that ultimately determine whether they will make a purchase. It starts with a trusted domain name,” said Evans.

“In Australia, .com.au domains are trusted vastly more than any other domain. Six in ten Aussies think an excessively long domain name is unprofessional, with many consumers also rejecting domains with numbers and dashes.”

Having a website also rates highly but complex navigation, difficulty finding important information, perceived lack of security, and slow site loading times account for a combined 81 per cent of why consumers leave a website.

“Beyond domain names, how websites look and function is critically important. Seven in ten consumers expect a professional website when they’re shopping online, and the higher the income, the higher the expectations.

“A professional website – that keeps consumers on your website – means having simple navigation, easy access to important information, and decent site loading times.

Is it secure?

Security, and perceptions around security, are also critical factors. Nearly half of Australian consumers are confident that their personal data is secure when making a purchase online.

“But six in ten consumers are also looking for some form of reassurance on a website, such as a privacy and data use policy or verification by an independent party, like the SSL padlock to boost their confidence.

“Half of all small business owners identified building trust with their customers as their greatest limitation, after the availability of capital, and sales and networking.

“It’s a perennial challenge for small business, regardless of how quickly they became profitable and across every demographic, including, age, gender or identification with a minority group.” 

The Facebook fallout

 The report also uncovered preferences for websites over social media when consumers are learning about a new business and deciding whether to make a purchase. It’s a preference that could be compounded by the fallout with Facebook in Australia.

“Facebook proved itself an unreliable platform for some small businesses in Australia as they became collateral damage in the news media bargaining code negotiations,” Evans said.

“So, it’s reasonable to expect the number of new websites and their importance may increase further. Most small businesses already felt they were getting a better return on their investment from their website than social media, which is consistent with Australian consumers also preferring websites when learning about a new business and when deciding to make a purchase.

“In fact, consumers rate a business’s website as being four times more important than social media when making a purchasing decision.”

“The situation with Facebook has reminded small business owners that their profile on social media is not something they own or can control, in contrast with a website. It’s subject to the social platform’s profit goals and government regulations.”

What about bricks and mortar stores?

61 per cent of Baby Boomers, and 48 per cent of Gen Xers still prefer to shop in a physical store, which is a stark contrast to just 35 per cent of Millennials and 34 per cent of Gen Z.

The study found those who prefer bricks and mortar stores value the opportunity to see, feel and touch products before they purchase them. Whereas those who prefer shopping online, including nearly half of all younger consumers, value its ease and convenience.

One in five consumers say they don’t have a preference between physical stores or shopping online. They are happy with either, depending on what they’re buying.

Still, all generations are purchasing more online now – 45 per cent of their purchases – than before the pandemic, and consumers are now more likely to rank having an online presence as important.

“As you’d expect, online shopping in Australia peaked during the national lockdown, but nearly half of all purchases are still being made online. As one respondent said, ‘COVID-19 forced us into online shopping, but having now tried it, we like the concept and will continue to do more online shopping in the future’.

“So, we’re seeing a shift to online shopping driven by generational preferences, and now further propelled by the pandemic. It’s an ominous combination for bricks and mortar,” concludes Evans.

Read the full Online State of Australia’s Small Businesses 2021 report

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