Nearly 90 per cent of Canadian consumers think it’s important to support local small and medium businesses, but according to a recent report, SMBs have a hard time reaching those consumers.
Worse yet, Canadian SMBs run the risk of stagnant growth as they fail to use the digital tools available to them, reported a whitepaper commissioned by Visa Canada.
The vast majority of all Canadian enterprises, more than 95 per cent, are SMBs. But less than a third of these Canadian SMBs sell their products and services online, and only 12 per cent of sales are contributed by e-commerce.
The report says there’s a serious business case to improve e-commerce capabilities.
“Sixty-one per cent of SMBs agree that customers spend more when they use cards versus cash, and 40 per cent of SMBs saw an increase in sales after they started to accept digital payments – by an average of 7.1 per cent,” it reads.
Canadian SMBs (63 per cent) recognize the importance of digital marketing. However, there is still a lot of room to improve.
“I would definitely recommend people to try because of the vast improvements that have been made over the past five years. You could be selling online in two hours. And don’t think of a website as ‘I need to make it 100 per cent great, and it’s the best thing ever, and then I press on’, rather just get a website that sells online, and then build it as you go… like you build your business,” explained Joey Walsh, co-owner of Hockey Stick Man, in an interview with IT Business Canada.
As far as the cross-border sales and payments are concerned, only three in five Canadian businesses currently engage in cross-border sales. One in 10 executives thinks they’re ready to manage international customers, while nearly half of Canadian businesses view processing and handling foreign transactions as the biggest barrier to international growth.
“Running a small business is not easy. And that’s why I think it’s really admirable as well. A lot of the small businesses that we work with at Xero say the number one challenge that they face is getting time back into their day so that they can start to look to invest more in finding opportunities for how they would like to grow their business.
“And what we see a lot at Xero is that getting access to real-time financial information around the health of their business, actually really helps to create that opportunity to bring time back into their business because it speeds up the amount of time that it takes to actually make confident decisions on what opportunities to pursue and what decisions to make to grow the business,” said Will Buckley, country manager for Canada at software firm Xero.
Reduced costs, customer acquisition and improved sales are the main reasons SMBs are adopting digital transformation. But according to the report, only 52 per cent of SMBs say the prefer to accept digital payments from consumers.
That’s an issue when 85 per cent of consumers ranked a digital payment method, such as a card or wire transfer, as their most preferred payment option in the report findings.
“It’s no longer necessarily about what customers are looking to buy, it’s more about how they’re looking to buy and what that buying experience is going to feel like…which creates all kinds of opportunities to start to differentiate one’s brand around how good their customer service is, how close and connected they stay with their customers, regardless of where those customers are based,” explained Buckley.
He added only nine per cent of SMBs in Canada leverage cloud technology in their business. Compared to other regions they serve, such as Australia and New Zealand, cloud adoption among SMBs is closer to 60 per cent.
It has also been estimated that 24.3 million Canadians (72.8 per cent of the total population) will be digital buyers by 2023, and e-commerce sales are expected to hit $56 billion in 2020.
Millennials, indicated Buckley, will play a big part in that shift.
“This trend of à la carte technology adoption will be a key driver for Canadian small businesses in 2020, especially as the technologically savvy millennial entrepreneurs gain a foothold in the space.”