How Digital Tools Help Small Businesses Weather Economic Challenges

Sharon Nguyen and Prisha Punjwani, 3C’s Tech Policy Fellows

Recent trade policy changes have created serious challenges for small businesses. Most notably, steep new tariffs are driving up the costs of imported goods and materials, forcing small businesses to choose between two bad options: They can either absorb the higher costs and accept pared-down margins, or raise the prices of their goods and lose customers. Unsurprisingly, nearly two-thirds of small business owners say tariffs will hurt their business.

But small business owners can offset some of the tariffs’ ill effects by leveraging digital tools that help boost sales; cut costs by improving shipping, logistics, and advertising efficiency; and identify new, less expensive suppliers. By leveraging these tools, small businesses can effectively deploy a “digital safety net” to help weather the current economic headwinds.

Selling through online marketplaces like Etsy, Target, Walmart, and Amazon dramatically reduces operating costs, eliminating the expenses of running a brick-and-mortar shop while offering instant access to sophisticated digital infrastructure and millions of customers. The combination of reduced costs and increased sales typically makes selling through online marketplaces more profitable than selling through traditional stores, or even to wholesalers. That, in turn, makes digital marketplaces key elements of the digital safety net. Moreover, by selling through multiple platforms, small retailers can reach even more customers and limit dependency on any single platform — allowing them not only to mitigate risk, but to grow and compete even in a challenging economic environment.

Importantly, many online marketplaces offer extremely cost-efficient integrated fulfillment services. Small businesses may choose to manage fulfillment (i.e., storing, packing, shipping, tracking, and delivering goods) in-house, but using online marketplaces’ services typically saves enormous amounts of time and money. Fulfillment by Amazon (FBA) and Walmart Fulfillment Services (WFS), for example, offer industry-leading services that help small businesses keep shipping costs low, and ensure quick, reliable delivery to customers. That means businesses save money and stay competitive by keeping prices stable and customers satisfied.  

As business costs rise, effective digital marketing is a necessity. 3C research indicates that 64 percent of small business leaders rely on digital ads to reach customers, and 75 percent believe the ads help them compete with much larger competitors. That’s because unlike traditional marketing, data-powered digital advertising allows small businesses to reach interested customers, while skipping those unlikely to be interested — helping save money and drive sales. And digital ad partners’ data analytics help businesses see which ads are most effective so they can adjust in real-time and get the best bang for their advertising buck. Eighty percent of SMB leaders who invest in digital ads say the ads help them reach new customers.

Increasingly, AI-powered tools like Google Ads’ Performance Max help small businesses tailor ads to specific demographics based on geographic location and purchasing behaviors, enhancing personalization and brand awareness — and driving sales. This digitally-driven approach improves ROI and ensures sustained growth even in challenging macroeconomic conditions. 

Finally, small businesses can leverage U.S.-focused business-to-business (B2B) online marketplaces to connect with American suppliers and reduce reliance on costly imports. Digital platforms like Flexport and ImportGenius provide valuable access to global trade data and analytics, enabling small businesses to identify new suppliers. Flexport offers end-to-end supply chain visibility, allowing businesses to anticipate delays and proactively make adjustments. Similarly, ImportGenius gives insights into how tariffs affect different industries, allowing small businesses to adjust their strategies appropriately. 

Rising tariffs, counter-tariffs, and associated inflation present significant challenges for U.S. small businesses. But as 3C’s new Super Selling report shows, small businesses are creative and resilient, using digital tools to streamline logistics, optimize inventory management, and grow their customer base — while managing costs, adapting to market changes, and maintaining strong supplier and customer relationships. When the going gets tough, the tough get going with digital tools.