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Digital Safety Net Helps Small Businesses Survive During COVID-19

Washington, D.C. (September 10, 2020): The Connected Commerce Council (3C) today released a report detailing the existence and importance of the small business “Digital Safety Net.” The report confirms that small businesses using more digital tools, technologies, and online marketplaces are doing better during the COVID-19 pandemic. Those who embrace digital tools early and integrate them more are doing even better. 3C defines the Digital Safety Net as the free and low-cost small business services that include communications and workflow tools, digital marketing and advertising, websites and social media, back-office tools, and e-commerce and online payment tools.

Digitally Driven shows that small businesses that continue to operate and embraced digital tools the earliest – “Digital Drivers” – expect 4x better revenue for 2020 compared to “Digital Maintainers,” those who are generally skeptical of digital tools’ value and typically use only a few basic tools such as email and perhaps a website. Regardless of where they started on the digital continuum, 72 percent of small businesses have increased the usage of their digital tools during COVID-19.

“In times like these, when in-person commerce is limited, if not impossible, and working from home is the norm, digital tools literally are a safety net preventing deeper small business calamity,” said 3C President Jake Ward. “The Digital Safety Net is real. However, the net could — and must — be bigger, more robust, and more inclusive. Small businesses must invest time in selecting the right digital tools for their business; technology companies must help small businesses access the right tools, and policymakers must invest more money in public-private partnerships that create and support small business resource networks.” 

 Other key findings in the report include:

  • 35% of small businesses are “Digital Drivers.” They consider digital tools essential and were using many digital tools pre-COVID-19.
      • 33% are “Digital Adopters.” They recognize the value of digital tools and are using some but are not fully committed to digital. 
      • 24% are “Digital Maintainers.” They are generally skeptical of digital tools’ value or are tech-nervous, and typically only use a few basic tools such as email and perhaps a website.
    • 53% found digital tools more helpful during COVID-19 than before.
    • 48% started using at least one new digital tool during the pandemic.
  • Asian (64%), Black (60%), and Latinx (52%)-led small businesses are more likely to find digital tools more helpful during COVID-19 than before. 
  • Small businesses cite two key challenges to adopting and expanding their use of digital tools.
    • 49% cite information and skills gaps, while 45% report cost and return on investment as challenges.

“When the pandemic first hit, we thought we would have to shut down, but we were allowed to stay open to handle online orders,” said Charlie Mayer of Chicago-based Spice House. “Our digital business has accelerated more in the last four months than in the last several years. Now more than ever, anything that can be sold online, should be.”

The report also recommends that small businesses maximize their digital tool use and become better prepared for the next crisis, and provides a playbook for tech platforms, governments, and NGOs to support small businesses today and into the future.

For small businesses, it is critical to identify their goals, gaps, and precise needs to ensure they are investing in the right digital tools – not the most popular or least expensive options. For technology companies, helping small businesses discover which digital tools they need and providing confidence-building skills training and user-friendly support materials will help with the knowledge gap that prevents many companies from taking the digital plunge. And for policymakers, the need is to increase funding of small business resources and create public-private partnerships to address access and education barriers that small businesses experience during tough economic times.

“Thanks to digital tools, when the pandemic forced our storefront to close, I was able to easily amplify my business online,” said Mimi Striplin, the founder of The Tiny Tassel in Charleston, S.C. “Small businesses that are still struggling to find a new normal should heed the advice of this report and embrace digital tools and technology as early as they can; better to be prepared than to be faced with heightened negative impacts brought on by an unpredicted crisis.”

Digitally Driven, commissioned by 3C  in conjunction with Google and Greenberg, is based on findings from a nationwide survey of 7,021 small businesses that were still in business, including a representative sample from every state in the country. Data are weighted by gender, ethnicity, region, business size, and vertical, to ensure an accurate national representation. The survey was fielded online and by phone between May 28 and July 3, 2020.

The full report can be found here.

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