In 2020, online sales grew 32 percent in the United States, to an all-time high of $791 billion—the highest growth in e-commerce in decades. Even more astounding, according to figures released by the U.S. Department of Commerce in August, online shopping in the United States continued to rise an estimated nine percent in the second quarter of 2021, growing even as vaccinated shoppers returned to stores.
The takeaway for small business owners?
Online shopping is here to stay. According to a recent report by Adobe, e-commerce spending is expected to top $1 trillion in the United States in 2022. “A lot of the resource investment,” states an April 2021 report by McKinsey & Company, “needs to shift away from opening new brick-and-mortar stores and toward putting it into technology.” The world is changing fast, in other words, and to succeed entrepreneurs must continually adopt the latest innovations to better connect with customers. Here are five trends for staying on top.
1. Use “phygital” tools like social discounts and pop-up events
Going forward, customers will increasingly expect “phygital” transactions—experiences in which elements of both in-store and online experiences are blended in an omnichannel environment. For small businesses, however, phygital offerings like augmented reality—letting a potential customer use their smartphone to, say, outfit their apartment with a digital hologram of a custom-made armchair—can be difficult to achieve from a cost perspective. One solution? Social media sites like Facebook and Instagram allow businesses to reward their followers for sharing a discount code, for example, which drives new traffic to the store and encourages previous customers to buy again. And for online-only stores, seasonal pop-up shops can use customers’ geo-location data to target the right physical area for setting up a temporary space. When situated in a popular area, the brand can then take advantage of events like Black Friday. The options for devising phygital offerings are only limited by creativity, and customers are increasingly expecting “experiences” when they shop—whether that’s online or in-person—so combining the two worlds may be the quickest way to establish a memorable interaction for customers.
2. Small Business Insurance Makes Safety Easy
In a world that’s changing as quickly as this one, it’s as important to stay up-to-date on the latest digital tools as it is to stay ahead of potential new risks. Luckily, State Farm offers 24-7 virtual assistants to help business owners quickly connect with the right agent to tailor a business insurance plan that fits their unique needs. Working with over 300 different professions—from photographers to plumbers to accountants—local State Farm agents meet business owners wherever they prefer (in person, online, via phone) to help ensure their assets are protected. Ranked by Investopedia as the top choice for small business insurance due to multiple types of coverage options through a nationwide network, State Farm has local agents who are business owners themselves, so they understand the needs of other business owners—enabling them to focus on growing with confidence.
3. AI Helps Personalize Customer Experience
Artificial Intelligence (AI) and machine learning (ML) are already used by large corporations, but technological advances are making it easier and cheaper for small businesses to take advantage of these tools as well. Using AI/ML software programs, entrepreneurs can streamline research and development, discover supply-chain inefficiencies, find the best job candidates, and improve cybersecurity. But the technology is most impactful, perhaps, in reaching customers. AI-enhanced software or plug-ins can deliver real-time, personalized ads and messaging to consumers, enabling small-business owners to better identify customer segments, connect with repeat customers, and customize push notifications. Also, AI-enabled chatbots are improving rapidly. In the past, chatbots had to be programmed with a specific scripted response to questions, leaving many customers frustrated. But with AI-powered chatbot programs, the more sessions that are logged, the more helpful the computer program is likely to become—offering an easy way to improve customer service online while also freeing up employees to better help customers in person.
4. Social Communities Drive Sales
Most small businesses use Facebook, Instagram, or Twitter, even if only to provide information to customers. But increasingly small businesses are leveraging those platforms and others, like TikTok, to create their own communities. Big brands have done this for some time now by designing unique offerings like online classes, which enabled the craft-store Michael’s to stay connected with its customers during the pandemic. But small businesses have done this, too, offering everything from virtual chocolate tastings (chocolatiers) to remote instructional classes (local hardware stores). This creates personal connections with the brand, as well as an online community of like-minded people who are interested in the company. Once a business owner has that group, it’s easier to reach the members of that community with advertising campaigns on social media platforms that have “buy-now” links—essentially transforming the platform into a version of Amazon’s one-click shopping experience. Used together, social community and social commerce can be a significant boost to any small business.
5. Cybersecurity threats are everywhere
Cybercrime is at an all-time high and small businesses are becoming an increasingly popular target. By one estimate, 47 percent of small businesses experienced a cyberattack in the last year—and forty-four percent experienced more than one attack. And yet, according to research from BullGuard, nearly 60 percent of small businesses think it's unlikely they will be targeted. Small businesses need to take the threat seriously—and also use it as an opportunity. By prioritizing technologies that improve cybersecurity, businesses will not only reduce the consequences from attacks, they will earn the trust of consumers and encourage more business from customers. Essentially, increased cyber security is an easy way for entrepreneurs to both protect their assets and instill confidence in customers while growing the brand.
This story was produced by WIRED Brand Lab for State Farm.
