SMALL BUSINESS INSIDER
By Karen Kerrigan –
Certain members of Congress think they know exactly where innovation and the market are headed. They also think they are much smarter than consumers and entrepreneurs. That’s the audacious mindset they are bringing to legislative efforts that aim to micro-regulate and break-up America’s “big tech” leaders.
These legislative measures are centered on a fantasy view of monopoly power, that markets are stagnant with little competitive pressures, and that consumers are somehow getting the shaft in the digital economy. All of the opposite is occurring, as the digital economy is driving more competition and entrepreneurship, and is benefiting both consumers and small businesses by blending the best of online and in-store experiences. Technology and tech innovation has made this possible.
Entrepreneurship is Booming: Startups See Opportunity and an Open Economy
First and foremost, as we’ve seen in the data over the past couple of years, entrepreneurship in America is alive and well. In fact, it is booming.
A record number of Americans have filed for business applications, which actually hit a new record in 2021. According to the U.S. Census Bureau, 5.4 million people filed business applications to start new businesses in 2021, an increase of 53% from 2019 and the most of any year on record. This upsurge began in 2020, and there seems to be no slowing down, as more than 430,000 individuals applied for business applications in January 2022.
So, competition and a competitive environment – as revealed by the large number of new business entrants – is vibrant and strong across America. All industries are benefitting from this entrepreneurial surge, especially retail, which is one of the top sectors where people are taking steps to start new businesses.
The Retail Sector is Thriving and Dynamic
These new entrepreneurs see opportunity in the powerful digital economy. They have access to technology tools, allowing them to start a business affordably and market to customers more easily through platforms that provide efficient access to the massive consumer marketplace.
Congress is acting as though online commerce is fully disconnected from (and will fully dominate) in-store purchases and that a few big tech players monopolize the online sphere. This view is not based on the facts, or reality. What we see happening is a productive co-existence between online shopping and physical (in-store) shopping that meets the needs of consumers. Technology platforms – big, medium and small – and tech tools are providing efficiencies to both shoppers and small businesses alike.
New studies by Deloitte for the Computer and Communications Industry Association (CCIA) on small and mid-size businesses (SMBs) reveal the reality and positives of this evolving dynamic. The reports are “must reading” for Members of Congress who are working to rein in big-tech through intrusive and punishing regulations, as legislation being pushed will vastly harm the SMBs that are using an array of tech tools and platforms to reach and serve consumers.
The bills will harm consumers and small businesses by disallowing conveniences they enjoy and have come to depend on. If that isn’t enough, legislation would also undermine America’s startup ecosystem, and the investment and innovation that leads to more beneficial products and services for consumers. This is not what our economy needs as it works to recover from the pandemic and navigate the crushing impact of inflation.
As noted by CCIA in a press release about the studies:
“The rapid growth of omnichannel retail has allowed both SMBs and large national retailers to find synergies between their physical and digital channels, adding further value to physical stores. The survey finds that consumers are seamlessly using both digital and in-person retail options, more often than not within the same journey, to find the products they want, at the best price, and with a fulfillment method most convenient to them. The research supports the idea that consumers don’t think of shopping in segmented terms of online and offline.”
The studies note specific data on how consumers are actually behaving as they embrace the “mix of the physical and the digital”:
● 72% of consumers reported shopping more than one retailer on a recent shopping trip: 42% shopped two retailers and 30% shopped three or more retailers.
● Two-thirds of shoppers used a digital device while in a retail store to compare prices and products online and in-store simultaneously.
● 55% of respondents who started their most recent shopping journey online made their purchase in-store.
● 44% of consumers preferred having multiple fulfillment options when purchasing online, rather than just defaulting to home delivery.
● 46% of consumers will pay more to pick up an item in-store 5 minutes from home rather than wait for two-day delivery.
● 78% of predominantly online shoppers compare prices amongst multiple retailers vs 66% of predominantly in-store shoppers.
● 55% of shoppers who routinely purchase a specific product category online switch to in-store for new occasion purchases, and 33% of shoppers who routinely purchase a specific product category in-store switch to online for new occasion purchases.
In addition, according to the key takeaways provided by CCIA, SMBs have positively responded and are continually innovating to meet consumers where they are, how they want to be served, and are able to do so because of tech tools:
● SMBs are taking advantage of the omnichannel fulfillment option and leveraging their physical stores: 61% offer buy online, pick up in-store, and 50% offer buy online, same-day curbside pickup.
● 99% of SMB retailers use at least one digital tool or marketplace, including retailers who only sell via physical stores. Digital tools have lowered barriers to entry, allowing SMBs to reach consumers far beyond their physical location or hometown.
● Among the SMB retailers who are currently selling online, they’re using a variety of digital touchpoints; 70% are using more than one: 39% are using two and 31% use three or more.
● 27% of online sales were fulfilled at the physical store in 2021, up from 21.7% in 2020, demonstrating the importance of physical retail.
Especially over the past 10-15 years, retail has dramatically evolved. It will continue to do so because of innovative entrepreneurs and technology, and the changing needs of consumers. Again, consumers and entrepreneurs are greatly benefiting from the dynamism in this sector.
Some in Congress see boogeymen, while consumers and small business owners see efficiencies, conveniences, competition and opportunity. Why would Congress want to wreck a good thing? A very good thing.
There are plenty of other issues for Congress to address that are priorities for the American people and small businesses. High health care costs, inflation, healing the economy and more. They need to leave alone what’s working, and address those issues that are not.
Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council.