In recent years, small businesses have experienced unprecedented changes in how they start and operate. If you feel lost or uncertain about what to expect in the future, you are not alone.
As a small business owner, your best tool is information, whether it’s about how other businesses are communicating or how customers want to shop during this time of change.
Fortunately, we have data that can help you with both.
1. Rising customer acquisition costs through paid advertising drive business owners to prioritize customer lifetime value and brand loyalty
It has never been easier to start an online business. While this is exciting for entrepreneurs, it also means more competition – and customer acquisition costs through paid advertising are rising as a result.
With the increase in online businesses, it has become very difficult to be discovered by new customers. “Because it’s easier to start online now, there are definitely increasing customer acquisition costs. Paid advertising becomes very costly, not to mention the Apple iOS 14 release that made it harder to track results in ad spending,” according to Mel Ho, Senior Product Marketer at Shopify.
More brands are competing for customer attention. In fact, total global spending on social media ads in Q3 2021 was up 26% compared to the same period in 2020. More advertising means more competition.
As a result, marketers are shifting to focus on enhancing brand loyalty – a move away from customer acquisition towards customer retention. Loyalty programs, personalization, and retargeting are some of the marketing strategies that brands can use to achieve these goals.
2. Companies are turning to first-party data to personalize services
On the personalization front, data privacy concerns continue to loom large. Legislation makes it harder for brands to collect and use customer data – such as the General Data Protection Regulation (GDPR) in the EU, the California Consumer Privacy Act, the Personal Information Protection Law in China, the General Data Protection Law in Brazil, etc. More than a quarter of “technology decision-makers” expect these changes to hinder business growth in 2022.
As a result, merchants have to pay escalating compliance costs and even hire legal professionals for consulting. Many marketers may consider giving up on personalization efforts altogether due to the challenges facing this marketing strategy.
However, about a quarter of customers insist on opting in to mobile app tracking for a brand they know and trust – especially if there is added value for them.
This is where first-party data comes into play. Instead of relying on a set of third-party data collection sources, merchants can take data and personalization into their own hands – and consumers are more likely to trust this approach.
According to our survey, 42% of brands plan to use tools like tests, personalized mobile apps, and first or third-party behavioral data to deliver personalized product recommendations. Additionally, 44% plan to increase their transparency about how they use customer data.
Using a tool like Shopify Audiences, brands can manage all their data directly from their Shopify dashboard. Moreover, the tool allows merchants to optimize ad spending and performance, reduce conversion costs, and find high-intent buyers. BlenderBottle, a merchant on Shopify, achieved a 600% return on ad spending performance using Shopify Audiences.
3.
Traditional retail companies that moved online during the pandemic are reopening their doors
The COVID-19 pandemic has forever changed commerce. With physical retail stores closing and exploring online sales channels to survive, the world’s return to normalcy is also inspiring a return to traditional businesses.
Consumer behaviors continue to evolve. People want to be able to integrate digital and physical retail – their experience with your brand should be the same regardless of the channel they use to interact with you. In fact, more than half of consumers say they are likely to consider a product online and purchase it in a physical store over the next year – and more than half also say the opposite.
It is important for brands to maintain a physical local presence. Half of consumers consider this an important factor in their purchasing decisions.
Physical retail can also reduce some of the rising customer acquisition costs. LIVELY, a Shopify merchant, started by selling women’s lingerie online but soon faced the high costs of acquiring new customers. So the brand decided to open its first physical location. Not only did it reduce acquisition costs, but it also increased the average order value by 80%. As founder Michelle Cordeiro Grant says, “Our stores act like billboards.” LIVELY now operates in five stores across four states.
4. Mobile shopping is becoming more social
Mobile commerce has been on the radar of retailers for some time. It is important for merchants to understand how consumers use mobile to make online purchases. In many cases, this means turning to social media.
Social commerce sales are expected to nearly double by 2025, with about 30% of consumers in the United States already making purchases through social media channels.
One way to capitalize on this trend is to leverage the power of live chat and live shopping. According to our data, over 80% of companies plan to increase or maintain their budgets for live selling.
If you cannot conduct a live video broadcast for any reason, consider live chat. Our data found that 58% of consumers say it is important for them to easily access customer service through their preferred channel. An additional 43% said they are likely to use live chat in the next year. As a result, 45% of brands have plans to implement this technology in the near future.
Brands can have real-time interactions via social media or live chat applications on their e-commerce site. You can also use a tool like Shopify Inbox to manage all live chat interactions from one dashboard. About 70% of Shopify Inbox conversations end in a purchase.
5. Increased online business creation as more people embrace entrepreneurship
While small entrepreneurship rose in 2022, many entrepreneurs are looking to take advantage of selling their products online. Technology has made it easier than ever to launch an online business, and the e-commerce market is expected to grow by nearly $11 trillion by 2025 as a result.
The recent pandemic forced businesses and consumers to interact online, and many are now comfortable dealing with these digital channels. There are between 12 million and 24 million e-commerce sites worldwide – more competition than we have seen before. In fact, this competition is the biggest challenge facing merchants, according to our survey.
To stand out
In this crowded environment, brands need to focus on quality in all aspects. Quality products, customer service, branding – everything should evoke a positive feeling and experience for your audience.
6. The most popular small business ideas are environmentally conscious
According to a survey conducted by Accenture, more than half of global consumers prefer to buy from companies that share their values. These values are increasingly centered around the environment.
Our surveys found that more than three-quarters of consumers are concerned about the impact of the products they purchase on the planet. Searches for “sustainable goods” have increased by up to 71% since 2016.
Both businesses and customers are aware of and concerned about the impact of trade on our planet.
In the next 12 months, 46% of businesses plan to invest in enabling customers to easily recycle products, 39% want to improve the efficiency of their manufacturing processes, and another 39% want to invest in using natural, renewable, or recycled materials.
Additionally, nearly half of merchants plan to facilitate the recycling process of used items for customers. Others plan to improve processes, focusing on manufacturing efficiency (39%) and reconsidering business relationships with partners who do not share these values (36%).
Building sustainable business practices is a worthy endeavor, and it can begin with small steps, such as educating customers, offsetting carbon emissions, using social media to promote messages about sustainability, and finding sustainable shipping partners.
For example, the sportswear brand Girlfriend Collective is taking steps to ensure it minimizes its impact as much as possible. They are completely transparent about their manufacturing processes and labor. Additionally, their ReGirlfriend program acts as a place for customers to buy and sell previously used products – which is important in the fashion industry.
7. Brands invest in transparency around shipping to enhance brand loyalty
Shoppers expect more from brands beyond fast shipping. They also want different options for shipping types, expedited orders when needed, and then the ability to track and manage these shipments themselves.
According to our data, free shipping impacts three-quarters of purchases, while 60% of online shoppers are influenced by fast shipping times and 53% by flexible shipping options.
Merchants that do not meet these consumer preferences risk losing sales. Nearly a third of consumers abandon their shopping carts if shipping times are too long, and nearly a quarter do the same if they cannot get a guaranteed delivery date from the merchant before purchase.
Make sure that shipping costs and estimated delivery windows are accurate. Nearly three-quarters of consumers find “pre-disclosed shipping costs” to be the most valuable information when making a purchase decision – more important than any other factor.
When integrating order tracking and updates into your shipping strategy, it is also important to provide helpful and accurate information. Many merchants fall into the trap of using cumbersome tools, creating a more negative experience.
The personal care brand by Humankind sends shipping updates via email, including a link for direct shipment tracking, the order number, and the order contents.
8. Labor shortages in the retail and service sector in the U.S. push merchants to innovate
More than 80% of merchants are investing in hiring and recruitment, but it has been difficult to find workers. Retail and service workers know they have the upper hand and are looking for higher wages. This threatens business scalability, as up to seven out of ten surveyed officials believe that labor shortages will slow retail growth.
Affecting
The labor shortage is affecting retailers seeking to build or maintain a workforce. A lack of workers means slower supply chains, as there are fewer people available to receive and deliver goods.
So what can retailers do when they face a labor shortage in the retail sector? More automation can free up your current team’s time and make your business less reliant on manual labor.
Focus on areas that are likely to be affected. Warehouse jobs are expected to be hard to fill – over half of the retail executives surveyed expect a “shortage of hourly supply chain, distribution, and logistics jobs” – so prioritize automating fulfillment processes as much as you can.
9. AI Helps Retailers Deal with Supply Chain Issues
Artificial intelligence and machine learning help businesses automate tasks so they can become more efficient and accurate in their operations, allowing human-operated resources to be allocated to the most important areas of the business. One key area to leverage this technology is supply chain management.
The past few years have shown how supply chain issues can affect even small businesses.
Our 2021 data showed that nearly 70% of consumers experienced delays in their orders due to global supply chain challenges. The greatest worries were shipping delays and additional costs, followed by manufacturing delays.
But instead of cutting costs to deal with these issues, small businesses invested in solving them. 45% planned to invest in manufacturing capacity, 44% planned to improve collaboration with supply chain partners, and 44% planned to increase supply chain speed.
Retailers are still paying significant attention to the supply chain as problems and delays persist – and may worsen due to talk of an impending recession. Retailers thinking ahead are investing in ways to make their businesses sustainable against such challenges.
Cloud-based solutions with automation help brands track inventory, manage orders, and maintain control over their operations. Cloud-based supply chain management software enables issues to be identified, decisions to be made, and communication with partners every step of the way in real-time.
According to research, companies using AI technology in their supply chain can improve logistics costs by 15%, inventory levels by 35%, and service levels by 65% compared to slower-moving competitors. AI can also improve package packing by automatically determining the best type and size of packaging to reduce costs and emissions.
10. Video Steals the Spotlight
Up to 70% of retail executives plan to invest moderately or significantly in digital marketing in 2022. One key area of focus will be investing in video. According to our research, 46% of shoppers want to see a product video before making a purchase.
Video marketing has emerged as an effective content type across all media. Although it began on “YouTube,” brands can use video to engage customers and boost sales on social media, in emails, and on product pages themselves.
As video works particularly well with a social audience, the rise of social commerce has made it crucial for brands to consider adding this format to their content mix. Interactive videos and videos showcasing products can earn you more views and visibility on social media platforms, ideally leading to sales.
Your videos can include behind-the-scenes content, live streams, product unboxings, video consultations, or personalized product recommendations.
Remember
You can make your videos for sale. Offer one or two products in each video and showcase them in action, filming with consideration of where you might like to include calls to action.
The sustainable clothing brand Boody uses video to drive social sales. In the video below, posted on Instagram, the brand tags the showcased products so their audience can easily purchase them.
Learn more: Grow your business with Facebook and Instagram – from one place – using Shopify’s social commerce tools.
Utilize these resources to help you figure out how to use videos to increase sales: How to Create a Video in 30 Minutes or Less How to Use Instagram Video to Boost Your Brand through E-commerce The Best 12 Free Video Editing Programs (Pros & Cons) Follow us for more small business trends
You know better than anyone that staying in business means adapting, reassessing, and continuous improvement. These small business trends can help you identify the areas to focus on and invest in for the coming year.
Take this data and run with it to make 2022 your best year yet. Are you ready to build your business? Start your free trial of Shopify – no credit card required.
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Frequently Asked Questions About Small Business Trends
What are the trending trends in small business?
There are many trends in small business. One is the shift toward more online businesses. This is due to the ease of starting and running an online business compared to a traditional business. Additionally, more people are shopping online, providing more opportunities for success for online businesses. Another trend in small business is the move toward more niche businesses.
What are the top 5 trends in business today?
Cloud computing, big data, mobile e-commerce, social media, and the Internet of Things.
What are the top 5 small businesses to start?
A company providing affordable online marketing and SEO services for small businesses. A cleaning and organizing service for luxury homes. A wellness center offering yoga and meditation classes, as well as stays at health and wellness resorts. A meal delivery service specializing in healthy, organic, and local food. An online retailer specializing in eco-friendly and sustainable home goods.
What are the biggest trends in small business?
Rising customer acquisition costs from paid advertising are pushing companies to focus on customer lifetime value and enhance brand loyalty. Companies are turning to first-party data to personalize services. Traditional brick-and-mortar businesses that moved online during the pandemic are reopening their doors. Mobile shopping is becoming more social. Online business creation is increasing as more people embrace entrepreneurship. The most popular small business ideas are environmentally conscious. Brands are investing in transparency around shipping to build brand loyalty. The labor shortage in the retail and service sector in the U.S. is forcing merchants to innovate. Artificial intelligence (AI) is helping merchants tackle supply chain issues. Video is stealing the spotlight.
What do small business owners need in 2022?
Updated technology. New marketing strategies. More efficient operations. Better customer service. More innovative products or services.
Source: https://www.shopify.com/uk/blog/small-business-trends
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