Online sales has surpassed brick-and-mortar for Australian small businesses

E-commerce revenue has surpassed bricks-and-mortar as the primary revenue source for Australian entrepreneurs and small businesses, new research shows.

For the first time, two-thirds of surveyed small businesses are optimistic about their prospects in 2022, following an online shopping boom that followed two years of pandemic lockdowns.

According to respondents, an online presence is now responsible for, on average, over 53% of a small business’ annual revenue.

For 23% of respondents, 100% of their total business revenue comes from online sales, with 46% saying they believe a business cannot succeed today without having a website.

The explosion of e-commerce globally as a result of lockdowns has led to a radical transformation in consumer behaviour.

In Australia, online shopping surged 57% year-on-year in 2020, according to Australia Post’s Online Shopping report published in March last year.

Australians spent an astounding $50.46 billion online over that year, up from $32.1 billion in 2019.

The new research, conducted by internet domain service GoDaddy, shows that as a result almost half are no longer feeling the financial impacts, while fewer than one in 10 believe the impact will be long-term.

According to research conducted by Mastercard around its Australian activity, the number of companies taking businesses online each month more than doubled from pre-pandemic levels in the past two years, peaking in July 2020.

This data is borne out in this new research, which found that an online presence is more important than a bricks-and-mortar location for the vast majority — 62% — of small businesses.

The company’s ‘Entrepreneurial Pulse’ research measured sentiment among Australian entrepreneurs and small business owners across topics of digital transformation, upskilling, the pandemic and e-commerce revenue.

Tamara Oppen, managing director at GoDaddy Australia, said its survey showed that while the last 20 months have been an unprecedented challenge, “the enduring themes in the small business community have been resilience, adaptability and innovation”.

As small businesses were forced to build up their online presence and transform their business operations as a result of the pandemic, they discovered changes made out of short-term necessity are now becoming long-term plans for growth, she said.

“With a fresh year ahead, we’re excited to see these everyday entrepreneurs and small businesses reach new heights,” Oppen said.

While most businesses were positive about the year ahead, disruptions caused by the pandemic continued to track as a major concern even for businesses that had pivoted to an online-first model.

The biggest concern amongst Australian small business owners is a return to lockdown, followed by competition, low customer demand and cash flow.

While staff shortages continue to ravage essential service industries, only 14% of small businesses said they were concerned about hiring staff.

Looking forward, online retail is the greatest focus for small business expenditure in the coming year, with more than a quarter planning to invest in an ecommerce website or online store.

Almost 72% are focusing on selling locally; 35% selling nationally and 13% selling overseas.

And reflecting ongoing uncertainty around physical commerce, just one in 10 small businesses said they were considering investing in premises such as an office or retail space.