Almost half of Australian small- to medium-sized enterprises (SMEs) have changed their business model to adapt to financial disruption caused by the Covid-19 pandemic, with one in five of those embracing online trading in a significant way.
The results from Westpac’s SME Covid-19 Tracking Report, which is an ongoing weekly pulse check of small- to medium-sized businesses throughout the pandemic, shows 42% of the businesses that moved online as a result of the pandemic will now make the change permanent.
Over 50% of revenue from online
According to details released by the banking giant, of the SMEs that operated both an online and a physical store during Covid-19, 52% of revenue came from their online store, while 48% of income came from the physical store.
In terms of sectors which moved their businesses entirely online during the pandemic, education and training (23%) led the way, followed by arts and recreation (13%) and retail trade (12%). However, only 5% of food and beverage businesses were able to move online completely, further proof that the hospitality industry has been hit extremely hard.
Ten percent of SMEs that operated only a physical store at the start of the year have moved online completely, 6% have kept their physical store and also started trading online, while 71% have kept just a physical store.
Aussie SMEs are extremely resilient
Around eight in 10 SMEs have had a reduction in revenue as a result of Covid-19.
Westpac’s Lali Wiratunga said the results from the Covid-19 Tracking Report showed how resilient Australian small- and medium-sized businesses could be when faced with a once-in-a-generation challenge.
“This year has been extremely challenging for many small businesses, but many have adapted. We’ve seen more change in the way businesses operate in the last year than we’ve seen in a very long time,” Wiratunga stated.
Of the SMEs that permanently moved their business online, 74% say moving the business online has made it easier to run, 60% believe going online has reduced operating costs, and 59% say moving online has increased revenue.
Online resources must be planned
“Going online may also require a substantial amount of extra work and staffing. SMEs should consider and plan for how to effectively resource the online component of the business, while also running their traditional business,” Wiratunga said.
“It’s also worth investigating what can be done to use online tools to better serve existing customers and communities before thinking about selling to new customers.
“There are quick wins that could be explored, like making better use of your businesses’ social media channels to connect with customers,” he added.
“From here you could review and prioritise opportunities for improvement across the business, for example by using artificial intelligence, automation and machine learning, you can better understand, anticipate and respond to improve the customer experience.”