The state of SMB innovation in 2021

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The state of SMB innovation in 2021
Lockdown restrictions fast tracked theĀ digitalisationĀ of Australian businesses.

Small to medium sized businesses’ (SMBs) ability to demonstrate resilience and fortitude over the past year is nothing short of astounding.

Every business in Australia had to completely rethink how it operated over that time, with many leveraging the power of e-commerce and digital tools to propel them forward. While there is still much uncertainty as we head down the road to recovery, twelve months on from the first lockdown restrictions across Australia, green shoots are starting to appear.

According to new research from the Amazon Launchpad Innovation Report, that surveyed more than 1,000 Australian SMBs, 89 per cent of SMBs are feeling more resilient in running their businesses, 92 per cent feel optimistic about the growth of their business, and 78 per cent will use e-commerce and digital tools to allow them to work from anywhere.

Our findings from the report have shown that despite the challenges of the last 12 months, Aussie startups and entrepreneurs are striving for growth and they are doing this by embracing e-commerce, investing into innovation and harnessing digital tools for business continuity, opportunities, and connection to customers.

Lockdowns helped fast track e-commerce adoption

E-commerce has been a key driver for business continuity and growth over the past 12 months with almost a third of SMBs (30 per cent) stating lockdown restrictions changed the way they sold to customers.

Many SMBs transformed their business models in 2020 to embrace e-commerce and digital channels as they navigated restrictions. As a result, 44 per cent of SMBs were able to reach new customers online and 15 per cent were able to make a sale online for the first time.

As lockdowns necessitated a shift to online shopping, over a quarter of SMBs (27 per cent) invested more in developing their online channels to reach new customers.

As a result, 21 per cent said the ability to sell over the internet reduced the impact of restrictions, and 39 per cent of SMBs report that customers are now more open to buying online.

Innovation is the key to growth

To help navigate the uncertainty of the past twelve months, almost a third (30 per cent) of SMBs said they invested in product or business innovation to reach new customers, and 82 per cent said they will lean into innovation to grow their business over the next 12 months.

Looking ahead, 42 per cent of businesses want to prioritise expanding their digital presence to enable innovation, while many are revising their business model to meet the changing needs of their customers.

Below are the top five ways businesses are planning to innovate over the next 12 months

  • Growing digital presence: 42 per cent 
  • Growing business into new markets 39 per cent 
  • Revising product offering 33 per cent 
  • Research and the develop new products 32 per cent 
  • Revising business model: 31 per cent 

Technology empowers success 

The research showed the vast majority of small to medium businesses intend to build on gains made last year by embedding technology in their operations, with 75 per cent of local SMBs stating online sales will help grow their business. They recognise they require resources and technology to achieve this, with 74 per cent investing in online channels to spearhead growth and 69 per cent using online channels to pursue investors.             

Importantly, a large majority of SMBs are investing not just through money, but also time in building their digital capacity and technology capabilities. In total, 75 per cent say they will invest more time in understanding how to use e-commerce over the next 12 months to transform their business.

Underpinning the future with digital tools 

Lockdown restrictions fast tracked the digitalisation of Australian businesses with 78 per cent of SMBs saying digital tools and e-commerce could allow them to run their business from anywhere.

The vast majority of SMBs embraced digital tools over the past 12 months to engage with stakeholders. The research showed 81 per cent of SMBs are now using digital tools to network, which may include video conferencing, and social media to harness their potential and easily engage with employees, stakeholders and suppliers. 

Finding freedom with online tools to reach new customers: digital strategies supported SMBs to pivot in 2020.

Last year prompted a shift in many SMBs’ approach to digitisation, with 30 per cent saying restrictions changed the way they sell to customers.

The research showed that 80 per cent of SMBs feel more confident using digital tools to market to customers than they did 12 months ago. They have been prepared to adapt their approach along this journey, with 30 per cent changing their business strategy to develop new opportunities and 19 per cent redefining target audiences to enter new markets. As a result, 27 per cent have invested in developing online channels to reach new customers, a trend that will continue this year.

What do small businesses need most in 2021?

Guidance and support remain important for SMBs in 2021, with 34 per cent seeking marketing, advertising and social media support, 30 per cent seeking help with future growth planning, 21 per cent wanting help building their e-commerce capabilities, 14 per cent seeking mentorship from established businesses and 17 per cent wanting help with infrastructure and logistics.

Grants for startups

The Amazon Launchpad program, supports Aussie startups and entrepreneurs to bring innovative products online and reach Amazon customers. To acknowledge businesses that have demonstrated an especially forward-thinking approach during a time of extraordinary challenge and change, our Amazon Launchpad Innovation Grants have returned for 2021.

Entries are now open close on Monday 10 May at 23:59pm AEST. Winners will be announced in June. Go to www.Amazon.com.au/Launchpad to find out more. T&Cs apply.

Chadd Ciccarelli is Head of Amazon Launchpad.

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