Digital tools create a safety net for European businesses

Alongside the public health crisis, the economic impact of the pandemic is being felt heavily around the world. As entrepreneurs, business leaders and Governments work to protect jobs and accelerate a return to prosperity in the long term, it's clear that digital tools and skills are going to be more important than ever. That’s why Google is investing in new tools and training to ensure all businesses can build resilience and recover quickly. These are helping companies such as handmade accessories retailer MoonDot in Poland who used digital tools to improve online sales by 70%, and La Maison Des Soeurs Macarons in France who gained 200 new customers after its team took online training courses in digital skills. 

A new report released today by the Connected Commerce Council, funded by Google, shows how a “digital safety net” can serve as a support system for small businesses. The survey of more than 5,000 small businesses across Europe found that businesses that used digital tools to rapidly change how they find customers, sell products and operate reported 80 percent better sales during COVID-19 than those who didn’t, and hired three times as many people. And without such tools, many would have gone out of business.

Digital drives jobs and sales for small businesses

Whilst almost all (80 percent) of European small businesses increased their use of digital tools during the pandemic, the report identified three different types of small businesses based on their adoption of digital tools, and how this impacts their business:

• Digitally Advanced small businesses (42 percent of small businesses in Europe) use more than 10 digital tools and prioritize their importance, leading to better business outcomes such as higher revenue and jobs 

• Digitally Evolving small businesses (40 percent) viewed tools as supporting or essential for their business, but were deploying an average of six 

• Digitally Uncertain small businesses (18 percent) use less digital tools and don’t prioritize their importance, leading to worse business outcomes

There is clear untapped potential for European businesses to benefit from digital tools 

From consulting with small businesses, the researchers identified a “stack” of digital tools —  e-commerce, data analytics and talent management, cloud services and collaboration tools — that created significant revenue advantages for small businesses if they were being used prior to the pandemic. This ultimately showed that not only is digital driving revenue and jobs for these businesses, but also that Europe is missing out on significant untapped growth from businesses who are not yet convinced about the usefulness of digital tools. 

The pandemic had a dramatic, and uneven, impact on small businesses

The impact on small businesses was, and continues to be, extreme, with 90 percent saying they were negatively impacted and 44 percent having to adjust their business models. And certain industries and groups faced greater challenges than others, particularly female, older and solo-operator business owners. 

What’s next 

It’s clear from this research that there is an opportunity to drive jobs and revenue for European small businesses. However, the research shows that governments and companies need to narrow the gap between the digitally advanced and uncertain, particularly for underrepresented groups. As new digital habits like online shopping and remote working are here to stay even after the pandemic, the research also highlights the risk of some small businesses falling further behind their competitors if they don’t increase their use of digital tools. The barriers those businesses face include being unsure of the return on investment and also a lack of skills and knowledge about digital tools. 

This is why new skills are such an important part of economic recovery efforts across Europe. It’s also why we are committed to investing in research like this to inform and build on the tools and training we already provide. Google is joining policy makers, public agencies, training partners and others to develop products and partnerships to help tackle these barriers, like ourZukunftHandel program, in partnership with HDE, the German Retail Association, to help German retail businesses or Ma Vitrine En Ligne, in partnership with the French Federation of Trade Associations, to connect artisans and traders with digital experts for remote support courses, and providing personalized product recommendations for small business owners on our Google for Small Business hub. 

By removing these barriers, we can achieve an accelerated, sustainable recovery which works for everyone. 

Read the full report and methodology from the Connected Commerce Council.

Key stats at a glance:

• Key stats at a glance:

  • The impact: 

  • 80% of small businesses increased their use of digital tools during the pandemic

  • 44% had to to adjust their business models

  • Small businesses with a sophisticated use of digital tools fared nearly twice as better financially (80% better sales; 60% better revenue) during COVID-19, and hired over three times as many people

  • The challenge: 

  • 90% of small businesses were negatively impacted by the pandemic 

  • Digitally advanced small businesses are about 2.5X more likely to be led by someone under 45 years old versus a leader over 45. 

  • Female small business leaders face more than 10% greater revenue challenges than men if they don’t use digital tools, but conversely these tools help women more when deployed successfully

  • The future

  • 62% of small businesses believe they will fully recover to pre-pandemic levels during the next year

  • 50% of small businesses plan to increase their use of digital tools