Online Sales Led Increased Revenue Expectations for Main Street SMBs in 2023

small business owner

With prices at high levels most of the year and with the overall economy recording moderate growth, 2023 was a challenging year for businesses, especially for the most vulnerable small and medium-sized businesses (SMBs). However, signs of recovery were observed at the end of the year. The inflation-adjusted GDP recorded in the last quarter was almost the same size as predicted by the Congressional Budget Office (CBO) four years ago, and unemployment figures should average a promising 3.9%. This might explain why nearly half of U.S. Main Street SMBs still expected their revenues to grow in 2023 full year.

Prospects are more positive among online players still benefitting from the eCommerce boom that followed the pandemic. As collected in a recent PYMNTS Intelligence research in collaboration with Enigma, “Main Street Health Survey Q4 2023: eCommerce Protects Main Street SMBs’ Bottom Line in a Cooling Market,” nearly 67% of retail trade SMBs currently offer their products online, and around 63% do so through social media, a portion that would have been unthinkable just a few years ago.

chart, Main Street SMB revenue expectations

The study reveals businesses that mainly operate online are more optimistic, with nearly 57% of them expecting revenue to grow in 2023, in comparison to 51% of those that solely operate as brick-and-mortar stores. But the most optimistic are those following an omnichannel strategy, meaning offering sales in both in-store and eCommerce channels: 61% of these companies anticipated revenue growth.

“We went through one of the most volatile macro environments … and I think many [SMBs] are now starting to think about going on the offensive,” Charles Zhu, VP of product at Enigma, told PYMNTS in a recent interview.

As for how SMBs should balance their eCommerce and brick-and-mortar efforts, Zhu advocates creating a seamless experience between online and offline channels. “What is the ideal customer journey? Sometimes it is fully offline, sometimes it is fully online, but increasingly we’re seeing that it’s got to be a mix of the two,” Zhu said.

The ability to understand customer behaviors and preferences has become a competitive advantage for SMBs. To do so, corporations are using a diversity of solutions that incorporate advanced analytics, digital tools, and more recently generative AI.

The study emphasizes that top-performing Main Street SMBs are looking to use multiple platforms to strengthen their online presences and expand their market reach. “Investing in eCommerce and omnichannel experiences are key in differentiating those that grow and those that lag behind,” Zhu added in that regard. “It’s another way of going on the offense as the economic environment stabilizes.” As the economy shows signs of improvement, omnichannel strategies will become an ever more important tool for SMBs.