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Happy Friday, everyone! With the weekend only hours away, and NRF’s Big Show having taken up much of the work week, be sure to catch up on the top ecommerce news you need to know before you sign off for the week. Below, top highlights concerning small business lending, consumer security concerns, how to protect your online business from cyber attacks and information of the steadily rising ecommerce revenue coming from social networks.
Small Business Lending Still Sluggish, Despite Optimism
Small business optimism is at an 8-year high and many of these businesses are looking to scale in 2015, hiring more employees and tackling new markets by diversifying their product offering. Unfortunately, doing so for all those small businesses making less than $1 million in annual revenue may be more difficult than first thought.
Despite a strong end to 2014 in which sales accelerated during the holiday quarter, with per-store totals up more than 34% year over year, small businesses will have to look to their own pockets to finance their growth. According to the Small Business Credit Survey released this week, conducted jointly by the Federal Reserve Banks of New York, Atlanta, Cleveland, and Philadelphia, small business loans continue to recover, but have yet to reach pre-recession levels, especially for businesses producing less than $1 million in revenue.
Small business loans now stand 17% below the peak reached prior to the recession.
The results of this survey echoed those of ones published earlier this month. For instance, the Cleveland Fed’s report stated:
“Small business loans now stand 17% below the peak reached prior to the recession. While small commercial and industrial loans grew 3.4% over the past year, this modest improvement does not provide strong assurances about the health of lending in this space. In contrast, lending to larger businesses (loans greater than $1 million) bounced back quickly and loans outstanding are now more than 24% higher than pre-recession levels.”
Below, a few other highlights from the Small Business Credit Survey:
- About 25% of small businesses hired new people in 2014, while 15% got smaller
- The biggest problem for small businesses in 2014 was attracting customers (23%), with obtaining loans falling second on the list (18%).
- Most small businesses (33-35%) are run not from financing, but from the personal pockets of the business owners. It isn’t until businesses reach the $1 million in revenue mark or higher that line of credit becomes a popular financing option.
- For smaller businesses, larger regional banks are the best bet for securing credit.
- More than half of businesses with less than $1 million in revenue that apply for credit receive nothing at all.
- The biggest reason for not getting credit is a low credit score (45%), with insufficient collateral falling second on the list (30%).
Privacy and Security Concerns Surrounding Shopping Technology Still Top of Mind for Consumers
In a new study issued by the IBM Institute for Business Value, 43% of consumers said they prefer to shop online, but only 29% made their last purchase online. In fact, in youth apparel or home furnishings product categories, a 20-point gap exists between the percentage of people who say they enjoy shopping online, and the percentage of people who actually made their last purchase online.
The report came out simultaneously this week with news concerning brick-and-mortar locations attempting to recreate a digital shopping experience in-store to increase sales. At designer Rebecca Minkoff’s new boutique in New York City, for example, interactive walls equipped with giant touchscreens allow shoppers to browse items they want to try on, put together complete outfits, look at what people are posting on Instagram about the brand, send items to a dressing room to try on later and even order a drink.
43% of consumers said they prefer to shop online, but only 29% made their last purchase online.
Beacons, too, are becoming more and more popular with multiple large retail chains in the U.S. buying in to the technology in an attempt to help physical stores combat ecommerce popularity.
“The retail landscape is so competitive and the way to stand out is to use technology like everywhere else,” said Mark Ellwood, author of Bargain Fever in an interview with ABC News. “Brick-and-mortar retail stores are really taking inspiration from online stores, which know a lot about our shopping habits and the brick-and-mortar guys say hang on a second, we can know that too.”
Yet, while technology is bridging the gap between physical and digital shopping, with many consumers reporting affection for the merger, privacy and security concerns are still top of mind for many shoppers.
The retail landscape is so competitive and the way to stand out is to use technology.
“Consumers say they like technology, but many still fear privacy issues and data theft,” reports MediaPost. “Most prefer features that help them find in-stock products without giving up too much information.”
Digital wallets like those issued by Apple and Google are looking to alleviate this particular pain point, both on and offline, focusing on security and privacy standards that outperform traditional credit cards and lower potential breach risk for consumers.
Top 3 Small Business Cyber Security Threats
Though the number of data breaches amongst national retailers has lowered, cyber attacks are still widespread online. For online business owners, preparing for and guarding your customers and ultimately your brand’s reputation from a potential breach is a good way to prepare for the whole of 2015.
Below, the top 3 small businesses cyber attacks to watch out for, as reported by the National Cyber Security Institute:
- Ransomware: Expect increased frequency of ransomware attacks. They will come from new malware as well as be highly clever. The experts forecast attempts at the cloud storage level as well as network level.
- What you can do
- Be sure you have redundancy in backups of your critical data.
- Make security awareness a company culture to reduce the chances of an employee allowing the malware to access your network
- What you can do
- Social Engineering: More cyber criminals will attempt to find ways into networked systems with creative and highly targeted strategies. These people are really, really good at investigating people. CIA level skills of investigating are not uncommon, but often the criminals just search social media and phone employees for easy clues
- What you can do
- Have employees role play social engineering activities so your people understand the type of questions a criminal may ask. Share ways to avoid responding to the criminal’s questions.
- What you can do
- Internet of Things: Hackers are expanding their efforts into products that can easily be accessed. They will go after products such as network printers for a lateral attack into a business network. It is all about maneuvering to get to the end goal – confidential data on your network system.
- What you can do
- Ensure your IT specialist looks for second tier entry points. Once top tier entry points are secure, harden the other possible access points to make it more difficult for the hacker.
- What you can do
Social Ecommerce Activity Grew 26% in 2014
A new report from Internet Retailer tallied online spending from social media and found that total sales increased 26% from $2.62 billion in 2013 to $3.3 billion in 2014 for online stores. Social media is proving to be a more viable selling channel, particularly for those looking to build a brand presence outside of marketplaces like Amazon or Etsy.
There is a caveat though. With social media platforms updating the algorithms used to present content in a user’s feed, businesses are experiencing a decrease in their organic reach, particularly on Facebook. To account for the loss of organic views and clicks, many brands are increasing their social advertising spend.
Merchants are having to spend more on ads to have their content seen by consumers.
“Merchants are having to spend more on ads to have their content seen by consumers,” said Stefany Zaroban, an Internet Retailer analyst. “That’s because Facebook shows fewer of a brand or retailer’s posts to its fans now than it did a few years ago –– a strategy that effectively forces marketers to spend more on advertising to reach Facebook users.”
Despite the increased spend, retailers experienced an average increase of 5.4% for traffic directed to their sites from social networks in 2014. The total number of Facebook likes for the retailers surveyed increased 33% to 916 million, while their Twitter followers increased 26% to 89 million, and Pinterest followers increased 16% to 35 million. YouTube views increased 78% to 3.89 billion.
Online store revenue from social media increase from 1% in 2013 to 1.1% in 2014.
Though the 26% growth in revenue from social media for retailers is a sign of a growing consumer base willing to purchase either directly from social networks or from social network influence, ecommerce from social media still remains low for overall ecommerce revenue. With the 26% increase, online store revenue from social media increase from 1% in 2013 to 1.1% in 2014.
In contrast, however, a case study conducted by Visual Website Optimizer, a website conversion and testing platform, found that removing social sharing buttons from product pages resulted in an 11.9% higher conversion rate than pages that contained them. So, while consumers may be willing to click-thru to ecommerce sites from social networks, the reverse may not necessarily be the case. Below, Practical Ecommerce rounded up a few tips to optimize social sharing from your ecommerce site:
- Reserve social sharing buttons for the confirmation page following the sale. That is an ideal time to encourage viral sharing.
- Use A/B split testing to measure conversion rates on product pages with and without buttons.
- Put sales first and social second. Think of social media as an added layer. Do not allow it to become a distraction that takes the prospective customer’s attention away from the sale.
- Consider using smaller buttons, as these may prove less distracting and still serve the needs of those who wish to share.
- Refrain from using buttons with counters unless you are sure that you can get a reasonable number of shares.
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