by Emily Atkins
A new survey has found that almost all small and medium e-commerce sellers have difficulty aligning inventory and production with changing consumer demand.
The 2024 E-commerce Performance Report on Shopify merchants surveyed more than 100 SMB e-commerce leaders in the U.S. and Canada. It revealed that a staggering 98 percent of respondents are having trouble, and of those, 60 percent reported significant difficulty.
The challenging SMB e-commerce landscape
Small businesses account for 99.9 percent of US businesses as of 2023. Yet, in today’s difficult economic climate, SMBs have a slim margin of error, and those that aren’t well-managed may not survive. This changing landscape includes many challenges, including supply chain disruptions, shifting consumer habits, and a significant rise in materials cost.
To offset these costs, 80 percent of SMBs have had to increase prices and 53 percent have looked for lower cost materials. In fact, the report revealed that 26 percent of Shopify merchants were forced to reduce their staff in a last-ditch effort to counteract inflation.
But this could be bad news for customers and brand perception. Both strategies could lead to lower quality end products at a higher price point, just as McKinsey & Company reports that nearly half of consumers still cite inflation as a major concern in 2024. Yet, to overcome current challenges, 73 percent of SMBs are leveraging technology to mitigate cost pressures and increase efficiency – a strategy that can have significant impact on operations.
Scaling growth in 2024
The good news for SMBs is that 77 percent expect their e-commerce sales to increase this year and of those, 14 percent expect growth to be significant. However, respondents are struggling to understand how much product to make and where to store it.
The report confirms that 66 percent of SMBs stated that producing and storing inventory is their largest expense. Additionally, 83 percent of merchants reported significant operational challenges and difficulties keeping inventory, manufacturing, and accounting data synchronized. Managing outdated business systems (64 percent) and aligning inventory with demand (60 percent) were also stated as major challenges.
Connecting the dots with technology
When asked about focus areas for 2024, the most common responses were e-commerce transformation (32 percent) and inventory management (32 percent), followed closely by technology adoption (30 percent). A staggering 94 percent of SMBs intend to increase their spend on SaaS technology and 97 percent plan to incorporate artificial intelligence (AI) into their business operations this year. SMBs view technology as crucial to enhancing their business and are ready to make the necessary investment.
Methodology
The research team surveyed 100 e-commerce leaders from SMB companies that use Shopify across the U.S. and Canada. All the respondents are Shopify sellers and manage their inventory — none engage in drop shipping. Respondents’ titles ranged from director to C-suite, and they represented a wide range of business sectors.
