E-commerce: Opportunities for small businesses in a K-shaped recovery

Lesson from Sharks: How small businesses can survive the COVID crisis
February 3, 2020
Lesson from Sharks: How small businesses can survive the COVID crisis
February 3, 2020

How small businesses can take the leap to e-commerce to exploit consumer demand and spending power in the K-shaped recovery

The ‘K-shaped’, long and slow road to recovery

Current economic data indicates a harshly unequal recovery for the Canadian workforce, which is termed as the ‘K-shaped’ recovery. The K, splitting the economy into two, will worsen disparity and inequality. The upward path of the K represents white-collar workers who have taken advantage of work-from-home jobs and low interest rates. The downward path characterizes blue-collar workers who have faced a loss of jobs and incomes, as well as unpredictable or shortened work hours.[1] [2]

While the vaccination rollout will speed up the reopening, it is unlikely that the economy will bounce back as quickly as we hope. The wounds from many permanent business closures, long-term unemployment, and delayed investment will make the road to recovery long and slow. The number of active businesses in May 2020 had decreased by 100,000 over the previous 12 months. Over 50% of these closures were in accommodation, food services, personal services, construction, and retail trade sectors.[3]

There is a sliver of good news for small businesses. A pent-up demand from the upward K market coming out of a lockdown will likely create a welcome return to consumerism after a period of decreased spending and increased saving.[1] [4]

During the pandemic, Canadians spent on average about $4,000 less per person. As a result, we have saved about $5,800 per person. With the reopening backed by successful vaccination rollout and growing consumer confidence, we should start seeing cashed-up Canadians spending some of these savings. An immediate spike could be expected in travel and food services sectors.[4]

Seize the opportunity with the digital leap

To reap the opportunity presented by these pent-up consumer demand and spending power, small businesses will need to make significant changes. Some of these changes have already been made and become part of the new normal. For example, measures to protect employees’ and customers’ health and safety by enhancing cleaning and disinfection protocols, maintaining physical distancing, and using cashless and contactless technologies [5] [6] such as QR code menus in restaurants and tap-and-pay payments in retail shops.

Other changes require more drastic actions, as digitalisation is driving a major structural change in the economy.[1] [5] The crisis could mark a turning point that forces small businesses to make the leap into digital by adapting their business models and investing in new technologies to become more virtual, mobile, and global.

E-commerce shopping, which increased substantially during the lockdown, will likely become a new hard-wired consumer habit.[1] [6] Businesses that can quickly jump online are winning. For example, restaurants that prospered during the crisis had invested in e-commerce to generate revenues and build customer loyalty, enabling customers to order takeout and delivery either through their own first-party apps [6] or by joining delivery aggregators like Uber Eats to outsource their ordering and delivery services.[7]

Options for e-commerce adoption

Small businesses can choose different options to go online depending on their investment capacity. The most popular, but also the highest cost option is to create their own e-commerce website. The initial costs include website and e-commerce development, as well as software and hardware costs. The ongoing costs could be the internet service fees, additional staff with digital knowledge, ongoing maintenance and upgrades, and delivery costs.

To get started at lower costs, small businesses could join e-commerce aggregators such as Amazon, Google Shopping and Etsy for retailers, Skipthedishes and DoorDash for restaurants, and Tripadvisor and Airbnb for accommodation providers. These platforms provide instant access to local, national and international markets. They are also an excellent place to trial different product, pricing and promotion ideas, and to check out your competitors.

At the lowest end of investment, small businesses could enter e-commerce through social media portals such as Facebook and Instagram. These platforms are easy to use and give businesses immediate access to online communities with only the cost of internet access. They are a good starting point for small businesses to experiment with e-commerce.

These options are not mutually exclusive and can be used together. Small businesses might create their own websites to build brand awareness, but sell products through aggregators to avoid e-commerce development and maintenance costs.

Experiment and keep adapting

Going online is an inevitable step for small businesses to survive and thrive post COVID. To seize your opportunity, you will need to learn to experiment and adapt. Get started with an option that suits your investment capacity and experiment. Once you gain confidence in your offers and grow a large enough customer base, you can always migrate or expand.

Even though the first step might feel like a giant leap for many small businesses, there is support available. Digital Main St., a partnership between the Government of Canada and the Province of Ontario, is offering training, advisory support, and grants to help small businesses with their digital expansion. Click here to find out more.

If you are an under-represented small business owner and would like to improve your digital marketing skills, you can join the Building Small Business Resilience (BSBR) training program here.


[1] RBC Economics. (December, 2020). Navigating 2021: 21 Charts for the Year Ahead. Retrieved from https://thoughtleadership.rbc.com/navigating-2021-21-charts-for-the-year-ahead/

[2] Alini, E. (October 2020). Canada’s ‘K-shaped’ recovery spans jobs, debt and housing. Retrieved from

[3] Statistics Canada. (October, 2020). Economic impacts and recovery related to the pandemic. Retrieved from https://www150.statcan.gc.ca/n1/pub/11-631-x/2020004/s5-eng.htm

[4] Schembri, L. (March, 2021). Household consumption in a pandemic (Speech summary). Retrieved from https://www.bankofcanada.ca/2021/03/household-consumption-in-a-pandemic/

[5] Longfield, N. and Collett, M. (2020, May 28). From temporary to transformative: How COVID-19 is changing consumer behavior. Retrieved from https://home.kpmg/xx/en/blogs/home/posts/2020/05/from-temporary-to-transformative.html

[6] Dua, A., Mahajan, D., Oyer, L., and Ramaswamy, S. (July, 2020). US small-business recovery after the COVID-19 crisis. Retrieved from https://www.mckinsey.com/industries/public-and-social-sector/our-insights/us-small-business-recovery-after-the-covid-19-crisis

[7] BDC. (n.d.). 3 trends that will impact exports in 2021. Retrieved from https://www.bdc.ca/en/articles-tools/marketing-sales-export/export/trends-impact-exports-2021

Sujinda Hwang-Leslie
Sujinda Hwang-Leslie
Professor of Marketing in Sheridan Pilon School of Business

Comments are closed.