Small Business News: 31 March 2023

This week’s SBN roundup includes the impact of fashion returns on the planet, and new Instagram tools that are changing the way users search for products.

Influencer marketing is just for big businesses, right? Wrong. While some high-profile influencers are paid huge sums to post about brands on social platforms, influencer marketing can still work for smaller businesses with smaller budgets.

A recent article from Business Insider¹ pointed up some valuable insights for small businesses interested in going down the influencer marketing route.

The first is that follower size isn’t everything. If you focus on follower engagement rather than the sheer number of followers, you can end up working with smaller (and cheaper) influencers but reaching highly motivated audiences. Use the free Chrome extension UpDog to gauge follower engagement.

Also, look for an influencer that’s a good fit with your brand and sector, rather than one that promotes lots of different brands. Otherwise, your brand can get lost amongst all the others.

The second insight concerns the big question of payment. By choosing an influencer who is already interested in your industry, you may be able to compensate them chiefly with free products. For example, Molly Fedick founder of non-alcoholic drinks company, BuzzKill Wines, targets influencers who already review non-alcoholic drinks or make mocktails.

Fedick says: “I'll tell them I'm a small, one-woman show with basically no budget to spend, but what I can do is I can send you product, and I can send you as much as you want.”

It’s a strategy that has helped her achieve over 2 million impressions on others’ TikTok channels.

Other ways to make influencers affordable include avoiding those with managers, and offering a percentage of the sales they help drive instead of cash upfront.

And finally, the third insight is to build a long-term, two-way relationship with your influencers. They know their audience, so invite their opinions on what would excite them – such as a coupon code, free shipping or other incentives – and let them guide you to an extent on the content they post. And when your influencer posts, follow up with likes, comments and re-posts, promoting the influencer. Make it a collaborative partnership that works for both sides.

According to the 2023 RetailX Health and Beauty Marketplaces report, European customers are considerably more likely to buy their health and beauty products online than Middle Eastern or African customers.

25% of European customers said they are more likely to buy these types of products online rather than at a bricks-and-mortar store2. This compares to 15% of customers in the Middle East and only 8% in Africa.

The new research follows the period during the pandemic, when online sales in the sector showed huge growth in Europe: 26% growth in 2020 compared to just 11% in 2019. In Africa, growth was even higher, but has since fallen back. The report comments:

‘Online growth returned to lower levels in 2022 with sales in some categories declining online, as consumers returned to more pre-pandemic behaviour. What has remained consistent is the higher level of spend from health and beauty customers in Europe across all areas of online retail.’

However, while Europe is clearly the largest online market for health and beauty products, for businesses it’s also worth considering that, as the report explains, the Middle East and Africa can offer higher growth in the future.

New research in the UK reveals that fashion returns are profoundly impacting the planet, as well as the retailers who have to deal with them.

A new report from the British Fashion Council’s Institute of Positive Fashion (IPF) shows that 23 million returned garments were sent to landfill or incinerated last year in the UK³. That represents 75% of the approximately 3% of returns that can’t be resold. As a result, 750,000 tonnes of CO₂ emissions were generated. 

On the money side, accountancy giant KPMG estimates that returns are already a £7 billion problem for UK retailers⁴. And the problem looks like it could get worse, not only due to inflationary costs, but also because newer generations tend to return more. According to research by the Retail Technology Show, the average UK consumer now returns 15% of the clothes they buy online, rising to 20% for Millennials and 22% for Gen-Z – ironically, the more environmentally conscious age groups.

The problem has led to some online retailers withdrawing free returns and charging customers who send items back, and even threatening to withdraw the accounts of those they see as ‘serial returners.’

In turn, this has prompted a backlash from consumers. In the Retail Technology Show research, 44% of Gen-Z said retailers shouldn’t ban serial returners. And 27% of the UK consumers said retailers should do more to understand why an item was being returned, rather than blaming, and in some cases, banning the shopper. While last year’s study by Appinio⁵ revealed 71% of UK shoppers would only shop from e-tailers offering free returns.

The effect on the environment has meant the tricky issue of fashion returns is an even more pressing one to solve.

The Netherlands has been a growing and infuential e-commerce market for a while. And now its latest Market Monitor⁶ has been released by the Dutch e-commerce association, Thuiswinkel.org . So what has changed in Dutch e-commerce? And what has stayed the same?

For a start, the same huge proportion of the Dutch population shopped online in 2022 as in 2021 – that’s 97%. But the total amount they spent online rose by 9%, from €30.6 billion to €33.3 billion. Strikingly though, the number of purchases has actually fallen from 366 million in 2021 to 347 million in 2022. Which means the amount spent per purchase has increased by 15%.

The research also shows Dutch online shoppers have been spending on different things. Online purchase of services increased by 49% in 2022, while product purchase dropped by 10% across all categories except food, which increased by 3%.

Marlene ten Ham, director at Thuiswinkel.org , explained:

“The increase in the services sector is mainly caused by the many purchases of tickets for attractions and events and travel-related purchases. We also bought insurance online more often in 2022 than in 2021, and at a higher price.”

Similar trends were revealed in cross-border online shopping: the number of purchases from other countries decreased by 5%, but the total amount spent increased by 20%. This is mainly due to the growth in online spending on travel.

And what about how the Dutch buy – and how they pay? Most importantly, there is an obvious growth in the use of the smartphone. The number of online purchases made with a smartphone increased from 29% in 2021 to 33% in 2022. But more revealing, according to Ten Ham, are the figures over the last five years:

“If we look at the growth in smartphone use over the past 5 years, we see a clearer picture: in 2017, only 13% of online purchases were made with smartphones. 5 years later, the use of the smartphone has therefore increased by 2.5 times.”

That means it’s absolutely essential to have your Dutch webshop optimized for mobile. It’s also vital to include iDEAL as a payment option. iDEAL is still the most used payment method and 96% of online buyers have used it at least once in 2022. However, the percentage of consumers who have used credit cards has increased too, chiefly because services are more often purchased with credit cards than other methods.

Meta has announced two new Instagram advertising tools, which it plans to launch globally in the coming months⁷.

The first, which has entered the testing phase, is the introduction of ads in search results. These are designed to reach people who are actively searching for products, businesses and services. When consumers type in a search term they’ll see relevant ads within the search results feed. These will differ from regular posts, by having a ‘Sponsored’ label under the account’s name.

The second tool is Reminder Ads, which will be rolled out to all advertisers as an option in feed. Their purpose is to help businesses build awareness and anticipation for upcoming events, such as product launches. Users can opt into reminders and receive three notifications from Instagram: one a day before the event, one 15 minutes before, and one at the time of the event.   

Meta is launching the new tools to try to boost advertising revenue, after ad sales have been declining. Meta CFO Susan Li said the decline was due to “the uncertain and volatile macroeconomic landscape.”

While the new ad tools may seem like good news for advertisers, it remains to be seen how they’re received by Instagram users.