Survey: American SMBs Fall Behind European in Digitalization

IONOS, a popular cloud and web hosting provider, unveiled the results of its annual small and midsize (SMB) digitalization and resilience survey. The survey, which included 4,800 American and European SMBs, shows that American SMBs fall behind in almost all digitalization categories.

Last year, 73% of American respondents categorized digitalization (having an online presence, utilizing online marketing, and working and communicating digitally) as “very important” or “fairly important” for their business future.

Fast forward to 2023, and 44% of American SMBs use a branded company website compared to 65% in 2022. The use of an email address that matches the name of their business is down from 60% in 2022 to 44% in 2023.

Despite the decline in using branded website domain names and email addresses, these two remain the most used forms of digitalization among American SMBs, with 44% of respondents embracing them. Other digitalization initiatives like online offices, online stores, online marketing, virtual meetings, and communication have lower utilization rates among American SMBs.

The sharp decline in these categories could “possibly indicate that the focus on digitalization due to the pandemic has waned along with the pandemic itself and its sheltering and social distancing aspects.”

Another explanation for the decrease in digital adoption could be a lack of resources to embrace new technologies. 60% of American respondents cited costs as a main barrier to adoption, followed by lack of time (56%), lack of knowledge (52%), and inflation (50%). Despite the challenges, only less than 8% of the respondents claimed they don’t utilize digitalization at all.

The problem isn’t in identifying digitalization’s benefits, IONOS’s survey finds, but in underestimating their importance. European SMBs, more precisely those located in Spain (88%), Germany (81%), the UK (79%), and France (80%), better estimate the importance of digitalization compared to 75% of their American counterparts.

The lack of interest in digitalization among American businesses skyrocketed to 51% from 25% in 2022, mostly due to economic uncertainty. Close to one-third of surveyed US businesses have decided to put non-essential digitalization initiatives on hold due to the bad economy, energy crisis, and geopolitical factors.

“Those who don’t firmly anchor their business strategy in digitalization will have a hard time surviving in the market,” Achim Weiss, CEO of IONOS stressed, adding that “the gains they realize from digitalization, including improved visibility, growth, new business models and greater resilience to crises, far outweigh the initial outlay.”