Shopify aims to empower black entrepreneurs with equal business opportunities. Recently, the Canadian e-commerce company conducted a survey to find out how black entrepreneurs have performed on Shopify and what challenges they face on a daily basis.
As part of its survey, Shopify interviewed over 500 established and aspiring black-owned businesses based in North America. The research study is titled ‘In Pursuit of Equitable Commerce: Insights on Black entrepreneurship in 2023 and beyond‘.
Shopify claims to have used a two-pronged approach in its survey. “We analyzed sentiments and behaviors of over 500 aspiring and established Black business owners across the United States and Canada from February to March of 2022,” Shopify states on its news website.
About The Research on Black Entrepreneurs
The research was conducted in two phases — Qualitative Discovery and Quantitative Validation. In the first phase, Shopify interviewed black entrepreneurs and aspiring black entrepreneurs to find out what factors they consider while making business decisions, what influences the community and what are the critical issues they face.
For the Quantitative Validation phase, Shopify surveyed 402 aspiring entrepreneurs and 109 established entrepreneurs to validate the hypotheses.
The research study helped Shopify discover three critical issues faced by black entrepreneurs.
1. Tough Access to Capital
It is not at all easy for black entrepreneurs to get capital on time and better business terms. Even though movements against racism and advocating social justice have supported black businesses over the last three years, the road to success is still full of ups and downs. Many banks, investors and tech firms extend support to empower businesses owned by blacks. However, most of these entrepreneurs still face difficulty to get access to capital.
Shopify found in its survey that around 61 percent of black entrepreneurs face difficulty to get access to capital. Nearly 60 percent face trouble securing grants meant for Black businesses. Most black entrepreneurs have to rely on personal savings, expensive credit cards and hard-to-access grants to run their online businesses.
Most of the studied sample said that easier access to finance would help black businesses succeed.
2. Inequity
This is not a thing of the past. As many as 78 percent of black entrepreneurs told Shopify in the survey that they face difficulties to attract non-black customers to buy from their stores. Economically speaking, this inequality costs $190 billion to the national economy. Shopify cited data from McKinsey and Company’s Institute for Black Economic Mobility to support its research.
To increase visibility, black entrepreneurs rely on expensive advertising. The requirement today is to help them get access to various digital advertising platforms. In August last year, Shopify partnered with Operation HOPE and GoodCarts to help empower one million black businesses (1MBB). The joint initiative aimed to help the community set up their online stores and connect to a wide range of customers.
As per a Yahoo Finance report, online business ownership by the black community has increased by almost 40 percent after the coronavirus pandemic. Thanks to the 1MBB partnership, the community gets access to a free consultation, support and online marketing to reach new customers and sustain a growth rate.
The Minneapolis-based company works on a technology that helps save time, energy and budget without compromising on revenue. The Shopify app is available as free to all.
3. Hard and Smart Work
The Shopify research also cited 56 percent of Black entrepreneurs admitting to running a business in an uneven field. They believe that working harder and smarter will help them succeed. As many as 81 percent of the sample would prefer to ignore the stigma associated with racism to run their business effectively.
The survey found 83 percent of black entrepreneurs on Shopify believe that now is their time to shine, while 68 percent of them are optimistic about their entrepreneurial future.
“The public’s increased awareness of social justice movements like Black Lives Matter has led to more tangible support for Black businesses, which has Black entrepreneurs optimistic,” Brandon Davenport, Head of Equitable Commerce for Shopify, said in a statement.
“For all my fellow dreamers who are sitting on an idea and waiting for the right moment, that moment is now,” Davenport added.
Complete Control
Apart from the three challenges discussed above, Shopify research also found that over 59 percent of black entrepreneurs don’t want outside help but complete control over their businesses. As many as 41 percent of them still prefer expert advice on crucial business decisions.
Shopify promised to help black entrepreneurs with easy access to capital. expert advice and selling opportunities in the next decade.
“Over the next ten years, our Equitable Commerce initiative will power an ecosystem of services: access to capital, expert mentors, and unique selling opportunities. We’re using four pillars – community, advocacy, research, and education – to empower and support entrepreneurs in the areas that make the most sense for them,” Shopify states.
In August 2022, Shopify also partnered with FLOURYSH to discover black-owned brands and help them scale their businesses. It aims to elevate a million businesses owned by blacks by giving them a 120-day of free trial instead of the usual two weeks. Add to this, the black entrepreneurs based on Shopify get access to educational programmes, tools, tricks and tips from experts to reach the right shoppers.
Merchants also benefit from exclusive access to the Black Building Community of Shopify, where they can get to interact with other successful Black entrepreneurs using Shopify to promote their businesses. Apart from an elevated online profile, brands who join Shopify via FLOURYSH will be able to get access to potential media exposure and strategic partnership.
According to prweb.com, out of 22.2 million businesses in the United States, around 4.3 percent are Black-owned but at the same time, African American consumers boast of $1.5 trillion purchasing power. Less than 1 percent are able to generate a median profit margin which is greater than 20 percent. One factor that hinders aspiring black entrepreneurs is the lack of information that could help them propel their ideas.
