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E-commerce tools can help women entrepreneurs earn more
Aug 15, 2018 |
New research from PayPal Canada and Barraza & Associates exposes a significant revenue gap between women and men-owned businesses in the Canadian small business ecosystem. Study insights show that on average women-owned businesses earn $68,0001 less than men who run similar businesses2 – revealing a 58 per cent gap in reported revenue3. Across all small businesses in Canada, bridging the gap in earnings of women and men entrepreneurs could unlock an additional $88.2 billion dollars4 in contribution to the Canadian economy.
E-commerce tools can help women entrepreneurs earn more
Narrowing the discrepancy in earnings between women and men entrepreneurs is no small task. However, study findings show that e-commerce tools play a pivotal role in closing the revenue gap between women and men-owned businesses, and increase the revenue potential for women-owned businesses.
Comparing the revenue of women and men entrepreneurs across all Canadian businesses that sell online via electronic invoice, an online marketplace, or an e-commerce enabled website, the revenue gap between women and men-owned businesses closes to 44 per cent.
Adding to this, women entrepreneurs using e-commerce tools report earning 75 per cent more revenue than their female peers who do not sell online.
“Supporting women entrepreneurs is critical to Canada’s long-term economic prosperity,” said Paul Parisi, President of PayPal Canada. “At PayPal, we are focused on offering accessible e-commerce solutions that help people start and grow their businesses. Helping women entrepreneurs thrive in the digital economy is an important part of what we do every day.”
Women are launching online businesses in record numbers
Understanding that the revenue gap between women and men-owned businesses narrows when women entrepreneurs use e-commerce tools, it is encouraging to note that an increasing number of women have launched businesses that sell online. The research shows that of online businesses launched in the past two years, half (50%) are owned by women. Whereas, only 34 per cent of online businesses started ten years ago are owned by women. In addition to starting online business in higher numbers, women entrepreneurs highlight e-commerce tools as a key ingredient of their success.
Competitive advantage of e-commerce:
Three out of four women entrepreneurs selling online (73%) highlight e-commerce as a factor for sustained growth and success. In addition, a large majority (85%) recognize that they need to sell their products and services online to keep pace with competition. In comparison, male entrepreneurs in this segment are less likely (60%) to attribute e-commerce to their success, and only three-fourths (74%) see selling online as a competitive advantage.
Reaching new horizons and selling internationally:
Selling online can offer strategic advantages, such as the ability to sell goods and services globally. Over a quarter (28%) of women-owned online businesses sell around the world and a majority (61%) indicate that selling internationally has made their small business more successful. Whereas research shows that their male peers are less likely to sell across borders with only 23 per cent selling internationally.
Younger than their male peers:
The majority (83%) of women entrepreneurs leveraging e-commerce are less than 55 years-old, while close to half (42%) of their male peers are 55 years-old and up.
Limited access to capital is a barrier to growth
While e-commerce savvy women entrepreneurs are pulling all the right levers to position their businesses for success, research findings show limited access to capital is a critical barrier to growth. In fact, almost half (47%) of women-owned businesses leveraging e-commerce have trouble securing the external investment they need to scale, whereas the majority (67%) of men with online businesses find it easier. Without access to the right resources, most women business owners are left to support business growth through personal means of credit, adding unnecessary financial strain.
Limited access to external financing drives 70 per cent of women with online businesses to finance small business growth through personal credit card debt.
However, the payoff speaks for itself for women who do secure external financing for their online businesses. Women-owned online businesses operating with a line of credit, loan or merchant cash advance report earning double (50%) the revenue of their peers operating without any external sources of financing.
Women-led businesses that operate online are redefining the Canadian entrepreneur ecosystem but they continue to face obstacles. With the right investment from the public and private sector, and increased access to tools and resources, women entrepreneurs can unlock tremendous economic benefit for the Canadian economy.
A $68,000 difference in earnings was calculated by subtracting the annual median reported revenue of female ($50,000) owned businesses from male ($118,000) owned businesses producing similar goods and services across a spectrum of industries.
The top business classifications producing similar goods and services across a spectrum of industries as reported by respondents with balanced representation of men and women.
The revenue gap percentage (58%) across similar types of businesses, was calculated by comparing annual median reported revenue across the top six business classifications producing similar goods and services across a spectrum of industries with balanced representation of men and women and across sectors.
Total unrealized revenue was calculated by multiplying the total number of women-owned businesses (1.4 million) by the total median revenue reported by women ($50,000) to get the current total median revenue figure ($70B). To calculate the total potential median revenue if women earned the same as men, the number of women-owned businesses (1.4 million) was multiplied by men’s media reported revenue ($113,000), resulting in ($158.2B). The current median revenue for women was subtracted from the potential figure ($158.2B – $70B = $88.2B), resulting in a missed total combined median revenue figure of $88.2B.
Canadian Women Entrepreneurs Study - Research Methodology
An online survey was conducted by Barraza & Associates on behalf of PayPal Canada between January 26 and February 27, 2018. A sample of 1,000 Canadian business owners completed the survey. Respondents indicated if they were male or female and were classified as selling online or offline, based on if they used any of the following online payment methods: having a website enabled to process credit or debit card payments, using an online marketplace, using a virtual terminal, using electronic invoicing, or using PayPal. Of those surveyed, women represent 40 per cent of small business owners both with and without employees. The precision of the Barraza online survey is measured using a confidence interval. In this case, the survey is accurate to within +/ - 3.0 percentage points.
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