Amazon study highlights digital divide for rural businesses

  • Improving access to digital technology for rural businesses could contribute more than $140 billion to the U.S. economy over the next three years, and create more than 360,000 full-time jobs in rural communities, according to a study commissioned by Amazon and conducted by the U.S. Chamber of Commerce.
  • The study found that nearly 20% of rural small businesses in the U.S. generate at least 80% of their revenue by selling their products and services online. According to the results, 55.2% of 5,300 rural business owners agreed that e-commerce helps them grow their customer base, and 54.6% indicated that online tools positively affected their revenue in the past three years.
  • Almost 40% of small business owners said digital technology has helped them sell outside their own states, and 16% have been able to sell internationally via digital. The study found that 33% sell their products through their own websites, while 12.7% rely on third-party online marketplaces.

Dive Insight:

There may be significant upside to increased access to digital technology, but there are hurdles. There is a well-documented lack of access to digital technologies in many rural communities and evidence suggests that gaining access to more digital tools could help businesses in those areas.

Despite the efforts of industries and government agencies, many rural communities remain on the wrong side of the digital divide. A lack of reliable high-speed Internet access contributes to these problems, as evidenced in many local examples. The report from Amazon and the U.S. Chamber of Commerce noted that two-thirds of rural small businesses claim that slow Internet or mobile connectivity negatively impact their businesses.

Increasing digital connectivity for these businesses is one of three recommendations outlined in the report for improving digital access. The study also suggested expanding business’ access to digital training and tools to help them scale their business, and hinted that one way this could be done is through policies offering incentives to rural businesses to adopt such tools. The report also advises that rural businesses need more people trained in digital skills in their local talent pools, though it didn’t have specific suggestions for how this could be achieved.

To make progress on either of the other recommendations, the connectivity issue may need to be addressed first. Amazon has a lot riding on the ability of rural America to make digital progress. It may realize that its third-party merchant marketplace could benefit from small, rural businesses embracing its platform. Also, as it looks to recruit the next wave of Prime members, more of them will need to come from rural markets.