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We all know how much the Internet has changed our lives but the most dramatic impact it may have had is the opportunities it has provided small businesses. Twenty years ago, there was no Google, YouTube or Facebook—companies that started small but have eventually turned into major brands. 

Much of this is made possible by the Internet and its ability to connect people in ways unheard of just a short time ago allowing small businesses to compete with larger competitors. One of the first ways small businesses utilized the Internet to start and grow a business was through the use of Digital Platforms. Digital Platforms facilitate commercial interactions between suppliers on one end and consumers on the other. 

Whether it is reaching consumers out of arm’s reach, or hiring someone to cover a shift, digital platforms stretch tight budgets and make small businesses more efficient. As the online economy evolves, digital platforms are growing into networks referred to as digital ecosystems where stakeholders and consumers are tied together by digital services that foster information sharing and collaboration. 

These communal environments have become the catalyst for modern business models like the gig economy and the next generation of digital marketing. The gig economy, term used to describe an emerging labor marketplace defined by flexible, temporary work arrangements, is changing the way Americans view work. Through digital platforms, like the ones that are represented by our witnesses here today, small businesses can hire talent for short term projects and benefit from a vast network of unbundled services. 

Skilled and creative solopreneurs like web developers and event planners can also use digital platforms to be hired by consumers and other small business owners. In fact, 70% of U.S. small businesses have hired a gig worker and 50% currently have at least one currently working. As a result, 43% of business hiring gig workers are saving at least 20% in labor costs.

Digital platforms also help small businesses reach bigger audiences. In the traditional marketing space, small firms must compete with big businesses for expensive ad space. Digital marketing levels the playing field by lowering costs and expanding impact. Data sharing within digital ecosystems also make it easier for small businesses to reach niche audiences because advertisements are targeted to customers of similar businesses. This competitive advantage and cost savings enable small businesses to scale and thrive.

However, many small firms are being left behind. In fact, even today, a third of small businesses still do not have functioning websites, and 42% believe that the Internet is not relevant to their business. Unfortunately, many small businesses view digital adoption as a luxury instead of a key driver for success.

As technology rapidly develops, the digital ecosystem is only going to become more deeply ingrained in business and everyday life. Today there are 2.5 billion people connected to the Internet and there will be twice as many connected by 2020. Studies have found that 80% of companies that have embraced digital adoption have increased profits by 85%. These increased profit margins can mean the difference between failure and survival. America’s small businesses cannot afford to be left behind.I hope that today’s discussion will shed light on the many ways digital platforms benefit small businesses and encourage broader adoption of digital tools. Small businesses must join the digital ecosystem to grow and thrive. 

I thank each of the witnesses for joining us today and I look forward to your testimony.