From Training to Trading: Why Real Customer Demand Could Accelerate SME Digital Transformation

World Bank research in Georgia finds that digital training alone did little to bring small firms online, while guaranteed purchase orders increased online selling by 24 percentage points in the short term. The findings suggest governments and development partners should connect SME digital support with real market demand, while strengthening payments, logistics, consumer trust and long-term commercial opportunities.

Governments and development institutions increasingly see digital markets as a way to help small businesses find customers, raise productivity and participate in wider markets. But experimental evidence from Georgia suggests that giving firms internet access and digital training may not be enough. A World Bank Development Impact Group study, conducted with the Georgia Innovation and Technology Agency (GITA), found that creating a real business opportunity was much more effective in getting small firms online than simply teaching them how to use digital tools.

The study compared digital training with a demand-side intervention that offered businesses a guaranteed purchase if they became capable of selling online. Training produced no measurable improvement in digital-market participation, while conditional purchase orders increased online selling by 24 percentage points in the short term. The findings have important implications for governments, development partners and private companies investing in SME digitalization.

Internet Access Is High, but Business Use Remains Low

The research exposes a major gap between connectivity and commercial use of the internet. A 2018 survey of 2,180 small businesses outside Tbilisi found that 91 percent had internet access at home or work and 60 percent of respondents had an email address.

Yet only 4 percent had a business email, 3 percent operated a website, 2 percent used an e-commerce platform and just 6 percent had ever received an online order.

GITA attempted to close this gap through three days of face-to-face training covering Google, Facebook, Instagram, online marketplaces, customer profiling, financing and other business tools. The programme cost about $130 per business.

The experiment included 858 firms, with 638 assigned to training and 220 to the control group. Despite businesses initially expressing interest, only around 56 percent offered the training actually attended. Researchers found no statistically significant improvement in e-commerce participation, employment or online revenue, including in the longer-term 2025 assessment.

For policymakers, the message is important: spending on broadband and digital skills may create necessary foundations, but it does not guarantee that SMEs will actually use digital markets.

A Real Customer Can Be a Stronger Digital Incentive

Researchers then tested whether actual demand could change business behaviour. The second experiment covered 283 firms. Businesses were offered a guaranteed purchase if they established an online presence and became capable of completing the transaction digitally within two weeks.

Some firms were offered an order worth around $130, while others received an offer worth $780, six times larger.

Together, the incentives increased online selling by 24 percentage points. The smaller offer generated an 18-percentage-point increase, while the larger offer produced an increase of about 30 percentage points. However, the difference between them was not statistically significant.

This challenges the assumption that lack of money is always the main barrier. For some businesses, a modest commercial opportunity combined with a clear deadline may be enough to overcome hesitation, procrastination or the organizational effort required to start selling online.

Digital Readiness Could Help Governments Target Support

The impact varied sharply according to how prepared firms were before the intervention. Among businesses with a high initial willingness to sell online, the demand intervention increased participation by about 54 percentage points. The increase was around 32 percentage points for medium-readiness firms and only 9 percentage points among businesses with low readiness.

This finding could help governments and development partners improve value for money.

Instead of providing the same training or subsidy to every SME, programmes could first identify businesses that are close to entering digital markets. These firms might respond strongly to buyer connections, digital procurement contracts or temporary incentives.

Less-prepared businesses may require different assistance addressing management practices, trust, logistics, payment systems or organizational capacity.

The research also found little evidence that combining training with demand incentives generated additional benefits. Policymakers should therefore test whether adding multiple interventions actually improves outcomes before scaling expensive programmes.

Turning Short-Term Adoption Into Lasting Market Access

The biggest challenge is sustainability. By 2025, the overall long-term effect of the one-time demand intervention had become small and statistically insignificant, partly because untreated firms gradually caught up.

By 2025, around 13 percent of control-group businesses were selling online. But initial readiness continued to matter: about 35 percent of high-readiness control firms were selling online, compared with 19 percent of medium-readiness firms and just 6 percent of low-readiness businesses.

Governments and international development partners should therefore look beyond the number of businesses initially brought online. Success should also be measured through continued digital sales, customer growth, revenue, productivity and business survival after incentives end.

For private-sector stakeholders, the findings create opportunities for e-commerce platforms, fintech firms, banks, logistics companies and large buyers. Easier onboarding, secure payments, reliable delivery systems and supplier programmes could reduce the practical barriers preventing SMEs from entering digital markets.

But firms may also abandon e-commerce if customer demand remains weak. Digital transformation therefore requires an ecosystem combining connectivity, payments, logistics, consumer protection, trust and sustainable market demand.

The Georgia experiment shows that SME digitalization is not simply a question of technology or training. Businesses may already have enough basic capability to enter digital markets but need a credible economic reason to act. For policymakers and development partners, the next step is to connect digital support more closely with real customers and lasting commercial opportunities.