Small businesses make up nearly 98 per cent of all Australian businesses.
The government is also planning to invest $100 million into the Australian Business Growth Fund to support them.
But new research reveals Aussies are inadequately supporting this sector in the retail space.
The research was released by parcel delivery service CouriersPlease (CP) on the eve of Small Business Saturday.
Founded 10 years ago to support small retail businesses, Small Business Saturday is now a widespread shopping event in the US and UK, and is gaining traction in Australia.
The CP survey of a nationally representative panel of 1021 Australians who shop online found that 54 per cent spend less than 20 per cent of their total shopping funds at small or independent retailers.
Just 11 per cent put 60 per cent or more of their shopping spend through small retailers.
CP asked respondents what would encourage them to shop more at small retailers.
Better marketing, better quality offerings, and a unique point of difference were the major reasons.
Thirty-one (31) per cent of shoppers said they would need to be more aware of small retailers and what they offer.
A further 21 per cent would be motivated to spend with small businesses who have a unique offering, while 19 per cent say they would need to offer better quality products compared with the major retailers.
Two-thirds (69 per cent) of online shoppers believe that online shopping is favouring big businesses, and is taking customers away from the small or independent players.
CP spokesperson Jessica Ip said scale often played a role in absorbing costs.
"One of the downfalls of a small business is their inability to absorb the cost of free shipping and free returns, which larger retailers can offer – often making it more attractive for consumers to shop with them.
"Free shipping is an expectation many shoppers have and it’s here to stay, however retailers who don’t offer free shipping will need to draw on other attributes of their business to entice customers for the sale.
"For instance, we’re seeing more consumers shop ethically sourced goods or purchase from retailers who are environmentally conscious.
"Retailers that cater to this may have the chance against the larger enterprises, who might struggle to establish such programs quickly.
“The Government’s plans for the Business Growth Fund, bears good news for start-up retailers if it goes ahead, as it will help provide the capital injection needed to fund their growth – a major challenge for most SMEs."