MSMEs Must Leverage Online Tools to get up to Speed
The digital revolution took off when smartphones were first introduced. It spurred growth in app building, and in due course, numerous technology giants took form. There are now virtual marketplaces, music and video streaming platforms, and also social media apps that command high user engagement. This fondness for online consumption received a huge fillip as people got confined to their homes for extended periods. If binge-watching was common prior to the lockdown, its scope has only been widened. E-commerce companies such as Amazon registered a significant increase in valuation and tech giants such as Facebook made sizeable overseas acquisitions.
Micro, small and medium enterprises (MSMEs) were the hardest hit during the pandemic. The lockdown kept customers at bay and this resulted in major liquidity challenges. In the absence of fiscal stimulus features announced by governments, MSMEs in many regions around the world faced permanent closure. But fiscal stimulus measures can only go so far; there has to be innovation and technology uptake to keep the pivotal cashflow cycle well-oiled.
Benefits of an Online Presence
A smartphone with an internet connection is all that is needed to access an online marketplace or visit a webstore that is brand specific. A Facebook page can be started in less than 10 steps and it allows MSMEs to reach out to as many as 2.6 billion monthly active users worldwide. The customer base that a physical store can generate is limited and if the location is less than ideal, then building the customer base is an arduous task. .
Facebook, the world’s most popular social media platform, allows users to reach out to potential customers with personalized advertisement campaigns. These can be boosted in lieu of nominal sums and they are substantially cheaper as compared to traditional advertising channels. Although creating an online marketing campaign may seem a daunting task for first-time users, there are dedicated digital marketing organizations that ensure a consistent online feed is maintained across popular platforms.
Popular text messaging platform WhatsApp claims to have one billion active accounts being accessed every day. This could serve as an advertising channel too, although it must be highlighted that there is a fine line that must be understood. Breaching this threshold will result in marketing efforts being perceived as spams. Geo-location services have also reduced the hassle of locating physical shops. MSMEs can now list their businesses on Google Maps, and it is a boon for customers who can easily navigate to their desired stores even in unfamiliar destinations.
Access to Vital Insights and Data Analytics
Digital platforms facilitate data collection. It could be in the form of user reviews that other online shoppers can see, or analytics such as geographical origin of visitors, post reach and post engagement. These data sets can be further analyzed to derive valuable insights, which will allow data driven decision making as opposed to using ‘gut feeling’ to steer course. v MSMEs can predict purchasing behavior and consumer preferences to plan new product launches, design marketing campaigns and align future business goals.
Facebook has recently announced a US$100 million grant program to support small businesses facing hardships due to the pandemic. Grants are awarded in the form of cash and advertisement credits. In effect, such initiatives can play a pivotal role in supporting local communities and limiting unemployment, especially so in emerging economies with large unorganized sectors.
Family Businesses are Finding New Patrons in Distant Shores
Brazil, Latin America’s most populous nation is home to a population of 211.8 million. An impressive 77 percent of its residents enjoy internet access, while 66 percent have a social media presence. That immediately reflects a sizeable target base for any small business owner to engage with by means of technology use.
Some have been quick in jumping onto the online bandwagon. Boutique de Krioula is a Sao Paulo based boutique store specializing in African turbans. The proprietor used the Whatsapp business app to connect with prospects and before long, she was able to increase her sales by 10 percent month-on-month. The boutique now has patrons from as far away as Spain, France, Italy and Switzerland.
Indonesian snack manufacturer, Hj. Mbok Sri, is using a combination of in-store sales and social media marketing to diversify and increase revenue streams. The family run business unit has since grown its revenue by 30 percent.
Online is the New Normal; Embrace It
MSMEs cannot afford to let digitalization pass them by. There has never been an easier time for establishing an online presence and if the current economic outlook is considered, then MSMEs must prioritize on exploring online revenue streams. Growth is forecast to remain slow for the near term and while governments provide assistance measures, businesses too must step up and adapt to the ‘new normal’.