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Holistic e-commerce approach in empowering SMEs as digital economy drivers

Geoffrey L. Dermawan
Geoffrey L. Dermawan

Senior vice president of merchant sales, development and operations at Blibli

Jakarta  /  Thu, September 3, 2020  /  08:00 am
Holistic e-commerce approach in empowering SMEs as digital economy drivers

Workers make baking pans in Kampung Tonggoh, Bogor regency, on July 22. After halting production for several months due to the COVID-19 pandemic, many small and medium enterprises in the area – the majority of which specialize in producing baking pans – are slowly starting to reopen. (JP/P.J.Leo)

The COVID-19 pandemic has shaken numerous industries, with small and medium enterprises (SMEs) among those taking the hardest hit. The cut back in consumer spending, freeze in travel and limitations for in-store operations have caused the business of SMEs to dwindle. Subsequently, saving them has become a priority given their major contribution – over 60 percent – to the economy, with the government launching multiple initiatives to help SMEs stay afloat.

One such major initiative is Bangga Buatan Indonesia (Proud of Indonesian Products), a national, multi-stakeholder movement to aid SMEs through the COVID-19 crisis. The government has engaged e-commerce platforms in the movement, on the acknowledgement of the efficacy of online marketplaces in surmounting barriers, such as market access, in conducting retail trade amid the pandemic. Moreover, catalyzing the digital transformation of SMEs through technological adoption has become a priority of the government, which recognizes SMEs as the cornerstone of the country’s push toward being a digital economy powerhouse.

This public-private partnership has encouraged e-commerce platforms, which have long advocated for SMEs to digitally transform, to redouble their efforts in advancing the online growth of SMEs. E-commerce platforms have endorsed the Bangga Buatan Indonesia movement by crafting unique campaigns to draw SMEs online, in addition to spurring consumers to purchase locally made goods.

However, real advancement of SMEs in the digital space necessitate e-commerce platforms to dedicate concerted effort and resources beyond having SMEs establish online stores. E-commerce platforms need to implement a holistic approach to empower SMEs, ranging from providing the right infrastructural ecosystem to digital entrepreneurship upskilling, thereby giving SMEs the ability to thrive long-term.

A critical part of the e-commerce processes is logistics and operations, from warehousing to delivery, which enable platforms and sellers to fulfill customer orders. With their limited resources, SMEs often face challenges in running robust fulfillment operations, including managing inventory and deliveries across the country. To facilitate SMEs, e-commerce platforms must establish a vast logistics and operations network, encompassing warehouses, hubs and delivery fleets, in key cities nationwide. This will be the foundation to provide end-to-end fulfillment services for SMEs that will relieve the pressure on logistics and operations, hence allowing SMEs to focus on developing their core business.      

With the critical infrastructure in place, it is time to combine the market push due to the pandemic with the market pull by e-commerce platforms to draw SMEs online. E-commerce platforms need to arrange incentives to convince SMEs, especially those that remain reserved about going online, to give e-commerce a shot. The foremost incentive is easing the onboarding process, especially for newly online SMEs who might feel daunted by the process. An efficient onboarding process is advantageous for SMEs too, as they could quickly reconnect with the market to resume business. Other critical incentives involve minimizing costs, such as deposits and commissions, that might cause SMEs to reconsider going online. Understandably, during this challenging time, SMEs need measures that would lighten their costs. Finally, granting starting capital to cover online marketing costs will motivate SMEs to launch promotional campaigns that raise customer awareness on the SMEs’ products.

Adopting e-commerce is only the first step toward digital transformation for SMEs. Building up their digital entrepreneurship capacity is instrumental for them to thrive further. E-commerce platforms need to empower SMEs who have gone online with the right set of digital entrepreneurship know-how so that these SMEs can optimize the use of digital tools and opportunities at their disposal. Mentorships, whereby SMEs received direct guidance from experts, are instrumental especially to help SMEs quickly trouble-shoot challenges. Workshops and training, which can be conducted online, further serve to inform SMEs on ways to enhance their business and capture fresh market opportunities, such as by expanding product portfolios.

The concluding element of the holistic approach by e-commerce platforms is collaboration, where e-commerce platforms partner with stakeholders across public and private sectors to support SMEs. The Bangga Buatan Indonesia movement is the basis to expand partnerships to ministries and regional governments. Partnerships must also be stretched to other businesses, even with SMEs themselves, to launch campaigns that highlight the goodness of local products and spark a sense of national pride in customers. Collaborations can be carried out creatively as well, such as through creativepreneur competitions that spark excitement among SMEs in creating innovative products with market potential. These competitions also serve to inspire other enterprising youth to start their own small businesses and possibly, opening employment opportunities for others.

Through a holistic approach, e-commerce platforms move beyond just being an alternative channel on which SMEs sell their products to playing an integral and active role in accelerating digital adoption by the SME industry. By enabling SMEs to embrace digital technology smoothly and at faster rates, e-commerce platforms ensure that SMEs operate at optimal capacity as key drivers of the country’s push toward being a robust, digital economy. (wng)

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Geoffrey L. Dermawan is senior vice president of merchant sales, development and operations at e-commerce platform Blibli. He oversees efforts to support the entrepreneurial advancement of small and medium enterprises. 

 

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Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.