The Pandemic has hit various industrial sectors hard, and a few of them have ended up bankrupt. One of the sectors that feels this impact in Indonesia is the MSME sector. However, not all MSME players have gone out of business because some have discovered new ways to survive amid a pandemic, namely by embracing digitalization.
In Indonesia, MSMEs are one of the country’s economic drivers, accounting for 60.34% of the country’s Gross Domestic Product (GDP) in 2018. The total number of workers in Indonesia absorbed by the MSME sector is also quite large, amounting to 115 million people, or approximately 97.02% of all Indonesian workers.
Unfortunately, when the COVID-19 pandemic began to spread widely in Indonesia, it had a negative impact on several MSME players. According to data from a survey report on MSME actors in Jabodetabek conducted by the Katadata Insight Center (KIC) in June 2020, approximately 82.9% of business actors were negatively impacted by the pandemic. Approximately 63.9% of MSME players saw a drop in turnover of more than 30%.
The Steps to Digitizing MSMEs During a Pandemic
The condition of the MSME sector being hit by the pandemic, of course, cannot be allowed to worsen by the government. Let alone the position of MSMEs in the economy of the country is quite important. Therefore, the government continues to accelerate the digitization of MSME players through various programs, either launched or new ones.
MSME players who have succeeded in seeing digitalization as an opportunity have also proven to survive during a pandemic, especially when the government has imposed super tight restrictions on activities. According to the findings of the KIC survey, 80.6% of MSME actors said that they felt helped by using the internet.
If digitalization is proven to help MSMEs survive in times of crisis, the next question is what technology services can be used as new moves by MSME players to prevail in times of distress? Check out our summary below:
Utilize Marketplace Services
The marketplace is an intermediary that provides services or platforms to connect buyers and merchants to conduct buying and selling transactions in cyberspace. It is like an online department store. The marketplace that operates in Indonesia can be divided into two types, namely pure marketplaces and consignment marketplaces.
The pure marketplace is a marketplace service that provides stalls for selling the product or services, payment facilities from various financial institutions, to logistics services that have collaborated with related marketplaces. Meanwhile, the consignment marketplace is a marketplace service that offers a cooperation system such as depositing goods for resale at the service. MSME players can use this channel to market their products or services according to their individual needs.
The steps to register and open an online store on a marketplace service are also easy because merchants only need to register their active email. After that, if the merchants want their account verified, they need to fill in personal information and upload several documents. If the opened online store is already a legal entity, the merchants can upload several administrative documents to verify the store becomes an official store.
Small and medium-sized businesses can gain access to untapped markets by using marketplace services to open an online store. This opportunity is the best momentum to expand services because, according to BI Governor Perry Warjiyo in Kompas, the value of online shopping transactions this year is predicted to reach IDR 395 trillion, or grow 48.4 percent annually (YoY). It means that Indonesians will shop online more often, and this trend does not appear to be slowing down.
Embracing Digital Payments
The increasing trend of online shopping in Indonesia also has a positive impact on other sectors. One of the sectors that are feeling the benefit is the digital payments sector. In Indonesia, the digital payment services that operate are no longer limited to mobile banking, internet banking, and credit cards but also include digital wallets, electronic money, online loans with pay later systems, and QRIS codes.
Bank Indonesia predicts that the value of electronic money transactions can reach IDR 278 trillion, or grow 37.7% (YoY), for the whole of 2021. Meanwhile, the value of digital banking transactions is projected to reach IDR 35,600 trillion, or a growth of 30.1%, for the whole year of 2021. Meanwhile, merchants who have used QRIS, according to data from Bank Indonesia as of the 3rd week of July 2021, have reached 8.1 million merchants, and 86% are MSMEs. The government has also targeted the use of QRIS in Indonesia by 2021 to reach 12 million traders.
Payment system service providers (PJSP) are also currently promoting the #AyoPakaiQRIS campaign to support the achievement of these targets. Through this campaign, PJSP continues to educate merchants through various communication channels about the advantages of QRIS, which makes payments for buying and selling transactions easier.
It’s also easy to register a business so that you can receive QRIS payments. Merchants can check the list of providers that support the service at https://aspi-indonesia.or.id/information-qris first. After that, they follow the registration procedure according to the service provisions by completing the business data and documents requested by the PJSP for the business verification process.
By embracing a digital payment system, entrepreneurs completed the choice of payment methods that can be used easily by customers and themselves. In addition to facilitating remote transactions from anywhere and anytime, digital payment services, in general, can also assist merchants in recording their transaction history so that they can make financial reports of the business they run even simpler.
Learn to Market Products Digitally
In addition to online shopping services and digital payments, small and medium entrepreneurs need to broaden their digital marketing knowledge. By using digital marketing, they can unlock opportunities to increase the sales of their products and services. There are two choices, using a paid digital advertising service or optimizing digital content such as articles, videos, or designs.
Indonesia is one of the countries with high internet penetration. According to APJII survey data in 2020, the number of Indonesian internet users has reached more than 196 million people, or about 73% of Indonesia’s population. Regarding the devices, smartphones are the favorite devices of internet users in Indonesia. The number reached 95.4%. Meanwhile, from laptops/tablets only 19.7% and from PCs, 9.5%.
Meanwhile, the five main reasons internet users access the internet are to access social media services (51.5%), message-based communication (32.9%), online games (5.2%), access to public services (2.9%), and online shopping (1.3%). It means more people are spending their time in cyberspace using smartphones and other advanced technologies.
This change in behavior signals a significant market shift, from offline to online. Therefore, just doing conventional marketing to reach the market to increase sales is not enough. Nowadays, small and medium entrepreneurs also need to learn digital marketing to market their products or services in cyberspace.
The first step can start by taking digital marketing webinar classes for online platforms. Then put it into practice by learning how to optimize digital content that can be uploaded to various channels based on the needs.
For example, if you want to upload content to Instagram, the optimization that you need to learn is making attractive designs, copywriting, to short videos. If you have mastered Instagram, you can try other channels such as Youtube for videos, Blogs for articles, and Tiktok for short videos.
After that, you can go to the next level in learning keywords and data analysis to apply in to paid digital marketing channels. Examples are Facebook Ads, Google Ads, and so on.
Creating Your Website
If small and medium entrepreneurs mastered content creation and optimization, there’s nothing wrong with building their website. It can function as a company profile or become an independent online shop if they have sufficient capital. By creating a website, the level of customer trust in the products or services owned by entrepreneurs can increase.
In addition, they will also have more flexibility to optimize their digital channels. For example, to build new partnerships with other companies, heighten Search Engine Optimization (SEO), optimize feature products or services to increase sales, develop new digital innovations, and more.
Digitization is the answer for SMEs to survive in times of crisis
Technological innovations that move quickly have touched various aspects of life. We can feel the impact of changes in people’s behavior, who are now doing more activities in cyberspace such as online shopping, playing online games, and reading online news. This phenomenon is moving faster because driven by the pandemic situation, which limits many face-to-face activities.
The dynamics of rapid market changes ultimately require many business players to change to remain relevant and not losing their loyal customers. The MSME sector is one of the many sectors in Indonesia that are needed to keep up with this rapid market change, given its important position in the nation’s economy.
Therefore, the government continues to encourage the acceleration of the digital transformation of MSMEs through various programs. These efforts were to help small and medium entrepreneurs not to be left behind and eroded by the fast-changing times.
The steps taken by the government are also not easy because most of the small and medium business players come from groups of people who rarely come into contact with new technologies. So, there needs to be cooperation from various parties to continue to educate them and strengthen the existing digital ecosystem so that they want to join the same pool.
In addition, transforming business towards digital in a time full of uncertainty has proven effective in making MSMEs more resilient in doing their business. Besides being able to open new market opportunities and increase sales, digital transformation can also maintain the health of business players because it reduces social contact with people and reduces the chance of being infected by the COVID-19 Virus.
Digital transformation is only one of many innovations that will be born in the future. In the end, those who will survive in the long term are small and medium entrepreneurs who have the will to continue to learn, develop themselves, and embrace the changes that occur in society.