Small and medium industries (SMEs) play an important role in a country's economy because they are the main contributors to job creation and meeting local market needs.
However, SMEs are often faced with various challenges, such as limited capital, limited market access, and difficulty in competing with large companies. Well, one solution that is now very popular in this digital era is the development of e-commerce.
E-commerce, or electronic commerce, allows businesses to sell products and services online without being limited by space and time.
Here are 10 benefits of e-commerce that can be obtained by small industry players in developing their businesses
1. Wider Market Access
One of the benefits of e-commerce is access to a wider market. Through digital platforms, small industries can sell their various products not only to local consumers, but also to the international market.
A study conducted by McKinsey & Company in 2020 revealed the fact that 58% of small businesses that use e-commerce experienced a significant increase in sales, both in the domestic and international markets.
However, SMEs are often faced with various challenges, such as limited capital, limited market access, and difficulty in competing with large companies. Well, one solution that is now very popular in this digital era is the development of e-commerce.
E-commerce, or electronic commerce, allows businesses to sell products and services online without being limited by space and time.
Here are 10 benefits of e-commerce that can be obtained by small industry players in developing their businesses
1. Wider Market Access
One of the benefits of e-commerce is access to a wider market. Through digital platforms, small industries can sell their various products not only to local consumers, but also to the international market.
A study conducted by McKinsey & Company in 2020 revealed the fact that 58% of small businesses that use e-commerce experienced a significant increase in sales, both in the domestic and international markets.
According to Dr. Hafsah Ibrahim, a digital economics expert, "E-commerce provides a great opportunity for small industries to develop a wider distribution network and market their products globally, at a much lower cost than conventional methods."
2. Operational Efficiency
Another benefit of e-commerce is that small industries can also increase their operational efficiency. The buying and selling process carried out online reduces the need to employ many staff for tasks such as customer service, inventory management, and payments.
An automated system integrated into an e-commerce platform helps simplify stock management, speed up transactions, and reduce the potential for human error.
The Indonesia E-commerce Association (idEA) in its report stated that around 40% of small businesses that switched to e-commerce recorded an increase in operational efficiency, which ultimately increased net profit.
Adopting technology such as automated inventory management systems and sales data analysis can help small industry players identify the best-selling products, predict market trends, and adjust their marketing strategies in real-time.
3. Reducing Marketing Costs
Marketing costs are often the biggest burden for small businesses if done traditionally. Through e-commerce, small industries can reduce expensive traditional marketing costs, such as advertising in print media or television.
Digital platforms provide various options for more affordable digital marketing, such as advertising on social media, SEO (Search Engine Optimization), and email marketing.
Not only that, various promotional mode features have also been prepared, such as flazz video, live promotion. According to the Google-Temasek report on the digital economy in Southeast Asia, marketing through e-commerce is more effective in reaching a more targeted audience, at a more efficient cost.
In fact, by utilizing customer data analysis, business actors can adjust marketing strategies to better target consumers who are relevant and have the potential to buy their products.
4. Ease of Payment and Transactions
The payment system in e-commerce is increasingly developing, with many choices offered to consumers, ranging from bank transfers, credit cards, to e-wallets.
This facilitates transactions between business actors and consumers, and speeds up the purchasing process. According to Prof. Suwandi, an e-commerce expert from the University of Indonesia, a flexible and secure payment system is one of the main keys to the success of e-commerce.
With technology that continues to develop, consumers can now easily make payments from anywhere and at any time, which of course benefits small industries in reaching customers.
In addition, online transactions also reduce the need for operational costs related to manual bookkeeping and cash payments, which are often a challenge for small businesses with limited resources.
5. Increasing Competitiveness
With e-commerce, small industries have the opportunity to compete more fairly with large companies. E-commerce allows small industries to offer their products to a larger market at a lower cost.
Platforms such as Tokopedia, Bukalapak, and Shopee provide space for small business actors to market their products without the need for expensive physical infrastructure.
This gives them the opportunity to compete in terms of price, quality, and product innovation. Research conducted by the Asian Development Bank (ADB) in 2022 showed that around 70% of small companies that joined e-commerce platforms recorded increased competitiveness in the market, especially in terms of price and faster delivery times.
6. Improved Customer Experience
E-commerce also facilitates a better customer experience. Customers can easily see a variety of product choices, compare prices, and read reviews from other customers before deciding to buy.
Interaction with customers can be done directly through the chat feature or email, providing a sense of closeness even though transactions are carried out online.
According to Nina Putri, a user experience (UX) expert, “E-commerce allows businesses to provide a more personalized and satisfying shopping experience.
With features such as product recommendations based on purchase history or customer preferences, small businesses can increase their customer loyalty.” In addition, with the integration of a faster and more accurate delivery system, customers can receive products faster and in good condition, which of course increases their satisfaction levels.
7. Flexibility in Operations
One of the main challenges for small industries is limited operating hours. E-commerce offers flexibility of time, where businesses can run without being limited by working hours.
Customers can make purchases at any time without having to worry about the operating hours of a physical store.
According to Siti Farah, a local entrepreneur in the fashion sector, "With e-commerce, I don't need to open a physical store every day. I can still get sales even though my store is closed or I'm not there." This greatly helps small industries to reduce operational burdens while still generating income.
8. Increased Ability to Innovate
With e-commerce, small industries can be more flexible in innovating, both in terms of products and the way they do business.
They can quickly adapt to the latest market trends and technologies without having to rely on major changes that require large investments.
For example, many small business owners are now starting to integrate artificial intelligence (AI) to recommend products or use virtual reality (VR) to provide a more engaging shopping experience.
Research by the Harvard Business Review revealed that small businesses that adopt digital technology are faster at innovating and responding to market needs than those that do not.
9. Support from the Government and E-Commerce Platforms
The Indonesian government has recognized the importance of developing small and medium industries in the digital world, with various initiatives to support business owners so that they can more easily switch to e-commerce.
The 100 Smart City and UMKM Go Digital programs launched by the government are concrete examples of efforts to facilitate the adoption of technology among small businesses.
In addition, e-commerce platforms are also increasingly introducing special features that support the existence of small businesses, such as digital training, funding assistance, and easy access to the global market.
10. Challenges and Solutions
Despite its many benefits, the adoption of e-commerce by small industries is also not free from challenges, such as limited technological knowledge and difficulty in utilizing available data.
However, with various training and resources from the government and platform providers, these challenges can be overcome.
Through collaboration between business actors, the government, and e-commerce service providers, small industries can continue to grow and increase their competitiveness in this digital era.
Conclusion
The benefits of e-commerce are numerous for small industries, ranging from wider market access, operational efficiency, reduced marketing costs, to increased competitiveness.
With technology continuing to develop, small industries now have the opportunity to grow faster and bigger, both in local and global markets.
Support from the government, e-commerce platforms, and digital technology can help small industries overcome existing challenges and take advantage of the opportunities offered by the digital economy.
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