Thursday, November 26, 2020

Learning to sell online creates extra challenges for non-urban digital start-ups

Computer know-how and fundamental marketing principles are often harder to access outside the cities.

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As the pandemic progressed, many small businesses opened online storefronts purely to survive and found their sales flourishing.

Traders restricted by movement control orders found e-commerce on social media easier and more profitable than they had anticipated.

Consequently, many more small brick-and-mortar businesses are focusing their energies on going digital.

Media reports abound of urban aunties selling their home-cooked food on Facebook Live and finding eager customers.

However, away from the concrete jungles, in less densely populated areas, setting up a digital business presents inherent additional hurdles.

Noor Ismawati Jaafar says that the first potential stumbling block for aspiring small-town micro-entrepreneurs is the difficulty of accessing digital know-how.

The Universiti Malaya faculty of business and accountancy associate professor tells MalaysiaNow, “Budding entrepreneurs in small towns may not know where or how to access resources to create their own digital platform.”

For them, digitalisation requires learning about and developing skills in cashless transactions, online storefronts, social media selling and much more.

Reaching customers restricted by movement control orders may not be as smooth for small businesses in less densely populated areas.

“In rural areas, one main concern is infrastructure, specifically connectivity,” she explains, adding how even in urban areas broadband networks don’t always operate smoothly or reliably.

“When the MCO first hit and most of us were at home, connectivity was not always great,” she says. “Glitches also resulted from congestion as workers were coming to grips with videoconferencing and children were adapting to online learning.”

“Micro-entrepreneurs should embrace digitalisation or miss out on modern marketing and sales channels.”

She maintains that many small-town budding entrepreneurs could also benefit from a basic business grounding.

“Aspiring entrepreneurs in less urban areas may not understand the pre-transaction nature of business such as promotion and advertising of products,” she says. “And digital payment fulfilment may feel alien to this group.”

She adds that even promotional activities such as creating the best content for their Facebook page or knowing what will be most appealing to their customers on their Instagram page can be a problem.

Lilyana Latiff, CEO of Beta Foundation, an organisation which aims to advance techno-entrepreneurship, points out other possible fundamental gaps in knowledge such as pricing and order fulfilment.

“Access to delivery networks such as PosLaju, Grab or Lalamove is a key part of e-commerce,” she tells MalaysiaNow. “Imagine you are located just outside Kuching; which fulfilment provider is available to you to help send your goods? There aren’t many options.”

But she insists it’s worth making the effort to go digital.

“Micro-entrepreneurs should embrace digitalisation or miss out on modern marketing and sales channels,” she says.

“If customers are already used to ordering online through Instagram, Facebook, and WhatsApp to even order cakes and goreng pisang, then you will be left out if you can’t reach them. In the pandemic, many customers don’t mind paying extra for Grab to deliver the roti canai and teh tarik.”

Ismawati adds, “Also, all these budding digital entrepreneurs are fighting over the same customers. Attracting customers requires knowing how to be distinct from your competition.”

She cautions aspiring entrepreneurs against selling the same product, headscarves for example, simply because other digital sellers have found success doing so.

“Fundamental business knowledge is important even for those who jump from school straight into business,” she says. “Even if they have street knowledge and the enthusiasm to try their luck with a sellable product, competition can be very intense.”

She advises budding entrepreneurs to start small, by finding a niche product that sets them apart from competitors.

“And then, even before we tackle digital skills, it would be good to look at marketing principles of positioning and which product is best for which market, because sometimes entrepreneurs graduate from offering one product to a range of products, which only ends up diluting their market focus.”

The government recognises that going digital is a way forward for digital start-ups and small enterprises and is developing ways of helping.

Last week’s Budget 2021 contained a strong focus on digital transformation in its proposals to support and help fund the digital journey for micro, small and medium businesses.

Under digital adoption, two provisions include a budget allocation of RM150 million for the SME Digitalisation Grant Scheme and the Automation Grant, with less stringent conditions for micro-SMEs and start-ups.

Also proposed was an additional RM150 million to encourage adoption of e-commerce in SMEs through training, sales assistance, and digital equipment.

The good news is that a report released this week by Google Malaysia shows that this year the Malaysian e-commerce market is growing faster than other Southeast Asian nations.

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