E-commerce instrumental in protecting SMEs during the pandemic

Inside Small Business

28th Sep 2022

New research has shed light on the crucial role e-commerce played in shielding micro, small and medium-sized enterprises (MSMEs) from the challenges of the Covid-19 pandemic.

According to the report published by Alibaba.com and research arm AliResearch, many small business-facing merchants stayed afloat during the pandemic by going all-in on digital retail and leveraging cross-border e-commerce channels.

The report noted that 41 per cent of MSMEs in Australia have seen a decline in income of at least 50 per cent. To prevent a further decline in income, these retailers embraced virtual trade shows, live streaming, social selling and more to retain existing customers, find new ones, and manage high logistics costs.

“[The] creativity and ingenuity that MSMEs have put into action to overcome the many hurdles created by the pandemic are nothing short of impressive,” Andrew Zhen, VP of Alibaba.com, said.

The report also noted that businesses with fewer than 250 employees were far more likely to try online retailing strategies during the pandemic.

“Digital commerce also contributes to a higher wage, higher productivity and lower carbon economy and builds our brand as a safe and secure place to live, invest, trade, visit and do business,” Stuart Nash, Minister of Economic Development of New Zealand, said.

Up to 70 per cent of MSMEs globally saw sales decline, while two-thirds reported their sales dropped by 40 per cent, according to the Alibaba.com report. Less than a quarter of MSMEs made it through the pandemic without a decline in sales.

“The primary problem was a sudden and nearly total suspension of demand due to the effects of lockdown mandates in physical-focused industries like tourism and hospitality, where MSMEs are strongly represented,” Zhang Kuo, president of Alibaba.com, said.

The pandemic also triggered rising costs in global trade and logistics. As a result, MSMEs reported a higher proportion of liquidity crises leading to waves of business closures and unemployment, with a quarter of MSMEs with under 10 employees shut down completely.

“We have to recognise that MSMEs are not only critical economic players but their health and prosperity are also critical to a full and sustainable global economic recovery,” Gao Hongbin, VP of Alibaba Group and Head of AliResearch Institute, said.

According to the report, e-commerce platforms helped lower threshold for these companies to participate in international trade and increase their chance of recovery by providing access to digital channels for sales. Online retail has also given MSMEs access to data analytics, such as demand forecasting, that empowers them to make better business decisions.

Such benefits have also been extended to B2B buyers, with more than half now using online marketplaces to find new suppliers, according to the International Trade Center.

The story is originally published on Inside Small Business.