How MSMEs can seize opportunity under the ‘New Normal’

The global economic impact of the pandemic that put it in a standstill has affected many business sectors, and in the Philippines the micro, small and medium enterprises are greatly affected given the fact that this sector is backbone of the economy.

The undeniable impact of the coronavirus pandemic and the varying degrees of quarantine measures that it has brought upon communities. Beyond the immediate health impacts, businesses have also been severely affected by the pandemic, from experiencing supply chain disruption to facing physical store closures. What has become apparent is that micro. small and medium enterprises (MSMEs) have been hit the hardest by the measures. Many SMEs have been forced to suspend operations, encountering limited liquidity and delayed payments, with some owners being forced to dip into personal savings funds to advance workers’ salaries.

Challenging as the last few months have been, there is light at the end of the tunnel for SMEs. Over the past few months, UPS Philippines has conducted workshops and webinars with small businesses about how they can navigate these challenges and ultimately bounce back from this crisis of our generation. In particular, UPS worked with women entrepreneurs from all corners of the Philippines such as Batangas, Cagayan de Oro, General Santos, Iloilo, Legazpi, Puerto Princesa, Tagbilaran, and Zamboanga, who faced unprecedented challenges as the pandemic unfolded this year. In the sessions that UPS Philippines conducted, 30-40% of SMEs have identified reduced cash flow and difficulty in resuming operations because of quarantine and social distancing measures as the biggest challenges. UPS Managing Director for Philippines and Indonesia, Chris Buono, shares some of the key takeaways and insights from the workshops: 

Tip 1: If business opportunities have become scarce, pivot the business model.

In the face of physical store closures, e-commerce has emerged as the way forward for businesses, as new digital technologies change the playing field and the speed with which companies can and must react. Some forecasters have even estimated that the pandemic has brought forward the growth of e-commerce’s share of retail by two to three years. In pivoting your business to e-commerce, logistics needs to support that shift, from production to warehousing and inventory management to fulfillment.

SMEs should consider a business model that works best for them, whether a purely online model or maintaining a hybrid omni-channel model. Whichever form this takes, supply chains and distribution channels will need to be reconfigured. 

Tip 2: Go digital.

Over the last few months, the SMEs that were able to continue operating with fewer disruptions have been those with a ‘digital-first’ approach, establishing their sales channels through different platforms, including their own websites, Facebook, Instagram, and market sellers like Lazada or Shopee. Among the businesses that UPS Philippines surveyed, 75% of SMEs are either in the process of transforming their business to go digital or intend to go digital, but don’t know yet where to start. This should serve as a strong signal to business owners who have not yet embraced digitalization to consider transforming their businesses to be more future proof. 

The next thing to consider is enhancing the ease of cashless payment options for customers, either through existing platforms such as PayPal or bank transfers over cash-on-delivery options. All these form part of business transformation, which means looking ahead for growth, identifying opportunities presented by new technologies, and spotting new ways of doing things, whether digital payments or ways to bring products to market.

Tip 3: Collect data, get insights, learn, improve.

Through the course of our webinars, we have had questions from SMEs like, ‘Am I reaching enough potential buyers through my current channels?’ or ‘Is my website or social media content attractive enough for customers to click through and engage more?’ or ‘Am I making it easy for my customers to purchase my products?’ These questions can be answered by data. Data insights can help SMEs make decisions that would enable their businesses to grow.

Data can also be utilized to identify potential export markets. One simple example is using rweb-based analytics to identify where visitors of a website are located, indicating potential demand your Philippine-made products. 

Tip 4: Know that digital tools can be used in the entire logistics process.

One harsh reality that businesses must face is the increasingly competitive and crowded e-commerce market, and the corresponding need to stand out with the right tools.  Customer experience is the name of the game in e-commerce, and when SMEs get it right, they will be able to grow the business and build loyalty. 

UPS has shown how it has helped SMEs with tools that enable greater automation, visibility, and flexibility such as Marketplace Shipping, where shipping tasks can be automated from UPS-supported e-commerce platforms like Amazon, Shopify, and Etsy. For SMEs, this means less time and labor spent on picking and packing, as well as manually processing shipments, waybills, and printing labels.

Visibility tools are equally important for SMEs. UPS has various visibility tools that enable customers to receive push notifications regarding their shipments, thereby eliminating the need to constantly check for updates on the website and having a better buying experience overall.

Tip 5: Understand all the costs for customers in the online buying experience, especially for international shipping.

While e-commerce offers SMEs the opportunity to expand their customer base beyond domestic audiences, some may find the meshwork of regulations, duties and taxes in international shipping to be complex or unpredictable at times. However, with the right information and access to support from the experts, they can easily export or import products.

This begins by computing the total landed cost, or the total charge associated with getting a shipment to its destination. These include the cost of shipping, the applicable duties, taxes, and fees, as well as other factors such as insurance, currency conversion, storage, regulatory fees, fraud prevention, handling fees, payment processing, and other applicable duties.

It’s OK to not be OK.

The combination of movement restrictions, lockdowns and suspension of air travel has created a perfect storm of factors that have challenged even the most resilient businesses over the past few months. But what is important is not who emerges unscathed, but how businesses can learn from this episode’s long-term implications on their path to recovery. UPS has a team of experts who can help our SME customers with everything they need to know about shipping internationally. Even as prospects looked dim, we helped many a business find elusive bright spots to expand across borders as they navigated a sea change in domestic and global trade. Ultimately, our goal is to help SMEs grow and rebound from the pandemic, and we have a wide range of solutions and resources to enable our partners to reach their targets, even in a business landscape that has changed immeasurably in the space of just under a year. Hopefully with these tips as a guide, your business can take steps in the right direction to do just that.