A craftsman in Solo, Central Java, sells accecories made from paracord strings via Instagram on October 4, 2017. (Antara Photo/Maulana Surya)

Many SMEs Embrace Digital Economy, They Just don't Realize It

BY :JAYANTY NADA SHOFA

AUGUST 10, 2021

Jakarta. Despite selling online via social media, not many small and medium enterprises, or SMEs, identify themselves as “digital SMEs”, unless they have embarked on e-commerce platforms, according to fintech firm KoinWorks.

“Perhaps there is a perception among these SMEs that they are only a ‘digital SME’ once they have joined e-commerce platforms,” KoinWorks chief executive officer Benedicto Haryono told an online conference on Tuesday.

KoinWorks recently surveyed 1,376 micro and small businesses across the archipelago. The results showed only 19.5 percent consider themselves as digital SMEs. Ironically, those who see themselves as “non-digital MSMEs” have already used social media, marketplace, and even food deliveries. 

Their response also comes as a surprise, considering it was an online survey. 

According to Benedicto, the SME sector encompasses entrepreneurs from different generations. The older entrepreneurs may not be as tech-savvy as their younger counterparts. They prefer easier-to-use digital tools like the Facebook-owned social media channels — namely WhatsApp, Instagram, and Facebook itself. 

“Setting up a page and signing up [in those three channels] only requires an email, phone number, and username. And voilà, you can start uploading pictures of your products and chat with the customers. In comparison, [setting up an online store] in an e-commerce platform has more requirements. For instance, SMEs must input their address and update the products stocks,” Benedicto said.

“Once [these SMEs] are comfortable with adopting digital tools, they will start to tap into e-commerces as their second or third step in their digital journey,” Benedicto said.

KoinWorks reported that 48 percent of the surveyed SMEs are adopting multiple sales channels or going hybrid. Not only do these SMEs sell their products offline, but they also go on online platforms.

About 84.4 percent SMEs or the 632 respondents use Facebook's social media channels. Of that number, 35 percent are on Facebook, and 30 percent sell via Instagram. About 19 percent sell on WhatsApp. 

And the more their sales channels, the higher the sales increase. SMEs that only have two sales channels have an average sales increase of 31.8 percent. Those with five different channels can enjoy a sales increase of up to 60.3 percent, KoinWorks reported.

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