Competing to Embrace the Micro, Small and Medium Enterprises Market

With its high contribution, reaching more than 57,8% of Gross Domestic Product, the Micro, Small and Medium Enterprises (MSME) sector not only contributes to the economy, but also affords the majority of the workforce in Indonesia (Central Bureau of Statistics / BPS, 2018). However, the benefits of technology have not been felt by most of this segment.

"From the beginning, Youtap had a vision to be able to be present and empower all lines of business, from the enterprise level to MSMEs to achieve their best through digital development. MSMEs have become one of the focuses in developing our all-in-one solution because Youtap sees great potential in this sector. ," said Youtap Indonesia CEO Herman Suharto.

Meanwhile, according to Co-Founder & President of BukuWarung Chinmay Chauhan, MSMEs are not only a source of economy, but also important for local communities, especially those who live in rural areas. BukuWarung noted that currently it has established partnerships with more than 5 million businesses in 750 locations. Most of them function as places for people to shop for their daily needs and where they interact with neighbors.

"The main operational challenge for microbusinesses is their reliance on manual processes to perform bookkeeping and payments with customers. We estimate that less than 10% of microbusinesses use any type of digital device to manage their business or accounting."

Departing from this problem, technology companies try to play an important role in supporting the efforts to digitize MSMEs in Indonesia. Chinmay's recommended way is focus less on innovation and disruption, but more on how they operate, such as bookkeeping, stock fulfillment and receipt of payments can be easier and more efficient.

According to the Co-Founder & CEO of BukuKas, Krishnan Menon, learning from his experience living and working in Indonesia, MSMEs are the backbone for Indonesia. However, not many technology companies have focused on the needs of this segment. To DailySocial, he said that his business was positioned as a MSME digitization software company that would develop into a fintech player.

“The merchants have realized that go digital very important to their business. Traders save 2-4 hours a day, 20% costs and minimize manual calculation errors. We also allow merchants to recover cashback 3 times faster because the process is automated.”

Speed ​​up adoption

In the Social Impact 2020 report released by Bukalapak, it is stated that MSMEs throughout Indonesia face enormous challenges during the pandemic. Bukalapak tries to turn these challenges into opportunities. As the pandemic restricts movement, they are empowering MSMEs who are able to offer a wide range of services, from selling groceries and basic necessities to offering remittances, bill payments and various financial services and other virtual products.

This step allows the general public to get services from conventional stores which are also Bukalapak partners. Until 2020, Bukalapak has added around 4 million Bukalapak sellers and partners. In total, there are currently 6,5 million sellers and 7 million Bukalapak partners spread throughout Indonesia.

The pandemic has also accelerated the acceleration and digital adoption of target users. According to Chinmay, the traditional socioeconomic role of MSMEs in Indonesia cannot be ignored. Indonesia, which is currently undergoing rapid digitization during the pandemic, its economic potential cannot be fully realized if small companies do not immediately carry out digital transformation.

"Indonesia is now doubling down on digitizing its companies to be more productive and competitive amid the economic recovery, with a focus on segments that are largely untouched such as MSMEs. This is a commendable task but also a monumental task, as there are around 60 million similar businesses spread across the globe 6.000 islands," Chinmay said.

One way to focus on accelerating adoption is providing education. Each platform also strives to deliver the features that users need with easy-to-use technology.

"It is undeniable that education conducted in Jakarta, compared to small cities outside Jabodetabek, has become easier to do. To be able to conduct education easily and of course more evenly, it is important for players to then build simple products that can be used easily. easy by the merchant," said Krishnan.

With unique characteristics, the Indonesian market does need a special touch. This is what the BukuKas team also believes. In order to be able to reach users in small cities, they bring fashion features offline with automatic synchronization when the user is successfully connected to the internet network.

Meanwhile, Youtap sees the benefits of digital technology in helping business people maintain their business during the pandemic. Business owners are flocking to use technology services to increase their sales.

"However, technological adaptation is still not evenly applied in various regions in Indonesia. Even though if they are able to adapt, their business can move forward thanks to the ability and fluency of the technology that has developed," said Herman.

MSME market potential

Based on BPS data in 2018, the MSME sector is still one of the biggest drivers of the economy, with a figure of 64,2 million. However, only around 16% (Ministry of Cooperatives and MSMEs, December 2020) have been connected to the digital ecosystem.

"Looking at this large number, we see that the MSME market still has many great opportunities to maximize the use of digital in its business. It is not limited to business management, but also many other aspects that can be developed such as marketing, financial management and digital payments. , especially with the standardization of QR payments by the government," said Herman.

To be able to provide the best services and products, BukuKas has several strategies. One of them is to focus on seeing what it looks like point bread them and build the required solutions.

"We have the best team with an innovative product culture and DNA that other players in the market don't have. This is what later became our core strength. We remain focused on merchants rather than worrying about competition," said Krishnan.

BukuWarung claims to be the only player who makes money through payouts. In this they see payment adoption as a strategic driver to enable monetization through credit, savings and other financial services at later stages of the merchant business cycle.

"Our focus is more on an in-depth understanding of our merchants to help help us stay ahead, as evidenced by how our products and features have become the standard for other players," said Chinmay.

Meanwhile, for Bukalapak, the company still has a vision to build the economy through MSMEs. Starting as a marketplace, now Bukalapak has grown into a trading platform that serves online and offline markets.

"To ensure that no MSMEs are left behind, in 2016 we began to provide solutions to serve the needs of the offline market including warungs, traditional kiosks and individual agents, enabling them to sell outside of FMCG goods," said Bukalapak CEO Rachmat Kaimuddin.