Overcoming the Challenges of Digital Transformation of MSMEs in the Regions: Expert Views and Best Practices from Business Actors

In this modern era, digital technology has become the main pillar in business strategy and operations. Moreover, the pandemic that occurred has encouraged digital transformation, including in the business sector.

Nafisah Wulandari, Head of Regional Growth Expansion Tokopedia, shared her views regarding the effect of digitalization on the growth of MSMEs in the regions. According to him, digitalization and technology are no longer just added values, but have become a necessity so that they can always be relevant to the times.

"Tokopedia itself has directly witnessed the birth of millions of new online businesses, who started and built their business with Tokopedia. This is evident from our internal data where there is a growth in the number of sellers on Tokopedia from 7 million in 2019 (pre-pandemic), to more than 14 million in 2023 (post-pandemic). Digitalization increases access for business actors in all corners of Indonesia to create online business opportunities. Without having to move to the capital, businesses in all regions in Indonesia have the same opportunity to start and build a business through the Tokopedia digital platform." Nafisa said.

DailySocial also had the opportunity to dig directly into the adoption of digital technology by MSMEs together with Liblow Widri Enggal as the founder of Blimey Kito and Riko Mappedeceng as the owner of Temphoyac. Both of them have digitized the business and uncovered the motivation behind it.

“(digitizing) in order to be able to reach global and prospective markets buyer more from all around." Said Liblow regarding his motivation to digitize the business.

The benefits of adopting digital technology can be felt by Liblow and Riko. Not only to drive sales, the adoption of digital technology is also carried out for various purposes, such as marketing, operational management, to facilitate interaction with customers.

“(The use of digital technology) is very influential, especially for promotion. But if to (increase) sales not necessarily like that. There are many (processes) to go through. So, currently it is used more for promotion so they know there is a souvenir shop from Jambi called Temphoyac.” Riko explained to DailySocial.

Constraints and Challenges of Digitalizing MSMEs in the Regions

Both Liblow and Riko have felt the benefits of digitalization. However, apart from these various benefits, they also experience various different obstacles and challenges in the digitalization process that is being carried out.

“Blimey Kito is a product handmade craft, so for direct sales in event, gallery or workshop faster than online. Candidate customer prefer to visit event us and shop directly because you can touch, see, feel Indonesian Wastra and its blend modern textiles  which we use in various Blimey Kito products.” Liblow said.

Different challenges have to be faced by Riko when trying to find out the character of the users of each social media that he will use.

“Each application is different. How to use the characters (the audience) is also different, it must be adapted to the promotional material that we will convey in each application. So you have to keep learning." Obviously Rico.

The pandemic has had quite a big impact on Temphoyac. The business had to temporarily close because there were no sales at all. In fact, even online promotions during the pandemic didn't help because of the character of the customers who preferred shopping offline. This made Riko spin the idea to switch to another business for a while. Surviving with the local beverage business during the pandemic, Riko is now slowly reviving his Temphoyac business.

Efforts to Overcome Obstacles and Face the Challenges of Business Digitalization

Various obstacles and challenges faced by MSMEs in the regions in their efforts to adopt digital technology. As Nafisah said, MSMEs in various regions are still struggling to overcome the obstacles they face.

"The common challenge faced in the context of digitizing MSMEs in various regions in Indonesia is to accelerate the adoption of digital platforms, as well as educate as many business actors as possible regarding the convenience of online transactions." Nafisa said.

Therefore, Tokopedia collaborates with various parties as a way to participate in responding to challenges and overcoming obstacles faced by business people.

"Close collaboration with various parties, including the government and other strategic partners, is very important to create solutions to the challenges faced by MSME players. For example, Tokopedia is collaborating with the government to present various business education modules for MSMEs, including the Digital Forward Women Module and the Financial Literacy Module." Add Nafisa.

Training is also one of the important steps that need to be taken by MSMEs in the regions to improve their skills and knowledge in an effort to achieve successful business digitization.

"In order to accelerate the adoption of digital platforms for MSMEs in the regions, of course this needs to be accompanied by increased skills and knowledge of business activists in terms of digital literacy and business management. For this reason, we continue to encourage local business activists to take part in the business assistance provided by Tokopedia for free." Said Nafisa.

Tokopedia provides several educational programs and business assistance for local business activists that you can participate in at this time, including Seller Flash School (free online classes/webinar) and Seller Education Center (a place for the latest information about sales).

Liblower and Riko experienced various challenges and constraints that did not prevent them from continuing to develop their business. This actually encourages them to be more creative and innovative in facing challenges.

"We attended several trainings which was carried out with the Ministry of IKMA, Kemenparekraf, Directorate General of National Export Development and various provider because they have successfully passed the selection for a series of go digital activities and strived to go global with export potential.” Clearly Liblow.

Not only training, Riko also continues to learn by socializing and asking relatives and employees who understand more about the use of digital technology.

"I also continue to study and ask more experts or ask my young employees and from there I understand (its use). Then, I try to adapt it to my business concept.” Obviously Rico.

Liblow remains optimistic in facing the intense business competition in the digital era while committed to continuously improving its digital quality and capabilities.

"The first thing that is very important to welcome the digital era 5.0 is to prepare competent human resources, always Update tentang trends, networking with many entrepreneurs in other areas, community WhatsApp groups, activities from Alumni, and national curation activities to facilitate the exchange of information. Competition will always exist, but if we have good digital capabilities and continue to improve product quality, I am optimistic that we can face these challenges.” Liblow said.

On the other hand, as the business grows, the needs and constraints faced by MSMEs will also change and vary. Therefore, it is important for business actors to always be open to change so that they are always relevant to developments and able to respond to various challenges.

"In every business scale or target, business actors face different challenges. To help business people in Indonesia, especially MSMEs, respond to various challenges at every business scale and target, Tokopedia has presented Tokopedia Marketing Solutions." Nafisa said.

Tokopedia Marketing Solutions is a comprehensive marketing solution from Tokopedia to help sellers of various business scales achieve promotional goals and generate sustainable business growth.

Full digitization is expected to provide more benefits for the Temphoyac and Blimey Kito businesses, such as increasing brand awareness, expand the market nationally and globally, to increase sales conversions.

Digitalization Tips that can be Applied by MSMEs

Digitalization has indeed opened up new opportunities for many businesses. However, not all businesses have digitized well. For this reason, Nafisah Wulandari shares some tips that can be applied to business people who want to start a business online-New.

Find out which products are selling in the market

To find out, sellers can use the Market Insights feature in the Tokopedia Seller application to study market conditions, including best-selling products and their keywords by region and category.

Study Product Price Recommendations in the Market

Through the Price Recommendation feature in the Tokopedia Seller application, sellers can determine competitive prices for goods to attract more buyers.

Create Interesting Content on Social Media

Use social media as a forum for creatively promoting or marketing products in order to increase aweness public. Sellers can also do live video streaming through Tokopedia PLAY to interact directly and get closer to potential buyers.

Take advantage of Beginner-Friendly Features from Tokopedia Marketing Solutions

To attract more potential buyers, sellers can take advantage of TopAds, an automatic advertising feature from Tokopedia Marketing Solutions that displays products at the top of the Tokopedia search page. With only a small capital starting from IDR 250 per click, sellers can reach more buyers and maximize sales.

Diligently Seeking Insights

For example, by joining the Tokopedia and Tokopedia Family (K-Top) seller communities in various regions. Through K-Top, sellers can share insights and experiences with each other. In addition, sellers can get comprehensive educational materials related to business development via the page Seller Education Center.