Hybrid Channels are the Key for MSMEs to Survive and Grow in the Midst of a Pandemic

In the midst of a situation of economic uncertainty due to the Covid-19 pandemic, digitalization has turned out to play an important role for Micro, Small and Medium Enterprises (MSMEs) to survive, even at the same time achieve significant growth.

This is evidenced by data from the Ministry of Cooperatives and Small and Medium Enterprises (Kemenkop UKM) which states that only Micro, Small and Medium Enterprises (MSMEs) that have been connected to digital platforms are able to experience growth. More specifically, the growth reached 26%.

Responding to the above potential, the MSME confidence index in the first half of 2021 increased sharply compared to the previous period for the business climate during the pandemic. In line with that, now MSME actors are increasingly “literate” with the 'Hybrid' channelization strategy (Hybrid Channel), which is to run their business on two channels, offline and online. This strategy is believed by most MSME businesses to help achieve positive growth amidst the challenges of the pandemic.

The application of 'Hybrid Channel' is claimed to be able to increase sales significantly. Based on Digital SME Confidence Index 2021 report released by KoinWorks, as many as 48% of MSME players prefer to adopt a hybrid channel to survive and open up new opportunities. This is evidenced by an increase in sales of 7% or an average of 44% for MSMEs that run a hybrid business.

Hybrid Channel also drives movement Offline to Online (O2O) which on the other hand is able to open up comprehensive opportunities for digital startup industry players to create a new ecosystem to support the growth of MSMEs.

The digital MSME ecosystem itself was born because of the collaboration between business owners and companies. This collaboration and synergy is needed to face the current difficult times and also supplies to face the post-pandemic era.

Solutions born from the MSME digital ecosystem come with a variety of solutions including; solution ecommerce, logistics, access to technology-based funding, to financial management and human resources.

One of the solutions that we can see today is the support for access to technology-based funding such as that promoted by KoinWorks. In his presentation at the webinar “A new hope: What's next for the SME's in the digital era” some time ago, the disbursement of productive funding from KoinWorks reached more than Rp930 billion in the first quarter of 2021.

Even so, the increasingly fierce industry competition requires SMEs to learn new tips and strategies in the digital realm to continue to attract consumers. still with same report from KoinWorks, it is proven that as many as 89% of MSME actors follow the process e-learning to learn the ins and outs of running a business digitally, from understanding digital marketing to social media.

On the other hand, the positive impact of digitalization in addition to increasing the trust index and the ability to increase sales, digital transformation has also succeeded in making MSME players no longer worried about the onslaught of imported products.

Some of them even take it as a new opportunity to be able to resell these imported products in order to get added value to their business. In addition, digital transformation has even helped them open the export faucet, which means of course it will also contribute to increasing export value growth nationally.

It is hoped that digital transformation can continue to be accelerated not only to face the pandemic, but also to prepare for post-pandemic market situations and conditions which will become more dynamic and competitive.

According to data reported by Kominfo, there are only 3,79 million MSMEs that use online platforms to market their products. This number is only around 8% of the total MSME actors in Indonesia, namely 59,2 million. The potential and market niche means that it is still very broad and the journey is still quite long in realizing a comprehensive digital MSME ecosystem. For this reason, a good synergy is needed in the future between MSMEs, digital startups, and not to forget the government as a regulator.