Digital Platforms: Recovery Tool for SMEs in the Asia Pacific

While the COVID-19 pandemic continues to disrupt businesses worldwide, the importance of staying connected becomes all the more apparent for small and medium-sized enterprises (SMEs) across the Asia Pacific region. When post-pandemic recovery starts, digital platforms would become a locomotive to assist them on the road to revival and success.

COVID-19 influence on SMEs in Asia

In most ASEAN countries, SMEs represent around 97-99% of the enterprise population, accounting also for 66.3% of employment. They mainly comprise enterprises in the trade, retail, and agricultural sectors.

While operating in traditional markets, many of these SMEs have been gravely affected by social distancing measures. The majority of them stopped trading one or more months after the outbreak of COVID-19. And those who didn’t suspend operations faced disrupted supply chains and low demand.

Digital platforms: the vehicle for SME recovery and development

In order to gain greater access to diverse global markets and mitigate the risk of supply chain disruption, SMEs can use e-commerce platforms as an important channel of connection. The survey of more than 1,500 businesses in the Asia Pacific discovered the following benefits organizations can reap from digital transformation initiatives: 

• improved profit margins

• cost reductions

• productivity

• ability to offer new products and services

• customer loyalty and retention

Taking into account the benefits of digitization, SMEs should think of digital platforms as a means to support their post-pandemic recovery. The following examples show where digital platforms are supporting SMEs:

• Provision of a digital one-stop shop for small retailers that allows them to bypass brokers while also taking care of logistics.

• Optimization of business operations.

• Facilitation of access to financial services by using API integration for automation of funding application process.

• Improvement of customer engagement and retention.

• Improvement of youth employment in rural areas by training young people in customer service, social media, advertising, and administration, monitors their performance, and recruiting them.

• Easy creation of an online shop.

But it's not all roses in using digital platforms. It must be noted that digitization comes with risk as well. Though peer-to-peer (P2P) lending platforms help SMEs to avoid time-wasting bureaucracy, they can also cause instability without rigorous profiling of their borrowers to avoid more losses than profits for lenders. 

Lenders could also be at risk of high-interest rates if such lending platforms are not adequately regulated. This emphasizes the importance of the role of appropriate legislation for digital platform users’ protection.

Mobile operators and the rise of digital platforms

As SMEs are a cornerstone of ASEAN economies, ensuring their post-lockdown recovery provides mobile operators with the opportunity to play a significant role in it. Mobile phones have become essential business tools. When online and digital markets are becoming increasingly important, MNOs are becoming the guardians of verifiable customer data. With an extensive presence in SME communities, mobile operators are becoming central actors in the key components of success, such as data, infrastructure, and customer outreach.

While digital platforms don’t come without the challenges of access, cost, and lack of familiarity, SMEs can profit by using the advantages of digital platforms for recovery from the consequences of the pandemic. Business owners and start-ups can be better equipped for building a sustainable future through the development of digital platforms that are beneficial to all stakeholders and enabling SMEs to get maximum advantages from le digital platforms and mobile technology.