Small and medium enterprises (SMEs) in Asia have been struggling to stay afloat since COVID-19 began its spread around the region and governments turned to limiting movement and operations to protect the public and contain the pandemic’s reach.
While many who work at larger organisations have been fortunate to be able to continue their jobs remotely, most SMEs have been in survival mode, with many unsure of being able to keep the doors open month-to-month. Add in the fact that SMEs usually have fewer cash reserves and the pronounced loss of revenue they have experienced in 2020 becomes even more threatening.
This has the potential for deep and lasting effects on the local and regional economy, given that more than half of labourers in Asia work for an SME and these businesses account for the majority of business transactions in the region.
Because of their size, access to resources and more immediate business priorities, SMEs have not historically invested as much in digital transformation as larger organisations. Given today’s circumstances, there is an urgent need for businesses to adapt to survive in this hyper-connected world. Digital is the future for all of us but what does that mean for SMEs in Asia going forward?
Adopting a digital first approach
Social distancing restrictions and the inherent fear of infection have forced new business models to emerge with digital at the center of the transformation. For instance, success in the retail world used to be all about location but has now moved to a digital-first approach focused on delivering seamless customer service experiences.
A major part of the digitalization transformation is implementing digital payments as well as mobile site optimization or mobile app development. Growing globally at a rate of 34 per cent per year – mobile commerce (mCommerce) is fast becoming the preferred channel for eCommerce around the globe.
According to our research, 65 per cent of online cross-border consumers in Singapore have made an international purchase via smartphone – emphasizing the high demand for mobile-first experiences.
Increased demand and growth opportunities
Despite many economies in limbo, businesses can still reach their customers online. Millions of people across Asia are spending more time at home and on online purchases. Just in this quarter, we added 20 million new users, with 7 million users added in April alone.
Across our platforms, we have seen a 60 per cent jump in conversion this year, with cross-border trade standing at a robust 17 per cent of our total payment volume in the quarter – highlighting the need for businesses to prioritize leveraging eCommerce or mCommerce as the new way of doing business and reaching new consumers within and across borders.
A changed eCommerce landscape will play an ever more prominent role in consumers’ lives as they turn to online diversions to replace outdoor amusement.
Understanding cultural drivers to improve revenue outcomes
Our research suggests that consumers are generally concerned about security, delivery times and shipping fees. In Singapore, the data shows that 53 per cent of local shoppers have abandoned their cart while shopping if shipping or postage costs were too high. One in three of them were put off by the process of returning products purchased overseas.
Merchants can gain an edge by providing clear communications about delivery times and incentives such as free shipping. Digital payment systems with end-to-end encryption and other fraud prevention measures ensure trusted and secure trade between merchants and customers regardless of platform. It also helps to collaborate with payment solution providers with buyer protection that offers insurance and protection to make shoppers feel more at ease.
We can do this, together
We understand the challenges SMEs are facing which is why we set up a range of measures to tide them through the early stages of this difficult time. We waived fees on chargebacks, increased the customer dispute resolution period by double the number of days and extended seller protection to include intangibles, among others, and continue to find ways to support them on this journey.
Rebuilding a robust global economy will require everyone to participate and adopting a digital first approach is imperative. By providing the tools and resources for all consumers and businesses to better interact, we have the opportunity to drive real impact and economic turnaround.
We are heartened to see the Singapore Government and others in the region stepping up to support companies, especially SMEs. The latest series of announcements by senior leaders emphasizes the need to transform, innovate and more importantly digitalise and adopt technology solutions to thrive in the new digital economy.
Positive steps like these will unlock greater economic opportunities for SMEs, creating a new diverse and resilient global economy.