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Small businesses resort to online channels to survive pandemic

Jakarta Post - April 24, 2020

Farida Susanty, Jakarta – As COVID-19 hits business activity and forces people to stay at home, small businesses are striving to make the most of online platforms to reach customers and gain revenue.

Astrid Safiera, 24, had to find a way to survive during the COVID-19 pandemic as her husband's restaurant in Menteng, Jakarta, closed, battered by the physical distancing regime put in place to contain the virus spread.

Astrid, an office worker herself, decided to start a small business with her husband to sell seafood on social media like Instagram and Twitter, offering shrimp, crab and barramundis, among other products, with a starting price of Rp 30,000 (US$1.93). She even promoted the business by replying to a tweet by former maritime affairs and fisheries minister Susi Pudjiastuti, which caught the attention of more than a hundred people who liked her tweet.

"We already know several suppliers, including a fish auctioneer who buys fish straight from the fishermen in North Jakarta. We order [the fish from the auctioneer] according to customer orders," she told The Jakarta Post recently.

She delivers the orders with the help of ride-hailing apps Gojek and Grab to customers in Greater Jakarta.

The response to the one-month-old business has been positive so far, as they manage to sell an average of 20 kilograms of seafood weekly, from which Astrid has been able to reap Rp 25 million in sales.

"We plan to continue running the business after the pandemic. We want to open a restaurant, so we're just trying to build something while also marketing our future restaurant," she said, adding that she would consider partnering with e-commerce in the future.

Astrid is not an outlier. Many people have resorted to running small businesses from home and use social media and e-commerce platforms to sell their products. Two million workers have been furloughed or laid-off as of Monday, according to Manpower Ministry data.

Data from e-commerce platform Tokopedia confirmed a 250 percent surge in the number of new sellers on its platform in March, particularly in the personal health category.

"We're also doing a campaign on #JagaEkonomiIndonesia [#GuardIndonesianEconomy] to push more people to dare to create opportunities online, so that the economy can still go on in the middle of the pandemic," Tokopedia VP corporate communication Nuraini Razak said.

Tokopedia said it would help first-time sellers on its platform by holding online classes and webinars on the e-commerce business, among other things.

The online classes covered subjects like opening an online shop, tips on handling the first order, the profit from e-commerce and making attractive promotional efforts for customers.

The change in customer behavior during the pandemic, with social distancing measures in place, supports the e-commerce trend, as business research firm Inventure Indonesia concludes that customers tend to meet their daily needs, such as groceries and health products, through online channels. This will significantly boost the online platforms, it reads.

Another e-commerce platform, Blibli.com, also confirmed a surge in the number of sellers, albeit not specifying the figures.

Blibli.com CEO Kusumo Martanto expected there would be more micro, small and medium enterprises (MSMEs) to use e-commerce platform after the pandemic.

"The situation will force them to adopt e-commerce. Hopefully after the pandemic they will enjoy the value and benefit and there will be more [sellers joining]," he said.

Blibli.com had also started initiatives for SMEs, such as providing a special channel, workshops and promotion for local SMEs, among other things, he added.

Despite the encouraging e-commerce data, Association of Indonesian Micro, Small and Medium Enterprises (Akumindo) chairman Ikhsan Ingratubun said the number of newly established SMEs was quite small.

"It's very difficult, based on our observation, because economic activity is crippled [nowadays]," he said.

Ikhsan added that starting a new business was still a challenge for people, as they needed to have the capital and basic knowledge to run a business.

SMEs have been hit severely by the pandemic, with 538,385 workers from more than 31,000 SMEs losing their jobs as of Monday, according to the Manpower Ministry.

The government is preparing a stimulus package for SMEs to help them survive amid the pandemic. The package includes relaxed rules for loans, a six-month tax waiver and cash transfers for micro-scale businesses.

Institute for Development of Economics and Finance (Indef) economist Andry Satrio Nugroho said most new SMEs were the ones flourishing due to a surge in demand of specific products or old SMEs that finally adopted online platforms.

"I think there is no surge in newly established SMEs because SMEs are the ones hit the hardest by the pandemic," he said, despite adding that starting a new business was clearly an option amid rampant layoffs.

"But not all SMEs can weather the pandemic, it's very different from the Asian financial crisis in 1998," he said.

Source: https://www.thejakartapost.com/news/2020/04/24/small-businesses-resort-to-online-channels-to-survive-pandemic.html