SMEs in India, Mexico & Philippines — Digital economies
As part of a recent work assignment, I spoke to 100+ small and medium business owners and decision makers across 8 cities (Mexico city, Monterrey, Manila, Udaipur, Indore, Hubli & Dharwad & Bangalore) in 3 countries (Mexico, Philippines and India) to learn how they operate their day to day business; to unpack their attitude towards WiFi and digital tools; and to systematically understand their pain points and, finally, to understand how can digital innovation, product development and design empower them to reach their goals.
I have distilled my learning into two categories:
1)An ethnographic enquiry: A day in the life of a restaurant manager; i) The problem;
2) A dyad of existing practices: Technological determinism v/s social constructionism; i) Innovation as a tool for empowerment; ii) Digital economies.
The problem: Complexity is tedious
To fully unpack the complexity involved in running the show, let’s take an empathetic approach towards the problem.
An ethnographic enquiry: A day in the life of a restaurant manager
For a restaurant manager, a typical day at work involves planning, execution, supervision and generally being a champion who is on top of things and delivering results. Imagine having to keep a watch at the cctv monitoring customers, chefs working in the kitchen; managing inventory; keeping a track of employee absence/performance; running promotions, tracking sales and targets; keeping your employer informed and happy at all times. It is tedious, exhausting, and complex.
I want you to meet Aie, who is a manager at a small Japanese eatery in Manila. Let’s get to know her better.
Persona type: Digitally savvy, spirited, young entrepreneur
Meet Aie, 26, is a Manager at a small Japanese eatery in Manila
Aie is a science graduate, and she is the youngest breadwinner of a family of four. She is active on social media and messaging platforms like facebook, instagram, viber and twitter. Her day begins at 6:30 am and she reaches work at 8 am to prepare and open the restaurant at 9 am. She manages a staff of 8 employees including chefs, cleaners, servers and receptionist. One of her daily responsibilities is to keep Jo, her manager, informed about the sales, targets, employee management, customer management and retention, business promotions and their results. Jo, who runs several businesses, trusts Aie with her responsibilities and almost never visits the eatery.
Aie is a digitally savvy champion but she suffers from anxiety about whether she is delivering her best performance and whether she can do better.
There are other challenges that SMEs face on a daily basis. I have briefly touched upon them below;
Inadequate credit assistance: There aren’t enough money lending/loan facilities available for SMEs. Most SME owners were not aware of the existing few loans and benefits provided by Government and private firms.
Problem of skilled manpower: SME struggle to find skilled manpower at an affordable cost. Lack of financial assistance coupled with low skilled manpower leads to operational issues.
Low technical literacy: Majority of the SME owners consider themselves to be tech illiterate. They do not consider using Whatsapp or Facebook as being tech savvy. Most of them struggle with emails, excel sheets and other software used for operations management and marketing.
Lack of ready to use marketing materials: Majority of the SMEs I spoke to, mentioned that they would benefit more from marketing however they do not have the necessary skills or resources to fully exploit the potential of their businesses.
Competition and a lack of community: Some SMEs in Manila, Hubli and Indore mentioned that they would benefit from a co-operative or a community that enables and facilitates cross business promotions and sales. A lack of community, however, leads to competition that causes harm to the smaller players in the market.
A dyad of existing practices: Technological determinism & Social constructionism
Before I move on to comment on technical determinism and the social construction of the use of technology, I want you to get a glimpse of the existing tools that SMEs use. Let’s look at the digital apps/platforms that Aie uses for work purposes.
Aie uses the following digital tools/platforms/apps for business purposes:
- Food panda — receiving orders
- Facebook business page — To run promotions, share interesting content, engage existing customers and to attract new customers
- Viber: Interact with loyal customers and managing food orders that come in via text
- Facebook messenger — To receive orders from customers; to communicate with her employer
- Instagram for business: Run business promotions, share content, drive business
- Over, Typic & Typorama: To create marketing and promotional materials
In several other instances, and in other geographies, SMEs also use Whatsapp for running business operations, managing inventory, running promotions, and for CRM. Other respondents also shared stories of using the platform to sell clothes, household items, and services.
i) Innovation as a tool for empowerment:
One common theme that emerged from the digital practices and behaviours of SMEs across the three countries is that they directly correlated with the level of affluence of SMEs. The affluent cohort used sophisticated software for running business and even paid a big chunk to digital marketers. Whereas the less affluent used social media and messaging apps, posters and banners, and relied on word of mouth and their social networks for promoting their business and sales. I have 3 recommendations based on the needs that I studied.
1. Innovation that enables SMEs to avail and use customised marketing tools that tap into their social networks can help them go a long way in realising their potential.
2. Apart from marketing, SMEs would also benefit from a tool that would streamline their workflows and processes.
3. An ecosystem or a social network for SMEs to operate in a co-operative manner would help them boost each other’s businesses and sales.
ii) Digital economies:
The SME landscape is an interesting dyad of technical determinism and social constructionism where the existing digital tools have shaped and influenced user behaviour while the needs of SMEs have given rise to new digital tools. Let’s look at some of the digital tools enabling the players in this landscape.
Kiranas (or local grocery stores in India) are the backbone of the economy. Nearly 12 million of these kirana stores operate hyperlocal to supply daily groceries and household items to nearby residents. Technology is not their strength, as mentioned above. Their inventory is managed through books and their transactions happen in cash. Affluent kiranas, although, have started experimenting with mobile e-commerce, digital inventory management and loyalty programmes. Let’s look at some of the innovative solutions that are empowering SMEs.
Snapbizz: Their business model makes money out of the entire consumer goods business chain and includes four components, three of which are paid modules. It comprises of a consumer app that allows the consumer to transact with the kirana (which is offered free to the customer). The second module includes software that helps the kiranas capture data of stock that is sold in the store, which then allows them to stock goods based on consumer behaviour. The third module is to help distributors understand what sells in catchments and distributors pay for this data. The final model helps consumer goods companies promote their products in each kirana through a cloud-based promotion-placement model.
PayNearby: PayNearby empowers retailers at the first mile to offer digital services such as Aadhaar-based banking services, bank savings, bill payments, card payments, insurance services, and more to local communities. The company leverages AI, ML, and advanced analytics to create quick, simple, seamless, and efficient micro experiences that enable local retailers, referred to as ‘Digital Pradhans’, to provide these assisted hyperlocal services.
METRO Cash and Carry India: METRO Cash and Carry is the wholesale division of METRO, a Germany-based initiative in wholesale and food retail. Its Indian subsidiary recently co-created an app for kiranas with fintech startup ePayLater. The app, called Digital Shop, facilitates instant digitisation of all business operations for kirana owners, without the need for additional investment on a device. This app enables traditional retailers that buy from METRO to order stock, facilitate digital payment options, manage inventory, and track their sales, etc. It allows local retailers to facilitate customised offers for customers in their area ordering on the app, giving instant credit for their purchases as well. The app gives retailers access to interest-free business credit with a few clicks.
