Local businesses are small and medium enterprises, and these represent about 90% of businesses worldwide. Moreover, formal SMEs contribute up to 40% of national income (GDP) in emerging economies [1].
In the Covid-19 crisis, we have seen that SMEs lack the economic, social, human, and organizational capital to respond to the challenges posed by the pandemic. Customers could not access retail spaces, they did not spend as much money as before, and business owners could not directly engage with them.
An observation that can be made is that the pandemic has made digital transformation mandatory for businesses, no matter the industry. Digital transformation is no longer an option or an add-on; it is a necessity [2]. According to a survey by the United Nations Conference on Trade and Development, in Germany and Switzerland, about 80% of the population was shopping online. The survey also says that European consumers admit that their shopping habits have moved to the digital world [3].
Certainly, the digital world offers new ways of interacting, communicating, and even new sorts of business and markets that can create a lot of value. However, digital transformation includes practical internet use as a data-based management model in design, production, marketing, sales, and communication [4]. Implementing all of this can be a burden for SMEs, as unlike big firms, they have limited financial resources, restricting their efforts to continue to grow actively [5].
Could digital ecosystems and digital platforms (dedicated to local goods only) be a solution to that? By paying a subscription to a platform provider, business owners who are not comfortable with digital technologies could still benefit from it at a lower cost than by hiring a marketing manager or a communication team. Moreover, platforms create network effects, a phenomenon whereby increased numbers of people or participants improve the value of a good or service. At the same time, if we want to sensitize consumers to buy more locally and help them discover local stores, such platforms could be great enablers because each local business that joins will bring its own consumers who will then discover new shops.
Are you interested in buying more local products?
– If not, what keeps you from consuming locally?
– If yes, would you use such platforms?
Finally, what else could we develop to help local businesses evolve in this digital era?
References:
[1] World Bank (2020) Small and Medium Enterprises (SMEs) Finance. https://www.worldbank.org/en/topic/smefinance. Accessed September 8, 2022.
[2] Fletcher G., Griffiths M. (2020) Digital transformation during a lockdown. International Journal of Information Management, 55: 1-3.
[3] Askew K. (2021) Are local and digital shopping habits here to stay post-COVID? https://www.foodnavigator.com/Article/2021/04/12/Are-local-and-digital-shopping-habits-here-to-stay-post-COVID. Accessed September 8, 2022.
[4] Bai C., Quayson M., Sarkis J. (2021) COVID-19 pandemic digitization lessons for sustainable development of micro-and small-enterprises. Sustainable Production and Consumption, 27: 1989-2001.
[5] Shahizan H., Siti N.A., Norshuhada S. (2015) Strategic Use of Social Media for Small Business Based on the AIDA Model, Procedia. Social and Behavioral Sciences, 172: 262-269.
Great topic! Personally I am interested in buying locally but what stops me from doing so is the price you have to pay and the effort you have to make in order to do so. Undoubtedly it is much easier to order from Albert Heijn or any other large supermarket to get all your groceries and house appliances than to visit a farmers market (where you usually end up at 10 different stands to get what you need). It feels like you have to sacrifice your time and money to be able to shop according to your ethical and ecological views.
That’s why I think a platform like that would be a great idea! Initially I thought- maybe it would be too much like Amazon, which for many people is an overwhelming place due to the number of items. Also I feel like the people who are willing to buy locally wouldn’t trust a website which offers too much items, because they’d doubt their source.
But if the website required the sellers/ service providers to be local/small business then that would limit the choices and really seem like a “local” experience for the users. Additionally the local sellers could describe their businesses and values.
Maybe the local businesses could also develop thanks to delivery companies like Glovo. For now they are delivering only items from large chains, but if they started cooperating with the SME as well, it could improve their business position towards the chains. That would only work for the product sellers though and not for service providers.