For many small- or medium-sized enterprises (SMEs), especially those who sell physical products, the pandemic has been a huge challenge. Many have had to shift online almost overnight and rethink who their customers are, how they reach them and how to make sales and distribution work. We spoke to three small-business entrepreneurs to ask them how they’ve managed the change and what they’ve learned over the last year.
How have SMEs shifted online during the pandemic?
Emma Sinclair, the serial entrepreneur and co-founder of EnterpriseAlumni, says: “It’s been a case of going online or go out of business for almost everyone.” She adds that even SMEs with a fundamentally physical presence such as street food vendors are having to find ways to reach customers digitally; for example, switching to online delivery and staying in touch with people via Instagram.
Others have had to completely rethink their customer base. Tracey Hogarth, the founder of Nudie Snacks, says: “Prior to the pandemic, we would use more traditional routes to market – wholesale and B2B was near all our business. Now we’re almost 100% direct to consumer.” This, she says, has meant developing a far more functional sales website and embracing platforms such as Amazon Marketplace and eBay. Indeed, the proliferation of online sales platforms means that it’s possible to set up an online store over a weekend.
The proliferation of online sales platforms means that it’s possible to set up an online store over a weekend.
The beverage SME Ugly Drinks, on the other hand, has always sold across multiple channels, says CEO and co-founder Hugh Thomas, so it was a question of dialling some channels up and others down. “Our direct-to-consumer business grew by 600% in the last year.”
What are the biggest challenges when transitioning a business online?
Hogarth says businesses are doing everything differently. For her, this has meant the logistical challenge of sending out small parcels to individual customers. “We used to send products out on pallets via our business distribution channels. Now we’re packing small parcels by hand, which is almost as much effort as putting together a pallet. Then you have the tracking, ensuring parcels get to their destination undamaged and so on. There’s much more human interaction.”
Thomas adds that online customers have a particular set of expectations fostered by services such as Amazon Prime. “All our partners have been stretched due to Covid. But we’re trying to get people what they’ve ordered within 48 hours. You want to click to buy on Sunday and then have the product arrive on Tuesday.”
Old ways of marketing such as billboards and flyers don’t work when everyone is online all the time.
Sinclair says that SMEs have to rethink how they reach audiences. “Old ways of marketing such as billboards and flyers don’t work when everyone is online all the time. Finding your existing customers and reaching new customers is the challenge.” She adds that you might discover that your once-loyal customers are more easily swayed by deals from competitors than they were in the offline world.
What are some of the learnings – and unexpected benefits?
Hogarth advises that businesses should have a robust sales website: “You want a fully functional website that captures data and really helps you understand your customers.” She values the direct connection she’s forged with her customers. “It has pushed our brands into the hands of consumers in a way that didn’t happen before – and has been very good for us in terms of building the brand and awareness. It has provided us with an amazing amount of data that we didn’t have before.”
Thomas says that SMEs should embrace their smallness and go for the personal touch: “Do things that don’t scale. We had a couple order some soda for their wedding. So we sent a bunch of flowers and cards, and some extra drinks we didn’t charge them for. That kind of thing is much easier to do when you’re a small business.”
You can build a close relationship with customers, innovate faster and use the data you gather to create and test new ideas.
He says that selling online offers the chance to dive deep into customer service, “To understand what sort of questions consumers are asking and the feedback they’re giving. You can build a close relationship with customers, innovate faster and use the data you gather to create and test new ideas.” Ugly Drinks now launches new flavours based on customer feedback.
What can SMEs take from the experience, for a post-pandemic era?
Hogarth says that although pivoting to online and dealing with a different set of customers was a survival strategy, having a broader customer base will make the company both more resilient and give it a better understanding of what people want. The move to online has also made her recognise that you need to keep abreast of innovation.
Sinclair notes that there has been a lot of love for SMEs during the pandemic and that people have tried to buy local and small, but this goodwill may ebb as things return to “normal.” She believes SMEs will need to work hard to ensure they keep the customers they’ve gained during the crisis.