The e-commerce world is thriving. Retail giants like Amazon, Alibaba and Ebay have transformed the retail industry by operating at an unprecedented scale.
The e-commerce world is thriving. Retail giants like Amazon, Alibaba and Ebay have transformed the retail industry by operating at an unprecedented scale. But how can SMEs harness this mass-market mindset to support their business growth?
Too often, SMEs are overlooked when discussing the global economy but the reality is, they are the true driving force behind it. One glance at the UK numbers reveals why: small or medium-sized enterprises (SMEs) in the private sector make up 99.9% of all companies, employ 60% of the workforce and generate more than half of the total turnover.
SMEs are extremely valuable to big businesses whether they are customers or part of the supply chain. Empowering this array of SMEs to become more efficient, productive and profitable, therefore has the potential to supercharge our economy. Small improvements and applying necessary data and insight can have a huge impact if rolled out on an immense scale.
The ‘Fourth Industrial Revolution’
Labelled the ‘Fourth Industrial Revolution’ by The World Economic Forum, technology is taking us to a world of ubiquitous automation and autonomous decision-making. And, with 91% of IT decision-makers saying their organisations have already launched or planned to launch a ‘digital first’ business strategy, it is clear that new technologies will have a crucial role to play in supporting SMEs.
What digital transformation doesn’t mean, however, is that what once took a team of 50 people will now only take a group of 25. Instead, it means machines automating brainpower as a way to support that team and vastly increase its performance -- rather than just replacing employees.
Furthermore, new technologies allow for greater operational agility which is particularly beneficial for SMEs who are well-placed to benefit from the growing trend towards remote, flexible and freelance working. It enables easier access to talent and reduced expenditure on business premises.
Serving SMEs at scale
In the past, B2B enterprises have struggled to address the core issues facing their SME partners and customers. Free trials, product discounts and supplier training courses tend not to solve SME problems but rather, create an unsystematic approach to acquiring the products and services they need.
The solution then is to take inspiration from the flourishing e-commerce industry. Ebay, for example, has 200,000 UK-based SMEs trading and thriving on its platform -- in the past 12 months, 64 per cent of Ebay’s UK-based sellers have exported products internationally and export sales have grown more than 25 per cent in the past 5 years.
Amazon is another example. For an SME retailer, Amazon now offers an almost one-stop-shop, aggregating a digital shopfront, delivery logistics, web services and more, all in one enterprise partner. This allows SMEs to harness Amazon’s economy and reach a massive market, minimise operating costs and seamlessly grow with demand.
As you’d expect from a Top 10 player in the Fortune 500, naturally, this business model is also beneficial for Amazon. Once an SME enters the Amazon ecosystem, the company can easily offer them additional services, all of which are designed to work together seamlessly. With SMEs understandably more interested in running their core business than researching and managing a disparate set of services, Amazon has a captive audience to sell to.
The point is, B2B enterprises need to do more than just solve their own internal challenges, they need to better support their customers by focusing on the common threads that run through the entire SME community -- just like e-commerce giants.
Building business networks
To accomplish this ‘e-commerce mindset’, connectivity is key. B2B enterprises should aim to create business networks that harness data and insight which can then help solve SME challenges by connecting them to a cohesive ecosystem of capabilities.
On a basic level, one benefit of interconnectivity is increased SME productivity. For instance, with technology that provides automatic, real-time feeds of information, companies can do things like track car trips to complete expense reports, or file restaurant receipts via a mobile app. This is far more time-efficient than, say, having to go through countless paper receipts. With these technologies, finance teams are able to see expenditure and cashflow instantly in a single dashboard.
There are ways to take this interconnectivity even further. It can help protect against fraud for example whereby, if an employee is breaching an expense policy, a red flag will be immediately raised and a warning issued. Again, this technology provides vital insights into spend and cash flow which increases cash visibility, ultimately helping keep SMEs afloat.
In addition, being part of a network means contact with like-minded business owners, which in turn generates new opportunities. Businesses who might have once been too isolated to link up with other SMEs can now find others looking to purchase the same technologies or services, thereby lowering the overall cost for both companies.
Like anything, the e-commerce industry is not without its faults, but the overarching ‘e-commerce mindset’ that combines innovation, agility and scalability should be a model for B2B enterprises. Currently, there are 5.6 million small businesses in the UK which means not only a massive annual turnover, but a lot of opportunity for connectivity on a scale. Helping SMEs to become more efficient is in everyone’s best interest -- it means not only will individual businesses grow but it can help supercharge the whole economy.