25 Mar The reinvention of SMEs in the face of a year of adversity.
Last 2020 wiped out more than 1 million small businesses in Mexico thanks to the contingency, only few were able to stay on their feet and less than 10% have received real support from the national government; so the way they do business has had to transform.
According to the survey on the economic impact generated by COVID-19 (EDN, 2020), the most affected sectors are: Non-financial private services, commerce and manufacturing. Income has decreased by 73.7% in small and medium-sized companies, demand decreased by 47.2% and the shortage of inputs was 19%.
A survey on the economic impact generated by Covid-19 reported that millions of businesses within the country have suffered different effects from the events of the past year.
(Meza Rodríguez & López Argueta, 2021) They assure that 79.2% of these had to do with the appreciation of income. The second most influential problem was the drop in demand. The survey carried out by (EDN, 2020) shows that 67.6% of companies suffered from it. While in a second edition it was reduced to 51.2%, an equally significant figure.
Closure of companies due to the health crisis
The definitive closure of businesses amounts to 1 million 10,857 (20.8%), reveals the study of (EDN, 2020) published by INEGI.
The states with the least impact on the closure of SMEs are: Oaxaca, being the least affected with 13.70%, while states such as Quintana Roo and Baja California were those with the highest closures, with 31.8% and 28.1% respectively.
These closures generated a great loss of jobs, roughly three million people were unemployed; on the other hand; the businesses that continued to operate had to do without at least 1.15 million people. Being a total of 4.12 million unemployed.
Change the way of operation due to the pandemic
Thanks to this event that occurred the year immediately before, companies have had to choose to change business models, be it online sales, pick-up, deliveries or have even ventured into other sectors.
(Meza Rodríguez & López Argueta, 2021) They provide us with examples of this type of change, such as that of Yessica Urbina, who owned a fast food restaurant called ”Las Carnes de la Gorda”, located in the State of Mexico and that unfortunately had to close. After the contingency and benefit evaluations, the business was resumed but in a Dark Kitchen format, which corresponds to a kitchen concept where only food is served at home, through delivery applications. There is no room or physical point. Now the service is offered at home through applications such as WhatsApp, Facebook and Instagram.
Like Yessica, many entrepreneurs had to adapt to new formats, especially in the digital age, through social networks or mobile buying and selling applications. Nationwide, 619,443 establishments were born, 12.75% of the country’s business population. The sector that had the highest number of new entrepreneurs was commerce with 13.75% and the prominent states: Tlaxcala with 19.31% and Quintana Roo with 7.67% (EDN, 2020).
Support policies for SMEs
Throughout the health crisis, different support programs were launched for small and medium-sized companies, such as Tandas para el Bienestar and Crédito a la Palabra, although they have been important in paying for the uncertainty of the pandemic, they have not It was enough since the SMEs indicate that the amount of 25,000 pesos is not enough to pay for income or payroll.
Until February 26, 11,000 applications for Credits to the Word were approved and the dispersal of 2,000 supports began in the modalities of Completed Companies and Solidarity Women, whose objective is to give 20,000 supports in each one. (Meza Rodríguez & López Argueta, 2021)
Six out of 10 small businesses sell online
E-commerce saves SMEs
Facebook, Instagram, WhatsApp and websites are the main sales channels for small businesses.
According to the Mexican Association for Online Sales (AMVO, 2021), due to the pandemic, at least six out of 10 SMEs are already in the digital world, which represents an increase of 94% compared to the previous year (2019), when previously only 20% of small and medium-sized companies sold in e-commerce.
An example of this is, according to (Meza Rodríguez & López Argueta, 2021), a company called Compugadget, which was dedicated to the sale of technological and computer items, which due to sanitary restrictions had to temporarily close its branches. The founder of the company, Fernanda Franco comments that before the pandemic it already had low numbers, but with Covid-19 everything got worse. By closing one of its branches, it definitely ventured into online sales, however and to a surprise, the stock was not enough because there was too much demand. They became an important company in the technology sector virtually on platforms like MercadoLibre. Now e-commerce represents 90% of the company’s income.
Experience in e-commerce for SMEs
At the beginning it was complex because most of the entrepreneurs with small and medium-sized companies didn’t have the knowledge of online sales, which led to bad experiences such as returning items or the lack of punctuality of deliveries.
According to (AMVO, 2021), seven out of 10 buyers declare that they are comfortable with Internet purchases.
Other channels and informality
According to a study of online sales by SMEs, at least 9 out of 10 small companies that carry out their processes over the Internet also have other means, such as social networks in the first instance.
Facebook, Instagram and WhatsApp are the favorites as channels for these small businesses; However, Mercado Libre and Amazon lead the list of sales platforms because their interface is friendly both for smartphones and on their website and allows better logistics.
The “nenis” take strength
The trend in social networks led to the creation of the ‘’nenis’’, who are characterized by being entrepreneurial women who offer their products on social networks. They deliver in different parts of the city, such as the subway or shopping centers. They are known for their dealings with their clients in ways such as: ‘’neni’’, ‘’cute’’, ‘’beautiful’’, among other affectionate words, which ultimately generate satisfaction in the buyer. (Meza Rodríguez & López Argueta, 2021)
This type of commerce has existed for a long time, however, it has been during the pandemic where it has gained strength both due to the confinement and the reduction of jobs that has occurred in recent months.
In order to promote formality and for SMEs to grow with e-commerce, the (AMVO, 2021) indicates that online sales training is necessary, support both in the payment of suppliers, and in logistics, in order to generate better distribution and good negotiations with government institutions and banks.
Source:
AMVO. (Marzo de 2021). Asociación Mexicana de Venta Online. Obtenido de AMVO: https://www.amvo.org.mx/
EDN. (2020). Encuesta sobre el impacto económico generado por COVID-19 en las empresas. Ciudad de México.
Meza Rodríguez, E., & López Argueta, E. (21 de Marzo de 2021). La reinvención de las pymes a un año de la pandemia. El economista.