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SMEs v. COVID-19 – the start of a direct-to-consumer revolution?

Date: April 22, 2020

Category: Industry news


As the coronavirus pandemic impacts economies around the world, resourceful small-to-medium enterprises (SMEs) are going direct-to-consumer (DTC) to beat the disease and ensure their commercial survival.

At the beginning of 2020, SMEs accounted for 60 per cent of employment and half of private-sector turnover in the UK. By April, 3.9bn people in 90 countries were in an advised or enforced state of lockdown, and the world had changed. As normal life ground to a halt, so did the means of trade and commerce that shape the global economy. In the UK, the Government had to take unprecedented steps to keep businesses afloat and workers employed, from catering to construction, hospitality to hairdressing. SMEs – the lifeblood of all national economies – would be the hardest hit of all.

Footfall goes digital

With the limiting of social contact, the ability for consumers to shop in person has been drastically curtailed, and footfall has gone from an established norm to a restricted activity.

Companies whose products and services rely on an in-store or face-to-face experience are now looking to find some sales salvation in the online world – many for the first time. Research conducted in 2019 showed that only half of UK SMEs were actively selling online, and that one in four had no web presence at all.

With a need to capitalise on a new digital revenue stream, SME brands and community organisers have begun to organise online hubs for those without the capacity or expertise to get online in a short timeframe.

Creative locals

Creative Locals, is just one of these. Established by the founder of Mahbir Teas & Spices, Mahbir Thukral, the platform has been set up to help independent businesses reach a broader audience in their local communities and beyond during the lockdown period.

Similarly, Mighty Small, an initiative started by the GS1 UK community partner, Young Foodies , has brought together challenger brands in an online supermarket, to promote smaller companies under one virtual roof at a time when retailers are concentrating on more established product lines.

Mighty Small gives independent brands the chance to reach new shoppers, and provides the public with an opportunity to support them. It offers challenger brands an easy way to drive online sales and combine marketing efforts, especially at a time when small food brands are under so much pressure and many are slipping through the cracks of government initiatives. We’d urge everybody across industry to get behind these enterprising companies.”

Theadora Alexander, co-founder of Young Foodies

But it is not just the food and drink brands banding together to go DTC. Foodservice providers and wholesalers have taken to the online world to offer non-trade consumers an alternative grocery channel.

Firms ranging from multi-award-winning suppliers to the catering trade to charcuterie and fresh produce providers for top London restaurants are delivering to doorsteps with the temporary break from traditional buying habits.

Learning from the Chinese experience

China’s emergence from coronavirus, has shown that online retail shops with apps built into social media weathered the storm better than most. Using subscription services like Shopify to build shopping cart solutions into existing websites, or the likes of Square to add options for collection and delivery to your company’s offering will enable UK SMEs to ride out the lockdown in good shape.

wechat

Social selling – using social media platforms to connect with and nurture prospective customers – is a well-developed practice in China that has helped businesses maintain the relationship with their followings from the comfort and safety of their own homes.

Twitter, Facebook and Instagram have seen a 15 per cent uptick in usage since the onset of the crisis, providing a huge marketing opportunity for shrewd brands wanting to maximise their sales and marketing outreach. Customers may not be coming through the doors, but they are still listening.

Whether the coronavirus pandemic will be the gateway to a new retail reality, or a passing interruption from the status quo, the businesses that do come out winning on the other side of lockdown will do well to embrace the learning opportunities that months away from the norm have provided.

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