HOw Digital Transformation Impacts Small Businesses In 2020

After COVID: How Digital Transformation Impacts Small Businesses in 2020

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After the pandemic, we see that we have a digital transformation. How this is will change our world. The year 2020 will infamously go down in the history of mankind for the Covid-19 global pandemic, lockdown, and other unpleasant reasons. However, if it’s of any consolation, the year 2020 also impacted small businesses in the field of digital transformation.

The impact of digital transformation on small businesses during 2020 was both, negative as well as positive. Small businesses that could adapt quickly to newer operating systems in 2020 could somewhat escape the brunt of the prolonged lockdown while others had to pull up their socks and get on to digital platforms for various purposes.

In this article, we will glimpse exactly how digital transformation is impacting small businesses in 2020. And might continue doing so beyond 2020 too.

Current Scenario in India

Current Scenario In India

As a nation, India boasts of 564.5 million Internet users, spread across the country. They’re about 401.75 million smartphone users in India. Thanks to cheaper Fourth Generation (4G) data and cheaper smartphones, Internet proliferation in India remains fairly high, though there’s some debate over this.

Most Indians use mobile Internet for purposes ranging from entertainment to online shopping, education to earning a small side income.

As a result, the Covid-19 related lockdown didn’t cause much discomfort to Indians as far as availing certain services are concerned. However, nobody can deny the fact the lockdown has several negative impacts, including some hitherto unknown and likely to surface later.

Impact of Digital Transformation on Small Businesses

But let’s start by looking at some of the impacts of digital transformation on small businesses during the first half of this year.

Retail Sector

As a result of the lockdown, small businesses that could offer online services could eke an existence while those depending purely on manual or physical processes seem to have recorded colossal losses.

A classic example is neighborhood grocery stores. While retail giants such as Amazon, Flipkart, Big Basket, and Grofers, among others were flooded with online orders for grocery items and other essentials, smaller businesses couldn’t as many open doors for customers.

However, a few small businesses quickly overcame the situation by publicizing their services and offering home delivery using free resources such as WhatsApp.

Cash Transactions

Cash Transactions

With almost everyone reluctant to accept cash due to fears they could be contaminated by Covid-19, digital payments in India gathered momentum, especially among smaller businesses. Even home-based businesses and micro businesses benefitted immensely from digital payments. 

Payment apps in India, both for personal and business use saw higher downloads. Google Pay and Phone Pe emerged as the most downloaded apps in India and select countries abroad. Net banking and Unified Payment Interface (UPI) transactions also witnessed a boom. As a result, a lot of small businesses are now accepting digital payments even for smaller amounts to evade the possibilities of losing out on business altogether.

The info above was taken from anonymous stories.

Work from Home

Before 2020, work from home was either looked down upon or considered the privilege of a few select people. However, 2020 saw a sea change occur in both these perceptions. Left with no alternatives, owners of small businesses had to start working from home and conduct remote meetings using webinar apps, where possible with employees and business associates.

Though digital transformation in this sector was slower among smaller businesses due to lockdown related ambiguity, work from home did gain momentum after April 2020. As a result, small businesses are now adapting their operations that aim at lowering staff turnout while ensuring efficiency with work from home apps and other resources.

Online Learning

Education is one of the first casualties of the Covid-19 pandemic rattling India since the beginning of the year 2020. Schools, colleges, coaching classes, and institutes of higher education had to down shutters following orders to that effect from the Central and state government. Small businesses such as training institutes and classes had no option than to take resources to online platforms to maintain a continuum of educational activities.

Furthermore, smaller businesses, especially individual entrepreneurs also flourished through digital transformation. The lockdown saw higher demand for online courses, especially vocational ones, which could allow people to open a side-gig swiftly without many investments. Fitness classes and instructors of Yoga and aerobics also went online to ensure that a locked-down populace does not fall victim to sedentary lifestyles forced by social distancing, self- quarantine, and health curfew norms.

Supply & Logistics

Supply & Logistics

Though India has a large organized supply and logistics sector, there’re thousands of smaller, unorganized players in the market. They generally would operate independently or depend upon larger players to lease warehouses and vehicles. In 2020, these small and independent players are now getting organized through WhatsApp and other free digital platforms to ensure they record adequate business.

With travel restrictions and movement of goods, except essentials restricted across India, smaller supply chain and logistics players could offer their services through digital platforms and stay afloat during what’s been billed as the longest lockdown in the world. And these online systems for booking freight through a third party or own independent platforms are here to stay after 2020.

Scenario Post Lockdown

As we have seen, digital transformation is helping small businesses and the largely unorganized sector to survive the Covid-19 lockdown and other forced restrictions. And this digital transformation will gather momentum and benefit the smaller businesses better after the lockdown. 

Post lockdown, smaller businesses will have to find innovative means to roll back losses during the first six months of 2020. Hence, they’ll definitely be retaining their digital platforms for various activities. We might even see a boom in the number of online resources including apps that are specially made for small businesses.

In Conclusion

Digital transformation continues to impact small businesses in 2020. Though uncertainties over the extent of digital transformation and its exact benefits remain relatively unknown at the time of writing this article, we’ll find that it’s been beneficial for all. A similar scenario was seen in 2016 when the Indian government demonetized Rs.500 and Rs.1,000 currency notes. Small businesses had to go for digital payments. The Covid-19 pandemic is causing and spurring digital transformation among smaller businesses once again and in a bigger way.

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