The impact of the pandemic on SMEs reinforces the importance of digital transformation

The impact of the pandemic on SMEs reinforces the importance of digital transformation

The number of small and medium-sized enterprises (SMEs) migrating to the digital environment in Brazil grew by more than 200% in 2020 compared to 2019. According to the report Recovery Insights: Small Business ResetFrom Mastercard, globally, the number of companies migrating online was three times higher than pre-pandemic levels, peaking in July 2020.

Overall, total sales of SMEs grew by 4.5% annually through August 2021, while e-commerce sales grew by 31.4%.

The work also showed that of the businesses that closed at the start of the pandemic, more than 30% remained closed after six months — and about a fifth were still closed after 12 months. The situation varies depending on the company’s website. In the United States, 26% of small retailers remained closed after six months, compared to 28% in Brazil.

encountered difficulties

Despite the difficulties faced by SMEs, there was an increase of more than 30% in the number of SMEs opened in 2020, a trend that can be seen in different parts of the world: UK (+101%), USA (+86%), Australia (+73%), Germany (+62%), Canada (58%), Brazil (+35%) and South Africa (+13%).

The work also reveals that small hosting companies are showing their strength against large hotel chains in this time of the pandemic. In the restaurant sector, the trend will be the opposite, as large chains gain space previously dominated by small restaurants.

Support for neighboring businesses has been a magnet for the duration of the pandemic. However, the challenges they faced were very real, due to reliance on local markets, local supply chains and tight cash flows,” says Bricklin Dwyer, chief economist at Mastercard and director of the Mastercard Institute for Economics.

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digital economy

Mastercard is committed to bringing 50 million small businesses and 25 million female entrepreneurs into the digital economy by 2025. The idea is to help businesses stay online and stay protected by ensuring they have the right tools to increase their digital presence and integrate with e-commerce. Mastercard has created an initiative called Strive, which has committed $25 million to help more than five million small and medium-sized businesses transform themselves digitally.

The company has also developed the MasterCard Small Business Performance Index, a performance indicator that serves as a support tool for SMEs to improve their strategic planning. The index uses a comprehensive AI-powered algorithm that determines metrics such as number of locations, sales volume, and number of transactions via Mastercards.

Imagem: shutterstock

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About the Author: Camelia Kirk

"Friendly zombie guru. Avid pop culture scholar. Freelance travel geek. Wannabe troublemaker. Coffee specialist."

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