How Latin American SMEs are Adapting to a Digital World

Digitalisation has become an important strategy in Latin America for enhancing the performance of micro and small enterprises (MSEs). Incorporating digital solutions in a company’s operations can bring about several advantages, such as expanding its customer base, improving productivity, and creating efficiencies, which can ultimately lead to increased revenue growth. However, little is known about how MSE owners themselves perceive these changes. For instance, how do they believe that digitalisation has impacted their sales? And which digital solutions have contributed to their business’s growth and by how much? Decodis, a social research company, tried to address these questions in their research.

Does digital payments improve sales?

The majority of participants (65%) who use digital payments reported a positive effect on their sales since adopting them. By allowing businesses to attract and retain customers who do not carry cash, these payment methods have facilitated growth. Owners reported an improvement in the convenience of making sales transactions, including the ability to make and receive payments quickly and without hassle, such as the need to provide change. Additionally, funds now go straight into their accounts. Other benefits mentioned by owners included enhanced security, increased credibility with customers, and the ability to track transactions.

How does social media improve sales?

The majority of participants (73%) who use social media reported an increase in sales since adopting this solution. WhatsApp is the most commonly used app, and Facebook, Instagram, and TikTok are primarily used to showcase products and services by posting pictures and videos, sharing offers, and checking comments. As a customer moves closer to a purchase decision, the conversation shifts to WhatsApp, where the business owner answers questions and negotiates delivery.

Once a customer pays digitally, the business owner returns to WhatsApp to confirm payment, monitor delivery, and address any post-sale concerns. Business owners further advertise their products and services to customers by using the app’s status and broadcast features to share business promotions and encouraging repeat purchases.

Impact of marketplaces?

Although very few business owners currently use marketplaces like Facebook Marketplace to sell online, this solution has shown promising signs of growth. Five out of seven participants using these platforms reported a positive impact on their sales. For some business owners, these marketplaces have become so essential to their sales that they have gone entirely virtual, abandoning a physical storefront to save on rental costs and generate sales more efficiently.

Business management solutions are viewed as a driver of efficiency not sales

Business owners in Latin America view digital payments and social media as drivers of revenue growth, but not business management solutions such as inventory tracking systems and financial control apps. While these systems were found to improve sales control, stock management, and accounting organization, they were not associated with economic returns. Despite an upward trend in adopting business management systems, most entrepreneurs are still reluctant to implement them, citing small inventory holdings.

Business owners focused on digital solutions that provide an immediate boost to revenues during the pandemic, with social media, messaging apps, and digital payments being the top choices due to their familiarity. Adoption of marketplace platforms should be next, but their complexity may be intimidating for business owners without direct assistance.

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