COVID-19: The Challenges for MSMEs, Impact on the Economy, and Opportunities for B2B E-Commerce

2020 will be remembered as the year of social distancing, rise of online collaboration, work from home – things that we now refer to as “the new normal”. The COVID-19 pandemic continues to disrupt our lives and businesses are reeling – particularly small businesses.

Burket Team Burket Team | Thursday, April 23, 2020

COVID-19: The Challenges for MSMEs, Impact on the Economy, and Opportunities for B2B E-Commerce

With so much uncertainty during these times, it’s hard to predict the full impact of the pandemic to B2B e-commerce. Here’s a look at the current state of the crisis, its impact on MSMEs and the economy, and the opportunities for B2B e-commerce.

Challenges for MSMEs

Since the implementation of the Luzon-wide enhanced community quarantine (ECQ), non-essential business establishments have been shut down leaving owners and their employees in a state of uncertainty. Micro, small, and medium enterprises (MSMEs) are the most vulnerable during the ECQ considering their limited resources to wait out the COVID-19 pandemic.

According to a survey by the Philippine Exporters Confederation Inc. (PHILEXPORT), the biggest challenges MSMEs are facing are the slowdown in market demand and the increasing cost of raw materials and intermediate goods.

There is also a notable disruption in the supply chain as the respondents reported late shipments, cancelled export and import orders as well as loss of buyers and suppliers as the virus continues to spread across the world and travel restrictions are imposed.

Other issues raised include newfound difficulties in getting loans (financing squeeze), cancelled loans, cancelled trade fairs, travel difficulties, liquidity and excess manpower, and delays in remittance.

The UP Institute for Small-scale industries is conducting a survey on the effects of COVID-19 on Philippine MSMEs. You can take part on their survey here. We’ll share their findings when the results have been published.

Government’s Action

The Department of Trade and Industry (DTI) has some programs to help affected small businesses:

  1. Small businesses get 30-day moratorium on rent payments
  2. Ensuring unhampered movement of cargo and transit of personnel of essential businesses during the enhanced community quarantine.
  3. Small Business Corporation opens P1B loan facility for affected MSMEs.
  4. Livelihood Seeding Program
  5. Shared Services Facilities Project

Economic Impact of COVID-19 Pandemic in the Philippines

Citing a report published by the National Economic and Development Authority (NEDA), the official target of the Philippines was 6.5% to 7.5% growth in 2020. However, by March 19, the growth projection was reduced to -0.6% to 4.3%, taking into account the impact on transport and tourism, exports, remittances, consumption, and the broader effect of the ECQ. In a policy brief published by the ASEAN Secretariat, the revised growth target is still higher than most countries in Southeast Asia.

NEDA estimates that the enhanced community quarantine over Luzon for one month could result in a loss of gross value added of PHP298 billion to PHP1.1 trillion, equivalent to 1.5 to 5.3 percent of GDP. This is expected to reduce employment by 61,000 to 1 million.

On April 21, newly appointed NEDA chief Karl Kendrick Chua said the government is now assessing the damage wrought by the outbreak on the economy. The acting secretary said the Development Budget Coordination Committee (DBCC) will soon revise their macroeconomic targets following the rebasing and revision of the gross domestic product (GDP) base year to 2018, as well as to incorporate the impact of the COVID-19 pandemic.

Opportunities for B2B E-Commerce

The current situation has all businesses feeling the impact, but MSMEs are the most affected. Despite the current situation, some business owners can still see an opportunity because people are always looking for convenient ways to get what they need.

What can b2b companies do during the pandemic?

  1. Ensure the safety of your employees and customers
  2. Stay connected with your customers
  3. Expand your online footprint
  4. Manage demand and supply chain disruptions

While there’s a significant decrease in demand for B2B products and services, buyers are spending their time doing online research to look for new suppliers – whether it’s for emergency procurement or future use. It’s high time for B2B sellers to list their products and services online. We’ve outlined here why it’s important for B2B businesses to list their products in a marketplace.

How Burket can help

Small businesses are at the heart of Burket, and we are doing everything we can to support MSMEs during this difficult time. Since day 1, we have been committed to provide free services to small businesses to help them jumpstart their online footprint. In line with this commitment, we launched our biggest feature to support businesses which are the Request for Quote form for buyers and Opportunities section for sellers as tools to make it easier to B2B buyers and sellers to connect. It allows companies looking for products to post their requirement while suppliers can browse the list and direct quote/fill those needs.

Here are some more features businesses can take advantage of:

  1. More Product / Services Postings: Have an online shop and enjoy as much as unlimited postings for both product / service offerings.
  2. Multiple Users: Maximize usage by allowing team members to manage the same business page.
  3. Verified Badge: Get the badge and transact confidence knowing the business is validated to be legit.
  4. RFQ Alerts: Have an edge by receiving real-time alerts when selling opportunities arise.
  5. Priority Ranking: Increase chances of closing more sales through improved ranking on manual searches.
  6. SEO Campaign: Boost online reach on google by being part of our Search Engine Optimization campaign.

While most features are free, some will be part of the paid subscription that will be launched soon.

So why use Burket?

  1. Products and Services Postings: Ability to post and search both product and service offerings.
  2. Easy to Use: No training required, comes in a social network interface for hassle-free navigation.
  3. Credibility: Get the badge and prove that you are a fully registered and compliant business
  4. Domestic: Our market is our priority, get to interact with Philippine-based businesses.
  5. Software-as-a-Service (SaaS) Integration: Comes with tools to help with your marketing and procurement process.
  6. Industry-wide: Cross-industry targeting so all businesses are included in the platform.
  7. Savings: We do not charge commissions or transaction fees.

Watch out for more features that we will launch in support of businesses during these uncertain times.