Why a digital transformation of your business is necessary

Small businesses mostly run on traditional business models, where they rely on a physical retail presence and a specific customer base. Larger businesses often have a global or multinational presence and are more dependent on technology to scale up their businesses. They cannot opt out of digital transformation and remain dependent solely on manual efforts and traditional business models.  

A study by International Data Corporation showed that global business spending on digital transformation is expected to grow at a compound annual growth rate of over 17% during 2019-2023.

However, it may not be wise to assume that digital transformation is irrelevant for small businesses. The number of internet users is increasing every day, and the pandemic has accelerated this increase. Local businesses are deriving unique benefits from digitisation, which are different from the digital transformation benefits enjoyed by large corporations.  

Digital transformation for large and small businesses 

Large organisations spend heavily on various technologies and services that help them digitise their practices, processes, and overall operations. They make advanced use of IT tools to enhance business models and processes and try to improve their reach and engagement with customers. When corporate giants embrace digital transformation, they undergo a cultural change in their organisational mind set, approach, and long-term strategies.

When a small grocery store or a corner shop adopts digitisation, it is a different exercise altogether. It could be establishing a presence on the internet, creating a website, enlisting with logistics applications, switching to IT solutions, and so on. This will ensure faster service, more accuracy in accounting and documentation, more visibility on the internet, and eventually more sales as well.  

If the global trend is any indication, digital transformation is becoming a more integral part of business strategies. Small businesses can look into the value they can generate from digitisation and build a digital transformation strategy of their own. Let us consider some key benefits:

  1. Improved local presence
    Once the initial steps towards a digital presence are taken, your small business becomes visible to a new category of customers. These are people who search for their requirement on the internet. For instance, assume you have a coffee shop with your customer base of regular and one-off customers. But if you have pinned your café in Google Maps, a tourist who’s visiting your city for the first time and searching “coffee shops near me” can find you easily.

  2. Stronger marketing and branding
    Small businesses often get lost in the crowd as not much is done in terms of branding and marketing. A standalone grocery shop doesn’t have the same brand image as a departmental store with a national presence. But thanks to the digital platform, your small business can have a social media presence, a website, tie-ups with delivery apps, and a presence in local search sites like JustDial. For example, with an active social media presence, you can engage with more internet users and build a stronger brand recall.
      
  3. No cash, no problem
    Implementing digitisation also means the adoption of various alternative means of payments. Apart from cash and card facilities in your physical outlet, your website can be designed to accept cards, e-wallets, net banking, and even cash on delivery. This ease of transaction encourages more and more customers to shop at your digital store.  

  4. Enhanced visibility and reach
    With a stronger online presence, your small business is visible not only to your regular customers but also to a vast number of internet users. You can cater to customers that didn’t even exist in your non-digital existence. Let’s assume a non-resident person wants to help his parents who live in the same city or town as you. Your grocery shop has a website that accepts multiple payment modes, and a tie-up with a delivery app. The non-resident can now order groceries on his parents’ behalf from your website, make the payment online, and even have it delivered to their address!

  5. Better financial performance
    A digital presence enhances your business visibility, which increases footfalls on your website and product links. With access to a wider audience, digital transformation promises better financial performance. More sales and more profits can be an obvious benefit of a robust digital presence.

    A study by Microsoft in Singapore revealed that small businesses saw a 26% growth in revenue after digital transformation. With an ever-increasing internet user base in India, such benefits can be expected by Indian small businesses as well. Embracing digitisation, therefore, holds great promise for all small businesses.

This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. and its employees. We make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article does not constitute legal advice. Kotak Mahindra Bank, its employees and the contributors are not responsible or liable for any damage or loss resulting from reliance on or use of any information contained herein.

 

 

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.