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New Zealand SMEs continue investment in technology

Digitalisation is being rapidly accelerated across different all sectors of industry and comprehensively across business operations, including marketing, sales, logistics, and customer service. Organisations are now more open than ever to the use of innovative technologies to achieve their strategic business goals post-pandemic.

New Zealand is no exception to this trend and, in many cases, is leading it. While the COVID-induced recession initially derailed the nation’s economic recovery, New Zealand has managed to rebound sharply from its biggest economic slump and is set to make an entry into 2021 on a strong footing. The government believes that the economy has weathered the virus storm better than expected despite a GDP contraction of 12.2% in the June quarter.

A recently conducted survey of 608 business leaders of small to medium-sized (SME) companies in the country gave deeper insights into this phenomena.

Indicative of the transition, almost thirds of SMEs surveyed conduct business virtually after the pandemic hit. A total of 64% of SMB leaders state that all or most of their business is now virtual, compared to just 2% who fully relied on virtual platforms pre-pandemic. Additionally, results show most organisations conduct at least some of their business processes on digital platforms after the pandemic began.

Businesses experienced increased digital interaction with 72% seeing increased website traffic since the start of the crisis. Close to three-quarters of businesses from the survey said they have registered significant website traffic from new regions. Virtual platforms and solutions have led to a more diverse customer base, with 74% of businesses reporting that 50% or more of new traffic comes from areas or nations where they had not operated earlier.

This insight supports data from the New Zealand Post in a study of eCommerce trends. Among a range of statistics showing increases in eCommerce activity, it was found that much of this growth came from regional anomalous regions.

New Zealand Post acknowledged that 2020 started strong for online retailers, with constant sales growth in the first quarter even in the face of concern around the pandemic. A small decline at the start of lockdown was reversed with overall online sales witnessing a massive increase during Alert Levels 4 and 3. By May 2020, nearly 1.5m Kiwis were shopping online, 28% more than in May 2019. Interestingly many of these shoppers came from regional areas like Taranaki, Northland and Gisborne: areas that have traditionally been slower to embrace online shopping.

Businesses are progressively relying on tech to remain sustainable and achieve meet both short and long-term goals. While overall 89% of businesses believe they have been successful transitioning to digital environments, particularly when it comes to using social media and websites to interact with customers, they have also encountered challenges along the way. Only just over a quarter of businesses showed they have been “very successful” engaging with their customers digitally, while 62% feel “somewhat successful” in doing so. However, respondents also said there were challenges while moving their businesses away from traditional models to digital platforms.

The top struggles were upgrading and implementing new software (73%) and training employees to use it (72%). Additionally, 73% of local businesses found software implementation to be a major challenge in their digital transformation journey. Fewer than half of businesses (45%) feel that they would have failed without a pandemic-driven investment in digital technologies. But looking ahead to the future, 70% of organisations said they need to keep investing in digital systems to keep up with their competitors.

While there are several areas of focus in the transformation journey, the top five areas where digital upskilling was seen most critical were in the next six months were:

  • Website and app development (44%)
  • Project management (39%)
  • Social media marketing (35%)
  • Cybersecurity (32%)
  • Business intelligence/Data analytics (29%)
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