Challenges Faced by Businesses in Expanding Sales Channels
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Growing local companies, or rising brands, generally need to expand their product sales channels to increase profitability. However, many are hampered by limited financing.
This is evident in a research report from a collaboration between the Katadata Insight Center (KIC) and the social commerce service provider Evermos, titled *Beyond the Digital Frontier*.
KIC surveyed 32 rising brands that contributed the largest gross merchandise value (GMV) on the Evermos application.
From this survey, 40% of rising brands admitted to being hampered when developing sales channels due to cost issues.
“Rising brands still face common challenges faced by micro, small, and medium enterprises (MSMEs) in Indonesia, namely limited access to financing,” said the KIC team in their report.
Another 32% of rising brands found it difficult to expand sales channels due to market conditions, and 32% due to limited human resources (HR).
Other obstacles found include unfamiliarity with technology, the need for learning time, time constraints, inventory management issues, and sales channel terms and conditions, with proportions as shown in the graph.
These various obstacles hinder rising brands from expanding their sales channels, especially to penetrate the offline sales realm.
“Indeed, for rising brands with limited financing, trying to enter the offline channel carries a high financial risk and may negatively impact their business,” said the KIC team.
“If not implemented strategically, these efforts may yield low returns on investment and hinder their overall growth,” they continued.
On the other hand, expanding sales channels into the offline realm plays a significant role in business development. According to KIC's findings, companies that have successfully become market leaders domestically generally have strong offline sales channels.
“One of the key lessons from national champions is how important it is for a brand to progressively expand its capacity in offline channels, especially after reaching annual sales of around Rp 100 billion,” said the KIC team.
“Offline channels not only serve as distribution channels but are also a proven and effective way to increase brand awareness,” they continued.
"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."
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