Q&A  | 

Going digital and joining forces, key for SMEs with Eduardo Elorriaga

"[Small] businesses must stop working individually and organize themselves on technologically advanced platforms".

Tags: '4.0 Revolution' 'Digital Market' 'Digital transformation' 'Digitalización' 'Digitalization' 'E-Commerce' 'Eduardo Elorriaga' 'Hermeneus' 'Mercado47.com' 'Small commerce'

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Eduardo Elorriaga is CEO of Hermeneus World, a company specialized in the digitalization of commercial ecosystems through its Digital Market software. Hermeneus has been in charge of developing Mercado47.com, the digital platform that allows shopping in Madrid's markets.

Mercado47.com was included in the European Commission's Facing the Future report as a Union-wide best practice for the revitalization and modernization of small commerce and has recently been selected as "Best Idea for Retail" by the Ministry of Industry, Trade and Tourism of the Government of Spain.

How did the idea of founding Hermeneus come about and how has it grown?

We identified the undisputed digital transformation process that all small SMEs had to face and the scarce existing solutions on the market designed specifically for them. So, we decided to develop a SaaS platform for the digitization of complex business ecosystems that would allow us to address this process in a simple and organized way, with the best possible technological tools.

The beginnings were very difficult because in 2011 it was necessary to explain what digital transformation was and, even worse, to convince many people with little vision and lack of preparation. We also did not have the technology and tools that we have implemented today.

The pandemic has revolutionized everything, and from day one, all our KPI’s are skyrocketing, with annual growth of 100%, black numbers, and leading to increasingly innovative and technically demanding projects. We are targeting a highly qualified customer profile belonging to large companies or public institutions that require tested, flexible and scalable solutions, which is a value-added proposition very difficult to find in the market, having become a national benchmark.

Paradoxically, it is a very complex year to manage with very significant investments in technology and where it is very important to maintain the focus on our growth strategy and market positioning in a market that greatly expands the options and needs.

How many employees do you have today and how many dealers do you represent?

We only incorporate payroll personnel that constitute the core business of the company, outsourcing all non-critical competencies or even taking them out of our business model. 

Thus, we currently have 8 people on our payroll and 2 seniors in the process of being hired, divided into 3 major departments: Development, Operations and Marketing and Sales.

The European Commission's “Facing the Future” report officially included Mercado47.com as an EU-wide best practice for the revitalization and modernization of small commerce and it has recently been selected as "Best Idea for Retail" by the Ministry of Industry, Trade and Tourism of the Government of Spain. Do you believe that small commerce has a future and, in your opinion, how can this be guaranteed in the 4.0 revolution?

Being small or large is not a virtue or a differentiating quality. It is an adjective. That is to say, it does not make it better or worse, nor is a consumer going to buy in one place or another depending on its size. 

It is essential to identify its strengths, its competitive advantages, its differentiating aspects and establish a strategy that allows it to compete in a highly competitive market, modernizing its key business processes, responding to the omnichannel nature of demand and generating economies of scale. 

For this last point, it is essential to work on the mentality of these entrepreneurs so that they learn to work together, collaborating and grouping together to defend their spaces. One of the major problems of small businesses is not their size but the individuality of their actions and decisions.

Is government support necessary for the digitization and survival of small businesses given their fewer resources, digital skills and ability to implement change?

Unfortunately yes, but that support must be adequate and structured in phases. It is not enough to set up an online store of products from a region to get a photo in the newspapers. It is one thing to set up an online store and quite another to tackle a digital transformation process of a given ecosystem. The latter requires a medium and long-term approach that includes training, awareness-raising, information, communication, workshops, specialization, strategic vision, technology and, especially, demanding from its participants a firm commitment and a partial investment in the project. 

Free everything is a serious mistake that generates a multitude of projects with a very short life. We keep seeing projects that we have known since their birth that they will not last more than a few months, especially when the politician of the moment talks about the “New Amazon for small businesses”.

What do you think are the main digital tools that can help small businesses to survive and grow in today's market?

The user has stopped choosing the small retailer as the place where he analyzes, compares and decides his purchase, but the number of transactions that end up being physically closed after this initial research is still in the majority. 

In this sense, the POS must provide the user with a shopping experience that is differentiated from the Internet experience, and it is necessary to defend the current shares of offline commerce by innovating and including technology in the POS as well. 

With regard to exclusively online sales, it is only necessary to observe what initiatives are succeeding internationally in ecommerce, almost exclusively large platforms that offer a set of services (variety, price, guarantee, shipping times, return policy, information, standardized service, etc.) that attracts and retains the user. 

Retailers must stop working individually and organize themselves in technologically advanced platforms that allow them to configure a unique and different offer, not reproducible by large online players, and for this there must be a solid leader with a strategic vision that leads, groups and convinces them, offering multi-commerce shopping and grouped delivery in a single order. 

In short, generating open urban shopping centers where logistics management, personal and differentiated treatment becomes a virtue and not a weakness. But it is a very complex process, which requires investment, vision, mentality and dedication on the part of a trade that usually shows an enormous reluctance to change and in which, being projects of “many few”, each step requires overcoming a multitude of obstacles.

In your opinion, how do large online intermediaries like Amazon impact a country like Spain, where 98% of the industrial fabric is made up of small and medium-sized companies?

Nothing is achieved by criticizing Amazon. It is a private company that is taking advantage of the manifest weaknesses of small businesses, their aversion to change and their difficulties in adapting. 

It is Charles Darwin’s theory put into practice. It is not the fault of Amazon or of the millions of buyers (including many small businesses) but of the businesses that participate in Amazon, of the leaders who encourage them and especially of the mediocrity of these business leaders (especially certain associations and confederations) who only know how to appear in the press saying that we must support small businesses and other empty slogans, always thinking about the photo.