Rum & Que, a manufacturer and distributer of food products, were able to increase sales and their firm’s resilience by participating in the government’s Digital Boost programme.
New Zealand retail SME revamped their website and shock-proofed their business through a government programme
Abstract
Background
Rum & Que is a New Zealand SME operating in the food & beverage sector. They manufacture and distribute kitchen products for use around the BBQ, with a focus on seasonings and sauces. They have three full-time employees.
Challenges
Rum & Que found that a significant barrier to acquiring the skills and knowledge to unlock growth and to scale-up their business with digital tools, particularly at the beginning, was the lack of time. Time restraints are a common challenge for SMEs who operate with smaller teams. For instance, SMEs are generally less likely to provide their workers with training opportunities due to their limited capacity to relieve people from income-generating activities for them to train ( (OECD, 2015[1]; OECD, 2021[2]). In addition, and at the individual level, a large share of adults willing to participate in adult training opportunities, report time related reasons as barriers to participation. This is the case for around 50% of inactive and 60% of inactive motivated adults according to data from the Survey on Adult Skills (PIAAC) (OECD, 2021[3]).
Access to finance was also challenge for Rum & Que when they were starting up. After operating for a year and in an effort to improve their branding, Matt and Trace thought about improving their branding by developing their packaging and giving it a more “professional look”. To do so, they borrowed money from a friend. They found this loan to be fruitful as the new packaging boosted sales, and they were able to repay the loan within a few months. In 2022, the unfavourable macroeconomic environment led to a deterioration of some SME finance indicators across OECD countries. In response to inflationary pressures, there was a rise in 2021 SME interest rates, raising the cost of finance and impacting their access to it. As a result, in the second part of 2022, banks reported higher loan rejection rates for SMEs who in turn reported greater difficulties in accessing debt financing (OECD, 2023[4]).
They also sighted supply issues such as finding a larger storage space for distribution.
Digitalisation Path
Rum & Que from the onset used online platforms as a means to connect with existing customers and communicate offers. This was a way for them to communicate with customers as well as to get their brand and products out to the public. They however have incorporated many digital tools into their operations, such as:
Social media pages for community management;
Accounting software to manage financials;
External digital tool to centralise orders and manage accounting. The tool is connected to the accounting software to automatically generate invoices and streamline their supply chain management.
Approach
Despite the rising cost of production through 2022 and 2023, due to the increase in prices from their suppliers, Rum & Que have been able to keep their prices constant. They believe that this result is due to the firm operating more efficiently due to using the available digital tools.
Government Support
Rum & Que participated in the New Zealand government programme Digital Boost for developing their website. The Digital Boost platform supports small business owners to digitally transform their operating models, not only through the adoption of digital hardware and software but through process changes, new skills, capabilities and having deeper insight into their business through data. The platform includes bespoke playlists of video content, online diagnostic tools, peer-learning support and free or discounted digital equipment or services.
Rum & Que had a Digital Boost consultant to work with when developing their website. They explained that before using Digital Boost their website was relatively basic, and that today the website performs very well using the tools and techniques they learnt from the programme.
Originally launched in 2021 in response to the COVID-19 pandemic, the Digital Boost programme has become an integral part of New Zealand’s SME Digital Strategy Framework due to its success. After engaging with the platform, the share of surveyed SMEs accepting digital payments almost doubled and the share of business with their own website went up to 70% from 49%. Further, 70% of the surveyed firms reported feeling confident about becoming digital after using the platform (OECD, 2021[5]).
To learn more about SMEs digital transformation
OECD (2021), The Digital Transformation of SMEs, OECD Studies on SMEs and Entrepreneurship, https://dx.doi.org/10.1787/bdb9256a-en.
OECD (2021), SME Digitalisation to Build Back Better, https://doi.org/10.1787/f493861e-en
References
[4] OECD (2023), “OECD Financing SMEs and Entrepreneurs Scoreboard: 2023 Highlights”, OECD SME and Entrepreneurship Papers, No. 36, OECD Publishing, Paris, https://doi.org/10.1787/a8d13e55-en.
[3] OECD (2021), OECD Skills Outlook 2021: Learning for Life, OECD Publishing, Paris, https://doi.org/10.1787/0ae365b4-en.
[5] OECD (2021), “SME digitalisation to “Build Back Better”: Digital for SMEs (D4SME) policy paper”, OECD SME and Entrepreneurship Papers, No. 31, OECD Publishing, Paris, https://doi.org/10.1787/50193089-en.
[2] OECD (2021), The Digital Transformation of SMEs, OECD Studies on SMEs and Entrepreneurship, OECD Publishing, Paris, https://doi.org/10.1787/bdb9256a-en.
[1] OECD (2015), “Skills and Learning Strategies for Innovation in SMEs”, Vol. Internal document - Working Party on SMEs and Entrepreneurship, https://one.oecd.org/document/CFE/SME(2014)3/REV2/en/pdf.
