Small business challenge: How technology companies like WhatsApp, Jio won over price sensitive MSMEs

December 12, 2019 11:49 AM

Technology for MSMEs: India is home to the second-largest number of small businesses in the world driving a large proportion of the total employment and GDP in the country. In spite of that, technology adoption in the country, compared to the rest of the world, has been woeful.

WhatsApp grew fast as a free replacement to the paid SMS. Image: Reuters
  • By Ambarish Gupta

Technology for MSMEs: “Indian business won’t pay for software” – was the advice I received when I started out my company. Indian businesses are very price sensitive. They are not very technology literate so training them on software is a problem. This was 2010. There was truth in it. I had a hard time selling software to small businesses. I ended up having success with slightly larger businesses with my software.

However the ground reality has since changed dramatically, thanks to smartphone penetration, inexpensive data plans from Jio and others and the training people have got on using smartphones by using TikTok and communicating over WhatsApp. But one thing has not changed. Indian business is very price and value-sensitive and won’t pay that easily. Startups selling software to such businesses have struggled with this issue. However, lately seems there are creative solutions to the problem that emerged.

WhatsApp grew fast as a free replacement to the paid SMS. Jio was also free, but become paid and also cheaper than the alternatives. All of these technologies are keeping the initial cost to zero and have chosen to charge the business in transactions when the value of the software has become obvious. While WhatsApp is free, the business will eventually start paying for WhatsApp business listing and in accepting payments through WhatsApp. Jio used the same playbook with the launch as free service converting into paid service as the time progressed.

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The free services also create a big buzz and lead to a large number of referral activities reducing the cost of the marketing. Once a business is using free software and sees the value, he does not stop. He goes on introducing and sharing the services to his friends. We are extremely social in nature and this, zero cost, marketing channel is an amazing channel to acquire new customers without having to spend any money into marketing. Jio, WhatsApp etc used these mechanics to ramp up their growth exponentially.

With 1.5 crore small businesses, India is home to the second-largest number of small businesses in the world. These businesses drive a large proportion of the total employment and GDP in the country. In spite of that, technology adoption in the country, compared to the rest of the world, has been woeful. With the zero-first pricing model, smartphone in every hand, and fast data connection, all the stars are finally aligned to bring interesting software to the hands of Indian small businesses. It doesn’t have to stop to the accounting software. It can grow to all kinds of mobile apps doing marketing, sales, operations management, and industry software.

India used to be the world’s largest economy from 1CE to 1600 CE. It contributed 25 per cent of the world’s GDP in 1700. However, Post British Raj economic exploitation, by 1950, it dropped down to measly 4 per cent. The smartphone is the tool that can turnaround this situation by putting the power of technology in the hands of the business and help the Indian industry recover to the first place in the world, that It always had in most of the known economic history of the world.

(Ambarish Gupta is the Founder at Knowlarity Communications. Views expressed are the author’s own.)

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