By Anil Bhardwaj
Technology for MSMEs: The impact of COVID-19 on businesses has been deep and left an indelible mark on the Indian MSMEs. Since the Indian MSMEs relied more on the physical aspects of doing business than their global counterparts, the impact has been more pronounced. Even before the pandemic, the industry was already facing constraints around financial crunch, labour-related challenges and supply chain issues due to lag in the adoption of technology. Though pandemic shrunk the markets on the one hand for physical sellers, it opened up reach for digitally-enabled MSMEs. Hence, it became critical for sellers to adopt digital ways of doing business. Adopting digital ways of business was an enabler but it wasn’t sufficient to ensure their discoverability by crores of consumers.
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Dependable e-commerce marketplaces to the rescue
The MSMEs and the sellers realised the value of being present on the dependable marketplaces. Marketplaces are essentially aggregators that list items from various sellers. Not only do such marketplaces have huge footfalls but more importantly they enjoy trust of the consumers. Even a consumer who wanted to purchase offline would search for the products online before buying from physical shops. It was evident that the ticket to global opportunity was in competing on the established marketplaces. However, a sharp negative tirade against these players also meant that MSMEs and small sellers were concerned about onboarding themselves on marketplaces. While quite a large number of sellers and MSMEs realised that these allegations were inaccurate but seeds of doubts has dented their ability to gain from the global opportunity. However, the people who digitised themselves and joined the established marketplaces are reaping rewards. Largely unheard brands and niche artists from smaller towns are now supplying not only pan India but also globally. This has revolutionised the art of doing business from India.
MSME sector- a critical link in the Indian growth piece
The writing on the wall is evident. The MSME sector is a strong growth propeller, supporting millions of direct and indirect jobs, contributing to around 40 per cent of India’s exports, and earning valuable foreign exchange. The sector contributes close to 30 per cent of the GDP. E-commerce offers a large reach and ability access consumers beyond Indian boundaries. Hence, enabling and empowering the sector with relevant regulations and infrastructure to digitise themselves becomes non-negotiable. According to the Cisco India SMB Digital Maturity Study 2020, digitisation of small and medium businesses (SMBs) could add anywhere between $158-216 billion to India’s GDP by 2024 and contribute to the country’s economic recovery post-COVID-19.
Lack of access to markets is one of the critical deterrents MSMEs face on the road to going global. Challenges such as limited adoption of standards, logistics-related challenges, trade, and non-trade barriers, and limited information on potential markets based on market intelligence hinder global competitiveness. The lack of actionable market intelligence delivered on time can impact global competitiveness. Very few players in the Indian MSME sector have that visibility. This is an area where established global marketplaces can provide the gateway.
Ecommerce giving a fillip to MSME sector
Pandemic was a period of chaos but it was also an opportunity for MSMEs to reflect on its holdbacks and initiate structural changes faster than they had intended to. Adopting technology was one such call to action, with consumers showing a clear preference for online shopping. As per data from Kantar Worldpanel, e-commerce penetration grew fivefold during COVID. The shopping behaviour has changed not just for the metros. However, even consumers in Tier 2 and 3 cities who have internet access make it ideal for MSMEs to adopt cutting-edge technology and rapidly expand their presence. Currently, the market size of India’s consumer digital economy amounts to $85–90 billion and it is expected to grow ten times in the next decade reaching $800 billion by 2030, according to Sharon Buteau’s paper, “Roadmap for digital technology to foster India’s MSME ecosystem—opportunities and challenges.”
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Along with expanding their presence, by adopting the D2C model, the businesses can stay in tune with what their end consumers need and in what quantities, hence planning well as per market demand. Traditionally, supply chain complexities and associated costs have deterred MSMEs from going the international route. It, therefore, is not surprising that MSMEs using ecommerce platforms are about five times more likely to export their product than those in the traditional economy, according to UNDP’s report, “National Report on e-commerce development in India”.
The widespread adoption of e-commerce has made the D2C route simple for MSMEs, as the sector has already set the foundation. Accessing global markets, technology, and capital will also boost innovation and quality from the sector and enable growth. From Republic Day to Diwali, the sale events open plethora of opportunities for Indian MSMEs and going global is the answer to millions of these MSMEs.
Anil Bhardwaj is the Secretary General of Federation of Indian Micro Small & Medium Enterprises (FISME). Views expressed are the author’s own.
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