Technology for MSMEs: The growing digital penetration across India is set to provide further acceleration to the adoption of online marketplaces in the country and the growth of the entire digital ecosystem. According to a report by consulting firm Bain & Company in collaboration with venture capital firm Accel, more than 15 million MSMEs are projected to buy and sell online from the current 6 million and create 7 million jobs as well by 2027 from over 3 million so far.
This would be accompanied by growing to 400 million to 450 million online shopper base from the current 200 million to 230 million as marketplaces are slated to collectively achieve over $350 billion in gross merchandise value (GMV) from $100 billion GMV currently and create $400 billion to $500 billion in enterprise value in five years from $150 billion to $200 billion as of now.
“With tailwinds from strong macro factors and continued investor support, Indian marketplaces are a mega opportunity that will have a lasting impact on the India growth story in the next five years,” the report The Rise of Digital Bazaars in India noted.
Arpan Sheth, Partner at Bain & Company and co-author of the report said, “Marketplaces have contributed to India’s growth story by offering greater access to capital and innovative financing solutions for traditionally underserved segments; enabled MSMEs to transact online, with an increased pan-India reach; and have provided employment opportunities to more than 3 million gig workers in India.”
Moreover, a large number of SMEs have also become digitally enabled in the past five years and have greatly benefitted from the advent of multiple B2B marketplaces with wider reach, increased availability of credit at favourable terms, and strong logistics and fulfilment support, the report noted.
Among all segments, upstream B2B, fintech, and shipping and logistics are attractive segments with significant growth potential in the coming five years benefiting MSME as well. For instance, a large number of underbanked MSMEs, low insurance penetration, and increasing financial literacy have driven the proliferation of fintech marketplaces. “These marketplaces provide better utilisation of capital for lenders and a vast choice of financial products for borrowers, especially new-to-credit customers, enabling greater financial inclusion.”
The addressable financial services market is worth over $400 billion with growth in demand from the user base including retail and MSMEs while the upstream B2B market is around $1 trillion with significant headroom for online penetration and massive potential to address critical buyer/seller pain points. For shipping and logistics, the market is worth over $200 billion with technology innovations to improve efficiencies and consolidate supply.