What Role Does E-commerce Play in MSME Growth?
What Role Does E-commerce Play in MSME Growth?

SMEs make up 29 percent of India's GDP through domestic and international trade, and they play a crucial role in the country's economic development. Moreover, the Indian government wants MSME exports and GDP contributions to reach $5 trillion in five years. 

With the advent of e-commerce, people have changed the way they do business, and this technological advancement has led to an increase in internet users. Electronic commerce is the trade of goods and services over the internet. In fields like academia, medicine, finance, and government, it's taking over traditional trading.

Mobile phone penetration and internet use have revolutionized India's e-commerce industry. Businesses now use websites to gain competitive advantages and measure e-commerce success. India's e-commerce has been boosted by government initiatives like Digital India, Skill India, Innovation Fund, etc. 5G fiber networks will boost e-commerce even more.

You can find out more about how E-commerce helps MSMEs grow by reading on.

MSME Overview

In business terms, MSME stands for Micro, Small, and Medium Enterprises. MSMED (Micro, Small, and Medium Enterprises Development Act) was enacted by the government of India in 2006. Basically, this act defines MSMEs as businesses that process, manufacture, and preserve stuff. 

Every sector in the Indian economy benefits from MSMEs, no matter the industry. However, the Internet has enabled MSMEs to grow by reaching a new audience online. The Internet used to be a weakness for Indian MSMEs. As the defect turned into a strength, e-commerce has ultimately been a game changer for Indian SMEs.

E-commerce - What is it?

The term e-commerce refers to electronic commerce. It facilitates online product trading through its business model. People worldwide can connect via e-commerce as long as they have an internet connection. 

It's estimated that 4 billion people will have access to the Internet by 2022. Amazon and Alibaba are good examples of e-commerce. Business-to-consumer (B2C) is the most common form of E-commerce, which connects businesses with customers. There's also business-to-business (B2B), which connects businesses.

In light of your knowledge of MSMEs and E-commerce, we can now focus on E-commerce's role in MSME growth.

What Are The Roles Of E-Commerce in MSME Growth?

The growth of MSMEs is positively impacted by e-commerce. The following are some of its roles:

MSMEs Get Financial Support - It's challenging for small, medium, and micro businesses to run smoothly because they're impecunious. These businesses can't access raw materials because they don't have working capital. 

Occasionally, business-to-business e-commerce offers financial assistance to MSMEs. That way, you don't have to worry about interruptions. Supporting MSMEs increases their chances of growth.

Providing Suppliers with Access to MSMEs - MSMEs sometimes have trouble getting raw materials because suppliers aren't readily available. Many Micro, Small, and Medium Businesses are affected by this. 

MSMEs can connect with their raw material suppliers, it reduces raw material costs and keeps things moving. Once suppliers connect with them, they'll be able to provide services like post-pay. These services will ensure that the business continues running even if it's low on cash.

MSME Market Expansion - In the past, MSMEs have found it difficult to reach potential customers outside their local marketplaces. The reason is that reaching out to international clients is expensive. Using e-commerce platforms, however, makes it easier to reach clients anywhere in the world.

MSMEs can showcase their products online through e-commerce platforms, and the website lets people buy the goods. Therefore, e-commerce can help expand MSMEs' markets and increase their growth potential. Certain e-commerce sites get lots of traffic every day, which means MSMEs with good products are more likely to sell.

Revenue Growth - MSMEs can boost their revenue with e-commerce. One way to increase sales is through online purchases. Investors may want to invest in this company because they wish to see the company thrive. 

Through the use of e-commerce platforms, many MSMEs are generating revenue through online purchases. By increasing revenue, MSMEs will be able to purchase more assets and expand their operations.

Marketing Cost Savings - MSMEs used to have to pay a lot to market their products. They had a hard time getting their products recognized. Marketing costs go down when you use e-commerce platforms. Promoting products in the media doesn't need to take up a lot of time for MSMEs. 

E-commerce platforms expose consumers to products and recommend them. MSMEs only have to pay a small fee. You can put the rest of the money in a savings account for marketing. Later, you can use it to improve their products.

Enhancing Customer Experience - Nowadays, businesses are differentiated by their customer service. Customers are more likely to refer to you if they like your product. MSMEs should spend more time improving their products to bring out the best in their customers. 

In the meantime, e-commerce platforms will recommend stuff based on customer feedback. The benefit of e-commerce for MSMEs is getting feedback from their customers. They'll then improve their products based on feedback. MSMEs with the best user experience are the most promising. These are the roles e-commerce plays in MSME growth.

E-commerce and MSMEs: What Does the Government Have to Say?

Several measures have been taken by the Indian authorities to accelerate the growth of e-commerce in the country, including Skills India and Make-Up India. The government is also encouraging MSMEs to make use of e-commerce platforms to promote their products.

Conclusion

In conclusion, e-commerce plays an important role in MSMEs' growth. Small businesses can sell their products anywhere in the world using e-commerce, and they don't have to expand or move, so they can show off their products without spending a fortune on expansion. 

They can also display their products anywhere in the world without having to move or expand. The platforms have helped small businesses by removing barriers, increasing sales, and providing a substantial consumer base. 

E-commerce platforms drive MSMEs' growth and development at low costs, low investments, and high levels of innovation. This is a collaborative effort between the government, the commercial sector, industry associations, and training facilities.

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