The Micro, Small, and Medium Enterprises (MSMEs) sector contributes significantly to India's GDP and employs millions of people nationwide. The Covid pandemic caused MSMEs to see the value of digitizing and to step up their efforts to do so. Despite this, MSMEs are not entirely content because it is still unclear why digitalization has become so important to the future.
E-commerce buying has grown from a necessity during the shutdown in India two years ago to popular practice. And this trend is here to stay!
Challenges Faced By The Industry
MSMEs nowadays face a variety of difficulties that keep the industry from reaching its full potential. These difficulties include a lack of trained labor, outdated technology, poor market access, difficulty obtaining raw materials, excessive financing costs, supply chain bottlenecks, a low level of consumer spending desire, and many others. Beyond this, the start of the pandemic has also harmed the industry.
While the government has been striving to revive the industry, MSMEs must embrace digital solutions to overcome some of these obstacles and hasten the pandemic's recovery.
To improve operational efficiency and hasten their growth, small firms must turn to digital solutions like e-commerce and e-procurement. MSMEs may benefit from e-commerce by embracing it. These benefits include greater revenues and margins, expanded market reach, access to new markets, reduced marketing expenses, easier client acquisition, and improved customer experiences.
How Can E-commerce Help The Industry
MSMEs are converting to digital ways to sell online as a result of the difficulties posed by traditional techniques. And during the previous five years, overall sales have increased dramatically. E-commerce is a route that allows the smallest MSMEs to increase their client base to a global level without expanding geographically, and it may help MSMEs achieve economic stability, growth, and security.
Online sales by the MSMEs evaluated by ICRIER, a government-based research body, will represent 27 percent of all sales in 2020–21. This percentage has climbed from 19 percent in 2019–20 and 12 percent in 2018–19. The increase in digital commerce can be ascribed to internet shoppers' altered purchasing patterns during the pandemic. Additionally, the government has actively pursued legislation in recent years to assist MSMEs in going digital.
India's e-commerce industry has seen significant growth as a result of the country's widespread use of cell phones, the internet, and online experiences. Customers' realization that online shopping is the safest way to acquire anything delivered right to their door has fueled the sector's expansion even further. To support this expansion, it's also necessary to comprehend the specific e-procurement needs of MSMEs and provide easy access to the market. Creating a commercial store with thousands of items from top categories including business laptops, networking equipment, industrial adhesives, tools and equipment, and safety and security across top brands is one such efficient approach.
There is also a chance to start programs like ‘Bill to Ship to’ to address MSMEs' other industrial demands. Company PAN. It is now easier to do business thanks to features like multi-user accounts, approvals, expenditure analytics, secure and dependable delivery, etc. that let customers claim GST credit on their billing address. In addition to removing geographical obstacles and offering a sizable client base, large-scale e-commerce firms are empowering small businesses by giving them the chance to interact directly with producers and suppliers, which lowers the cost of procurement. The small company owners are greatly assisted in scaling up their operations at a far lower level of investment because of the greater access to suppliers, which also helps to raise their cost structure.
MSMEs currently account for the second-largest source of employment in India. Additionally, there are more options now that e-commerce has become more widespread. E-commerce has increased MSMEs' total employment rates in India.
Online B2B Marketplace
In recent years, MSMEs' e-procurement demands have increased. In order to serve as a one-stop shop for small company owners, online B2B wholesale marketplaces must offer GST-enabled, technology-led solutions for all types of enterprises in India's most distant pin codes at wholesale costs. These platforms must not only offer direct access to the supplier but also access to value-added services that will help businesses cut down on paperwork, increase compliance with procurement requirements, and decrease mistakes.
Players are now more needed than ever to deliver greater insights and forecast whether or not various suppliers' items will meet a buyer's wants. Organizations need to take advantage of the chance to assist B2B companies in meeting the needs of thousands of business clients in order to increase their income.
What Does The Future Hold?
For most MSMEs in India, e-commerce has been an opportunity rather than a hindrance. And in the upcoming years, this tendency is predicted to accelerate. How can you follow the trend, and what will you need to expand, are the main questions.
The best method to stand out from the competition and keep consumers is to have an online store. By creating a strong brand for themselves, key companies need to differentiate themselves from the growing number of emergent e-commerce enterprises.
In India, the MSME sector has the potential to develop more quickly because of e-commerce's ability to cut costs and provide businesses unprecedented access to a global market. MSMEs may harness the enormous power of the internet and realize its full potential thanks to government efforts like Skill India, Digital India, and Startup India, as well as private initiatives like MSME Accelerate.