What began as a necessity during the lockdown in India two years ago has become a growing trend — eCommerce shopping. And this trend is here to stay, according to numerous reports and surveys.
How has eCommerce changed the face of MSMEs in India and what does the future hold? Read on to find out how MSMEs are using technology to help build a sustainable business.
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Online sales comprise 27% of total MSME sales
Due to the challenges faced by traditional methods, MSMEs are switching to digital means to sell online. And the overall sales have gone up significantly over the past few years.
Although MSMEs adopted digitalisation to survive the pandemic, they are now thriving — increased customer base, improved operational efficiency, improved risk management, innovated, and reduced manpower requirements.
From 2020-21, online sales accounts for 27 per cent of total sales by the MSMEs surveyed by ICRIER, a government-based research council. This number has increased from 19 per cent in 2019-20 and 12 per cent in 2018-19.
Here are the top benefits of eCommerce for MSMEs:
- 70 per cent reported an increase in sales volume and turnover
- 80 per cent reported an increase in profit
- A majority of the surveyed businesses report ease of transaction, convenience,
and higher profit margins after integrating with eCommerce
Around 30 per cent of businesses joined eCommerce after the onset of COVID-19.
The surge in digital commerce can be attributed to the changing shopping habits of online consumers after the pandemic. Also, over the past years, the government has been proactively pursuing policies to help MSMEs go digital.
The survey also reveals that most MSMEs are using a hybrid model (using both offline and online channels) to grow their business. Here are some other implications of the increased growth of eCommerce sales:
- eCommerce benefits both new entrants as well as existing enterprises
- There was an 80 to 90 per cent increase in seller registration in eCommerce
- Majority of online sellers are from small towns and rural areas
MSMEs integrated with eCommerce have led to more employment
Currently, MSMEs in India make up the second largest source of employment. And the number of opportunities have increased after the penetration of eCommerce. Ecommerce has improved overall employment levels in MSMEs in India.
However, the employment levels for women in eCommerce remain low. According to the ICIER report, there’s a huge disparity in gender when it comes to employment in MSMEs for the year 2020-21. But this number has increased by 16 per cent as compared to the previous years.
Online merchants with own websites claims many benefits
In the survey, only 12 per cent responded that they have their own website to sell online. And the rest preferred to sell on marketplaces such as Amazon and Flipkart. Many sellers did not want to create their own online platform to sell since it requires a larger investment — both in cases of time and money.
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The online sellers that have their own websites reported having many benefits as compared to selling on marketplaces. These include:
- Easier to get repeat customers
- Lower competition
- More sales and increased turnover
- Lesser regulations
The survey reveals that a majority of MSMEs are reluctant to switch marketplaces for their own platforms. But the sellers also prove that the advantages of selling on online stores surpasses the other demerits.
To conclude
Ecommerce has served as an opportunity rather than a challenge for the majority of MSMEs in India. And this trend is set to grow exponentially in the coming years. The question is, how can you keep up with the trend and what will you need to achieve growth?
To beat the competition and retain your customers, having your own online store is the way to go. Stand out from the crowd of emerging eCommerce businesses by building a sustainable brand for yourself.
Take the first step and sign up for your free eCommerce store on Instamojo. Unlock the potentials in eCommerce and grow a sustainable business online.
