Two decades ago, digital commerce made its debut, forever changing the way MSMEs operate. The results are now clearly visible. According to a recent report by RedSeer, India is home to 6.4 crore (64 million) MSMEs, out of which 12%—around 7.7 million—are digitally empowered. This number is steadily growing. Let’s explore the insights shared by Rajneesh Kumar, SVP and Corporate Affairs Officer of Flipkart Group, on this topic.
Whether an economy is large or small, it is often a group of companies that make headlines. However, it is the micro, small, and medium enterprises (MSMEs) that quietly carry the flag of business forward in any country. Traditionally, MSMEs faced limited access to markets, technology, and funds. Technology was either unsuitable for their operations or inaccessible, and funding was often prohibitively expensive. As a result, these enterprises remained small in scale and rarely expanded beyond local boundaries.
Digital Commerce Changes the Game
Two decades ago, digital commerce emerged, transforming MSME operations permanently. The evidence is now clear—according to RedSeer’s latest report, 6.4 crore MSMEs are operational in India, and 12% of them, around 77 lakh (7.7 million), are digitally empowered. This number continues to grow.
Improved Market Access
E-commerce platforms have played a key role in democratizing access to technology. While the cost of technology is falling, it continues to evolve rapidly. Acquiring new technology isn’t always easy. E-commerce bridges this gap, providing MSMEs access to technology that they can customize according to their needs, eliminating the necessity for continuous investment in new technologies.
E-commerce companies also take on the responsibility of managing costly logistics systems, allowing MSMEs to focus on their core operations and scale their businesses. With the help of digital tools provided by e-commerce platforms, MSMEs can expand their operations and manage daily tasks such as inventory management, accounting, and billing with greater efficiency.
Access to larger markets has enabled MSMEs to reach more customers, boosting revenue and profitability.
Harnessing Technology and Data
The advent of automation has significantly enhanced operational efficiency. Many e-commerce platforms provide comprehensive onboarding processes and user-friendly interfaces, enabling even first-time users to succeed in the digital business world.
Integration with digital marketplaces grants MSMEs access to critical consumer behavior insights, helping them understand market trends and demand patterns. These data-driven insights are instrumental in making informed decisions, allowing MSMEs to adapt their products and services to meet consumer needs effectively. This reduces wastage and ensures better implementation of technology.
Minimizing Costs and Expanding Reach
E-commerce platforms also provide MSMEs with access to infrastructure and resources that help minimize costs while focusing on growth. From warehousing solutions to marketing support and delivery services, these platforms offer comprehensive solutions that negate the need for expensive infrastructure maintenance. This cost reduction enables MSMEs to focus on adopting market trends and improving operational efficiency.
Another significant advantage is the improved brand visibility offered by digital marketplaces. E-commerce platforms help businesses strategically position their brands, run targeted marketing campaigns, and receive positive customer feedback. Consumers can order their products and services with just a click, regardless of location. Without e-commerce, achieving this level of operation would take decades for these enterprises.
Driving Financial Inclusion
E-commerce companies have partnered with banks, non-banking financial companies, and others to facilitate easier access to credit for MSMEs. With minimal documentation, businesses can now secure low-cost funding and accelerate their growth. Previously, lack of funding was a significant challenge, as banks were often hesitant to provide loans to MSMEs. With e-commerce support, MSMEs now have access to formal banking systems, enabling quicker and cheaper financing.
Boosting Social Development
While e-commerce has yet to fully penetrate remote areas, its impact is already visible. The jobs created in these regions through e-commerce have had a transformative effect, reflecting the determination and trust of local communities in the digital ecosystem.
E-commerce platforms have revived traditional crafts and industries by creating opportunities for them in new markets. This social transformation helps preserve cultural heritage and promotes inclusive development.
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