By Saahil Goel
MSME Day 2024: India
The growing penetration of e-commerce is transforming the shopping experience in remote villages and tier 2 and tier 3 markets across India. Imagine a mother living in a remote village being able to access a wide range of products, from educational toys for her children to the latest saree trends, with just a tap on her smartphone. Until now, residents of these areas have struggled to access a wide range of products and were often limited to local stores with limited inventory.
Today, e-commerce platforms are filling this gap, offering a wide range of products from local and international brands. With the convenience of online shopping, efficient delivery services and reliable payment options, consumers can now enjoy the same shopping opportunities as they would in urban centres. This widespread accessibility not only improves the quality of life, but also stimulates local economies by providing new business opportunities and increasing market competition.
Remember the charming local shopkeeper who knew your tastes and would tell you stories behind their products? Social commerce platforms like Facebook and Instagram have breathed new life into this tradition. Small businesses can now set up virtual storefronts that weave stories around their handcrafted products or innovative services. They can connect directly with their customers and foster a sense of community and trust. The rise of social commerce is not just about transactions; it’s also about enabling entrepreneurs to become storytellers and share the passion and heritage behind their brand. This shift in consumer behavior, further accelerated by the pandemic, has sparked a digital shopping revolution, and small businesses are the driving force behind it.
From Offline to Online: A Transformation Journey
A decade ago, it seemed like a distant dream for SMEs to thrive online. Many SMEs faced significant barriers, from lack of digital literacy and inadequate infrastructure to limited access to capital. The e-commerce space was dominated by large corporations, leaving little room for SMEs to carve out a niche. Of all SMEs that have ever integrated into e-commerce, only 12.7% did so between 2011 and 2015, indicating that SMEs were initially reluctant to adopt e-commerce. However, this integration nearly quadrupled between 2015 and 2019 and has continued to grow steadily since then.
This positive development is due to the determination of SMEs and the wave of digital transformation backed by e-commerce enabling platforms and government initiatives like Digital India and Make in India, which have enabled SMEs to break the barriers to digital commerce. The same enterprising spirit that first drove merchants to put wheels on their carts is now driving Indian shopkeepers to go online. Distance disappears overnight as once-out-of-reach products are now easily accessible with just a click. Affordable smartphones, widespread internet connectivity and digital platforms have enabled SMEs to transition from traditional operations to dynamic online businesses. Their success is a testament to their resilience and ability to adapt.
Small and medium-sized enterprises: drivers of innovation
Indian SMEs are more than just businesses; they are symbols of creativity and ingenuity. India's over 63 million SMEs contribute nearly 30% of the GDP, account for 48% of exports, and support the livelihoods of over 120 million people. Their ability to innovate and adapt quickly is what sets them apart and makes them a key driver of India's economic growth.
Whether it's small artisans fusing traditional craftsmanship with contemporary design or tech-savvy start-ups developing cutting-edge solutions, the innovation efforts of small businesses are inspiring.
Take Aadil Kadri, for example, which transforms traditional fragrances into contemporary scents and leverages digital marketing to blend tradition with modern appeal.
Globalization: Small and medium-sized enterprises on the world stage
MSMEs are now reaching customers across the globe. Indian MSMEs are selling their products to the global market through international e-commerce platforms like Amazon.
Consider the story of the Jaipur-based jewelry brand that started as a small local business and now exports its handcrafted jewelry all over the world. The spice producers from Kerala that once catered only to the local market are now a must-have for gourmet chefs and food lovers across Europe and North America. These success stories are a testament to the transformative power of e-commerce to propel Indian small businesses onto the global stage.
Celebrating the role of SMEs in the future of e-commerce in India
The $300 billion opportunity is a clear indication that SMEs are not just participants in the digital economy but are driving it with innovation, resilience and a global outlook. A study by Indian Council for Research in International Economic Relations (ICRIER) revealed that after e-commerce integration, around 63% of SMEs made new investments, of which over 40% invested in software and employee training. This indicates that SMEs are committed to continuous improvement and adaptation.
Their story isn't just about numbers. It's about defying expectations. Traditionally, large corporations have dominated e-commerce. But small businesses are making a name for themselves in a variety of sectors often considered the stronghold of established brands. For example, a woman-founded toy brand came up with the idea of educational toys to encourage independent learning.
Another example is a comfortable homeware brand. Originating from a family-run business in Surat, the brand's founders supplied products to major foreign brands but set out to create a uniquely Indian brand. The company offers premium homeware and loungewear at prices affordable to Indian women. This disruptive change highlights the company's innovative spirit and ability to cater to changing consumer preferences.
Going forward, the focus must be on further driving this digital transformation. Investing in infrastructure that bridges the digital divide in rural areas, facilitating access to credit and financial services, and providing targeted skill development programs can unlock the full potential of SMEs. The history of e-commerce in India is being rewritten not by chance, but through the collective efforts and ingenuity of SMEs. This is a data-driven revolution that holds huge potential for economic growth, job creation, and a more inclusive digital future.
Saahil Goel is the MD & CEO at Shiprocket. The opinions expressed here are personal. Reproduction of this content without permission is prohibited.
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