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E-commerce For SMEs

Industry reports indicate that in the first lockdown in 2020, the micro, small and medium enterprises (MSME) sector shrunk significantly. The second lockdown resulted in a further 11 per cent losses in businesses

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The past two years and the impact of Covid-19 have resulted in significant digitisation in India and data has consistently shown that e-commerce for small and medium enterprises (SMEs) was a compensating feature during this phase. The government should consider this growth and its positive impact on eCommerce, and introduce initiatives to assist small direct-to-consumer business (DTC) brands and entrepreneurs in embracing digitisation and shifting to online channels of selling. 

Some steps the government can take to foster small businesses and online entrepreneurs are:  

Policies to ease business functions online and offline  

In recent news, the government is said to develop a framework to tackle fake reviews on e-commerce websites. Though this will help curb incorrect information that can hamper business, there is still room for simplifying online and offline functions for businesses.  

Industry reports indicate that in the first lockdown in 2020, the micro, small and medium enterprises (MSME) sector shrunk significantly. The second lockdown resulted in a further 11 per cent loss in businesses. Therefore, government intervention to prevent such losses going forward will help the sustenance and growth of MSMEs in the country. 

In the event of any other lockdown, small DTC manufacturers should be able to switch to online channels of revenue when their offline income has been impacted. A complete framework to facilitate ecommerce will help small businesses become independent and be on top of their commercial operations.  

Uniform online and offline retail regulations should be in place for small enterprises. This would help online dealers gain government support, and open avenues that were accessible earlier only to offline retailers. 

Global opportunities for SMEs online should be increased 

Small DTC brands have limited possibilities to expand sales easily in markets outside India. For instance, a retailer has got to go to associations, communicate to trade bodies and send sample products to the overseas governing government before being able to promote or sell products. 

E-commerce has simplified many of these steps. For example, international payments and shipping are now possible on e-commerce websites. A sturdy online presence suggests that even ordinary online transactions can help these small DTC brands build their recognition when approaching global authorities for export. 

The government should help with a foreign trade cover which will inspire SMEs to take the eCommerce route. Reducing compliances and easing functions will assist small brands in entering new markets. It will also aid Indian products in increasing global exposure.

Digital skilling for SMEs 

There is a lot of potential in tier 2 and tier 3 cities for the growth of e-commerce. However, to form a seamless shift from offline to online shops, small DTC store owners need to know the digital fundamentals. eCommerce foundations, managing the inventory as well as customers, digital payments, social media channels, choosing shipping partners, and providing supply chain management are some of the essential learnings required. 

The government needs to boost training in areas beyond tier I markets. In defining the success and competitiveness of India’s MSMEs, it's increasingly evident that technology will play a crucial role both domestically and globally. Technologies like Fintech APIs, full-stack data platforms, customized machine learning solutions and advertising optimisation will drive business transformation in 2022. Hence, the digitisation of millions of MSMEs should be the highest priority. 

Launching certain skilling platforms like the DESH Stack e-portal will help small DTC owners train and improve their digital skills. 

Developing infrastructure and logistics associated with e-commerce 

Developed infrastructure and transport connectivity has allowed eCommerce to flourish in metros. The authorities have to now make similar networks in smaller cities and towns a priority. Apart from railways, roads and delivery ports, the Govt. must also prioritize constructing warehouses in all these areas. Ecommerce for SMEs can also make contributions to better employment in tier 2 cities by skilling individuals for last-mile delivery. 

As the infrastructure strengthens, people could also be in a position to shop and sell online even when located in a faraway corner of the country, aided by efficient shipping and courier partners.

Fresh additions to a mega infrastructural project declared in this year’s union budget will be a boost for MSMEs. The PM Gati Shakti Masterplan will also help ease the movement of products and passengers, especially in rural areas and will help improve inter-modal connectivity.

Such provisions were needed to make sure more SMEs could pave their way to start selling online. Improved delivery and infrastructure together with the relevant upskilling/ training will provide a nurturing starting point for small MSME brands. 

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Akash Gehani

COO and Co-founder of INSTAMOJO.

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