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Accelerating digital adoption among MSMEs through the power of ecommerce

With more Tier II cities emerging as strong markets for brands, ecommerce can help MSMEs reach more customers and unlock increased growth potential.

Tuesday June 27, 2023 , 4 min Read

India, the world’s fifth largest economy, is aiming for the third slot in the coming years. Economic growth is meaningful when it touches both big and small, reaching across all socio-economic strata and boosting our smaller entities, namely the micro, small, and medium enterprises.

According to government data, MSMEs contribute to 30% of the country’s GDP and half of exports. With more Tier cities emerging as strong markets for brands, there’s a strong case for the adoption of ecommerce to help MSMEs achieve greater success. It works as the perfect instrument to help MSMEs embrace the power of digital and achieve optimum outcomes of their investments and resources.

India had the world’s third largest shopper base in 2021, with 180-190 million online shoppers, according to Flipkart-Bain’s ‘How India Shops Online 2022’ report. This number is expected to almost double by FY26 with the addition of a large number of sellers and customers from semi-urban and rural India.

Online platforms have witnessed increasingly stronger demand and consumption over the past year, with smaller cities and towns driving growth. The Bain-Flipkart report also indicates that most of the new shoppers belong to Tier 3 or beyond and include Gen Z, a critical cohort.

Rise in number of sellers fuels growth of indigenous brands

A large number of sellers, craftsmen, and MSMEs from across the length and breadth of Bharat are coming aboard ecommerce platforms to meet the rising demand for a wide range of indigenously manufactured products. Ecommerce players are supporting this rapid expansion of their online seller base with seller-friendly policies, easy onboarding processes, efficient logistics infrastructure, and the latest digital technologies and tools. These developments enable lakhs of MSMEs and sellers to take their offerings beyond their respective regions to a pan-India market and become a part of the mainstream formal economy.

Ecommerce facilitates the transition from offline to online

Cognisant of the fact that the transition from offline to digital isn’t easy for everyone, ecommerce players provide support with onboarding and cataloging, as well as strategic guidance to scale their business online. Some offer skill development programmes and training on important business-related aspects throughout the course of their association. When it comes to growing their business, many Indian MSMEs are held back by insufficient liquidity and a lack of financing.

Fostering diversity and inclusivity to help women entrepreneurs

The importance of the participation of women in economic activities – especially in owned businesses – can never be overemphasized. It is heartening to see a large number of women sellers turning to ecommerce in their entrepreneurial quest. The success of women-led homegrown brands such as Rudraaksha (women’s western wear), Urbano Fashion (men’s and kidswear), Ritupal Collections (handbags), and InternationalDesi (wristwatches) testifies to how ecommerce can help women lead a life of financial independence through a successful entrepreneurial journey and strengthen the “Make in India” thrust in India’s economic growth story.

Building the ecosystem brick by brick by strengthening allied functions

On an important note, including sellers from across market tiers and social strata into the ecommerce fold creates new revenue and employment opportunities including those in allied functions. It spurs entrepreneurship, skill development, and community development – which, in turn, contributes to nation-building and equitable economic development. Sellers can also use the ‘go-to market’ intelligence and access to tech ecommerce provides to ‘Make in India’, a priority area for the Prime Minister. Ecommerce also lends the right impetus to export of traditional products, particularly catering to the diaspora as well as the foreign audience in markets like the US, Australia, the UK, Germany, and other European nations [1]. These products usually lack the supply chain to reach their market, a hurdle easily overcome by ecommerce.

MSMEs and sellers from tier-2 and tier-3 cities, empowered by ecommerce, are thus coming together very harmoniously to boost India’s economy in a very tangible and effective manner. Indeed, in the years ahead, the rise of these no-longer-small markets will influence the trajectory of India’s economic growth to a considerable extent. Ecommerce and MSMEs will complement and strengthen each other and accelerate India’s progress towards its goal of becoming a $5-trillion economy.

Rakesh Krishnan - Vice President and Head - Marketplace, Flipkart

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory)