What will drive Kiranas and MSMEs growth in India?
One way to help the growth of the MSME sector in India is to leverage new-age technology, which has the potential to unlock numerous business opportunities for the MSME/wholesalers’ community.
India is at the cusp of emerging as a technology hub globally. However, micro, small, and medium enterprises (MSMEs) in India have a long way to go when compared to their counterparts across the globe. One way to help the growth of the MSME sector in India is to leverage new-age technology. Contributing to nearly one-third of a country's GDP, technology has tremendous potential to unlock numerous business opportunities for the MSME/Wholesalers community, including reaching a wider consumer base, improving business acumen, enabling easy credit access, addressing the supply chain leakage and so on.
With digitisation becoming the catch word, to propel the growth of Indian MSMEs/Wholesalers and help unlock several business opportunities, there seems no other way than to rely on technology.
Helping MSMEs/Kiranas/Retailers expand their reach
According to an IMF report, the contribution of Indian MSMEs to the country's GDP is expected to reach around $4.1 trillion by 2025-26. With the MSME ministry setting a target of enhancing the sector's contribution to the GDP of up to 50% by 2025, it is herein where digital technology can help aid the growth for the sector.
Optimum utilisation of technology will result in ensuring customer retention, stock availability, enhanced marketing efforts, and supply chain management, leading the way for an accelerated growth trajectory of MSMEs. Additionally, with the adoption of reformed and new-age digital payments solutions, beyond traditional cheques and drafts, MSMEs can now accept payments from anywhere at any time, providing their consumers with an option to pay at their convenience.
Improving operational efficiency
Multiple challenges such as lack of skilled workforce, technological backwardness, inadequate access to the market, high cost of credit and supply chain bottlenecks have been a concern in the unorganised MSME sector. Unfortunately, the efficiency of the business–both operational and financial, has been adversely impacted. Hence, to increase operational efficiency and accelerate the growth of small businesses, the need of the hour is to integrate digital solutions.
By leveraging technology, they can migrate their business online, providing an omnichannel experience to the consumers and streamline the entire supply chain. This small change can aid companies gain advantage across their operations–increased revenue and margins, improved market reach, access to new markets, savings in marketing spending, and customer acquisition – thereby enhancing the customer experience.
We must understand that small businesses don't necessarily have the resources to invest significantly in technology. However, keeping in mind that there is no escaping from IoT resulting in increased smartphone penetration, leveraging technology seems to be a wise move. However, the established ecommerce and marketplace players must acknowledge that many MSMEs' transition from offline to online has been steep. Undeniably, the platform needs to keep creating feasible technology models that ensure that MSMEs can maximize the benefits of a platform, as larger enterprises and brands do.
Enabling easy & simple access to credit
Nearly 80% of MSMEs in India lack access to formal credit. There is enormous opportunity to leverage technology for enabling access to finance. Leveraging new-age lending models and big data, the financial technology companies are now enabling enterprises to go beyond traditional underwriting and aid more than two-thirds of credit-deprived Indian MSMEs.
From digital or phygital distribution engines to creating alternate data sets for underwriting, from lending/co-lending with traditional lenders to enabling closed-loop credit on marketplaces, fintechs are using tech to remove the inefficiencies in the market, making access to credit faster, economical, and contextual for the MSMEs.
Another interesting phenomenon revolutionising MSME financing is embedded finance. Backed by the intersection of technology and finance, it is now enabling new-age companies and marketplaces to collaborate and offer Buy Now Pay Later (BNPL) solutions for need-based closed-loop credit to the MSMEs.
Building sustainable business model to scale
Over the years, B2B marketplaces have become synonymous with affordability, convenience, value and choice. Despite the benefits, no one-sided approach can work for a B2B marketplace to thrive and grow. One has to look at unit economics, leverage existing assets, and innovation to bring a truly omni-channel experience for our customers. For a wholesale business to succeed, companies like Flipkart Wholesale leverage talent, strong technology backbone, deep merchandising expertise and logistics infrastructure to accelerate growth and prosperity for micro and small retailers across India. Sustainable business models with the help of technology will benefit kiranas and MSMEs uniquely. This will drive greater value and choice for end-consumers and businesses alike.
Koteshwar LN is associated with Flipkart for close to three years now and he is heading the Flipkart Wholesale Business.
Edited by Megha Reddy