Amazon, Flipkart, Myntra are helping small businesses go online to thrive in the profit-making festive season
India’s big festival season is here, and it's clear that coronavirus has changed the way we celebrate. Everything has gone online: celebrations, darshan, aarti, family catchups, and – of course – shopping.
The festive season, which includes Navratri, Durga Puja, Karwa Chauth, Dhanteras, and Diwali, is usually an added reason to rejoice for many local small and medium businesses. These enterprises prepare months in advance to meet the surge in the demand and notch up profits.
But, 2020 is not your regular year.
The memory of the lockdown is keeping shoppers home and families are budgeting to get through the tough time. The worst hit amidst this turmoil are small businesses and MSMEs, which continue to operate in the traditional format.
Coronavirus could be the catalyst that brings about a paradigm shift in the way small and medium businesses operate by bringing them online. And even as they ready to climb on to the digital bandwagon, they are being backed by ecommerce companies that are handholding them from offline to online.
The need of the hour
A KPMG report, COVID-19: A time for transformation and thinking for the future, states that the COVID-19 situation, while presenting challenges, is “a time for SMEs to fundamentally change business models for a sustainable future”.
The report adds that COVID-19 has demonstrated that adapting to digitisation isn’t a luxury, but a necessity. Technology is not only critical to operating during these times, but requires significant focus and attention post-COVID-19 if businesses are to remain competitive and resilient in the ‘new normal’.
And many realised that going digital was the only way to survive.
During an interaction with SMBStory in August 2020, Farah Malik Bhanji, CEO of Metro Brands, said it had ignored the brand’s digital presence for years, but COVID-19 proved to be “an eye-opening experience”.
“All things that were not possible for us are happening now. Buying groceries online has given customers the confidence to buy anything and everything online. In the coming time, we plan to hone our presence online,” she said.
But shifting and adapting to new business strategies comes with challenges. Amid the festive season, when entrepreneurs expect larger sales, pivoting from the conventional method of selling to creating a digital presence is not easy.
This is where the thriving ecommerce sector plays an important role. Companies such as Amazon, Flipkart, Nykaa, Myntra, ShopClues, Snapdeal, TradeIndia, and others are giving the local business community a platform to onboard and sell products, hand-holding them through the processes.
As the stage is set for the battle between Amazon’s Great Indian Festival Sale and Flipkart’s Big Billion Days, things could turn around for MSMEs that are going online.
Last year, the festive season sales split the e-tailer market share between Amazon and Flipkart, which grabbed a combined market share of 90 percent. The two ecommerce giants sold a record Rs 19,000 crore of goods in 2019 - a growth of 30 percent over the previous year, a RedSeer report said.
Whatever the figures may be this year, it’s clear that small businesses stand to benefit by creating an online presence.
How are ecommerce companies helping?
The KPMG report said the coronavirus crisis had made disruption very real, and put the spotlight on the gaps in operations and technical investments.
“It is now important for businesses to start thinking more strategically about technology and digital capabilities, and investing in uplifting their operating models as an imperative rather than a ‘nice to have’,” the report said.
The backing of ecommerce companies and other startups has eased the digital transition for MSMEs that were facing losses. Many small businesses have signed up on B2B and B2C ecommerce platforms to survive and thrive.
In July 2020, B2B marketplace Flipkart Wholesale announced the expansion of its operations into 12 cities, including Ghaziabad, Faridabad, Mysore, Chandigarh Tricity, Meerut, Agra, Jaipur, and Greater Mumbai.
The digital marketplace for the kirana retail ecosystem aims to onboard and digitally transform kiranas and MSMEs to help them grow faster, retain their customers, and improve profitability.
Adarsh Menon, Senior Vice President and Head - Flipkart Wholesale, said, “As we enter the festive season, we are excited to be scaling up our offerings across 12 cities, aiming to create more opportunities for MSMEs and kiranas. From trendy Jaipuri Kurtis to evergreen Mysore silk saris, we aim to help small businesses embrace the digital transformation and emerge as more robust businesses.”
E-tail giant Amazon also stepped in to help Indian MSMEs join the digital revolution.
Earlier this year, Amazon announced plans to digitally enable MSMEs across the country as part of a $1 billion investment pledge. The company launched local shops on Amazon.in, offering shopkeepers and retailers with physical stores the ability to register and serve more customers. More than 11,000 sellers have enrolled in the programme.
During an investor call in July 2020, Amazon Director Investor Relations David Fildes said they were “really focused on digitising Indian sellers”. “A lot of micro, small and medium-sized businesses [are] there,” David said.
Leading fashion ecommerce brand Myntra has onboarded around 80 new brands - in the ethnic wear category for men and women - amidst the pandemic.
Ayyappan Rajagopal, Head of Business, Myntra, said: “We have added ~500 brands this year. We are working with about 10,000 artisans from across the nation, through our multicultural lifestyle brand Taavi, to help the community tide over this difficult period. Our upcoming ‘Big Fashion Festival’ is set to give them a fillip. We have also added an additional 6,000 new kirana partners to strengthen last-mile delivery.”
Curated online store Jaypore extends mentorship to grassroot artisan brands, by offering technological assistance and training sellers to “shoot their own products in an aesthetically valuable manner”.
Sangeeta Pendurkar, CEO, Pantaloons and Jaypore, Aditya Birla Fashion and Retail, says the festive season is an “exciting time for us”. “We've onboarded almost 300-plus new sellers across apparel, jewellery, home, accessories, and beyond for this year,” she says.
The ecommerce biggies aren’t the only ones helping out.
TradeIndia, a B2B ecommerce portal for small businesses across India, has been registering around 4,000 small and medium businesses every day during this festive season.
Apart from easy onboarding, the company realised in the last six months that the biggest challenge for MSMEs was payment collection. To overcome this, TradeIndia came up with a new product TradeKhata, a cloud-based invoice and payment solution.
Sandeep Chhetri, COO of TradeIndia, said TradeKhata helped businesses collect payments faster and maintain personal ledgers online. “MSMEs can create invoices online and share through WhatsApp, SMS, and email during this time when there will be a surge in demand and it will be difficult to manage financials manually,” he said.
What comes next?
The way ahead is clear: digitisation.
The pandemic has accelerated the shift towards a more digital world and triggered changes in online shopping behaviours that are likely to have lasting effects, a survey conducted by UNCTAD and Netcomm Suisse eCommerce Association in nine emerging and developed economies earlier this month showed.
“The COVID-19 pandemic has accelerated the shift towards a more digital world. The changes we make now will have lasting effects as the world economy begins to recover,” UNCTAD Secretary-General Mukhisa Kituyi had said.
The acceleration of online shopping globally underscores the urgency of ensuring that small and medium businesses seize the opportunities offered by digitalisation as the world moves from pandemic response to recovery.
According to a KPMG-Snapdeal report, Indian small and medium businesses are looking at ecommerce as an innovative tool to build fresh business models, one that will help them cater to customers pan-India.
Ridhima Arora, Founder of Namhya Foods, said she listed her brand on ecommerce sites in April 2020 in the midst of the pandemic. “Online sales now comprise 30 percent of total sales. Setting up a virtual shop during the pandemic has helped us get loyal customers, with repeat customers holding 67 percent share.”
Indian skin and beauty care brand Mystique Earth is also expecting a rise of around 30-35 percent in online sales this festive season.
Popcorn & Company Founder and CEO Vikas Suri, speaking about his brand’s transition to online, said the pandemic had made shopping online the new normal.
“During these unprecedented times, people find placing online orders and sending gifts to their loved ones more secure rather than going to malls and shops. Companies like us will witness a jump in sales during this festive season. Popcorn & Company is likely to see a rise of 30-35 percent in sales as compared to the previous year,” he adds.
The UNCTAD survey suggests that changes in online activities are likely to outlast the pandemic.
In this scenario, it’s clear that small businesses and MSMEs that put ecommerce at the heart of their business strategies are better prepared for the post-COVID era. Only they will be able to tap the huge opportunity that exists for industries and sectors still more used to physical shopping.
Edited by Teja Lele Desai