Smart distribution and quick delivery: How MSMEs are preparing for the festive season

It’s a busy shopping quarter for India and micro, small, and medium enterprises (MSMEs) are gearing up to capture the surge in consumer demand. While every festive season brings its own set of opportunities and challenges, the stakes are higher this year.

A recent Unicommerce analysis of more than 210 million festive transactions shows a clear shift in consumer behaviour. The festive shopping window has expanded from just over a week in 2022 to a month-long cycle today, spanning Navratri, Dussehra, Karwa Chauth, Dhanteras, Diwali, and Bhai Dooj. 

Tier II and beyond cities now account for over half of festive ecommerce orders, reflecting how online shopping is spreading more deeply across Bharat.

“Tier-II and Tier-III towns are driving a bigger share of festive sales, with rising demand for value-driven fashion, affordable electronics, and festive décor. Customers now expect metro-like delivery speed, making hyperlocal logistics and data-driven forecasting critical. Success will depend not just on a strong start but on staying relevant through the season—where technology is helping both big and small players compete with agility,” says Kapil Makhija, MD & CEO of Unicommerce.

The demand for fast deliveries is pushing businesses to rethink how they stock and sell products. For MSMEs, this means being prepared not just with more products, but with faster delivery, better visibility on marketplaces, and wider distribution networks.

According to Subramanian M K - Director of Growth, Velocity, an e-commerce enablement platform, companies are looking for same day or faster delivery solutions. “D2C brands are increasingly hopping onto quick commerce and ecommerce platforms to capture the festival season demand surge while looking to raise funds for growth capital and infrastructure solutions like inventory holding and management,” he tells YourStory.

“We are witnessing a 70% uptick in funding requests from brands compared to last quarter to ramp up their e-commerce presence and a 40% increase in the average ticket size.  Brands are investing heavily in warehouse capacity and automated fulfillment to handle a 3-5X surge in festival orders without compromising delivery speeds,” he adds.

Front-loading inventory 

Many businesses are front-loading inventory across regional warehouses and dark stores to ensure shorter delivery times. But stocking ahead requires significant capital. 

To fund this push, MSMEs are increasingly turning to working capital loans and inventory financing, with average ticket sizes rising compared to last year.

According to a recent report by MSME-focused digital lending NBFC FlexiLoans, loan applications are projected to rise by 35–40% during this festive period. The company expects over Rs 1,000 crore in disbursements, with nearly 10 lakh applications anticipated during the festive season.

Since inception in 2016, FlexiLoans has consistently recorded around an 80% spike in festive season loan applications. This year, the momentum is expected to be stronger, driven by robust consumption, greater digital adoption in Tier II and III cities, and easing inflationary pressures, it says.

Changing consumer behaviour

“The increase in consumer demand for quick delivery–and convenience in general–has permanently altered how MSMEs operate during the holiday season,” says Ritesh Jain, Co-founder, FlexiLoans.com. “This year, there is unprecedented demand for credit as small firms hoard fast-moving items like clothing, FMCGs, and electronics.”

MSMEs have a busy festive season. “Typically, there is a sales spike of 15–20% for most consumer-facing businesses,” Nishith Maheshwari, Head – Digital Business Loans, InCred Finance.

“This year, demand is expected to rise because of GST reductions and lower prices. Many customers postponed their purchases last month while waiting for the GST cuts. We are seeing an increased spike in working capital loans from businesses selling online and via D2C channels. However, it remains to be seen if this heightened demand for capital is temporary or sustainable,” Maheshwari adds.

“Consumer expectations have shifted decisively towards instant delivery and digital convenience. For MSMEs, festive readiness today is not only about stocking shelves but also about being digitally visible, payment-ready, and able to fulfil demand faster,” adds Anuj Pandey, CEO, UGRO Capital. “Preparation must go beyond inventory and into discipline, digital tools, and customer engagement.”

Smarter distribution

To meet these expectations, MSMEs are rapidly rethinking their distribution strategies.

“Many small businesses are increasingly using regional warehouses and dark shops to bring inventory closer to the client, as well as collaborating with e-commerce and logistics platforms to provide hyperlocal fulfillment,” said Jain. “This holiday season, we are seeing MSMEs use data-driven stocking, digital inventory management technologies, and flexible warehouse models to minimize stockouts and shorten delivery times. The emphasis is changing from just having inventory to having it at the right place at the right time.”

Data from Unicommerce shows evolving consumer preferences: while fashion and accessories continue to dominate festive orders, FMCG has consistently seen growth. Electronics, home appliances, and home décor seeing increasing traction from smaller towns. Prepaid payments have also surged, with Tier II and III cities now showing 60% prepaid transactions, signaling a narrowing digital divide between metros and Bharat.

“Technology has reshaped the competitive landscape for smaller businesses by equipping them with advanced tools that enhance operational efficiency and broaden market access. Real-time analytics empower MSMEs to make informed decisions and adapt to constant market changes, helping them stay ahead of the competition,” Maheshwari adds.

Tech as a leveller

Technology is also helping smaller businesses compete with larger players.

“This holiday season, technology has shown to be a terrific leveller for MSMEs,” Jain says. “AI-driven demand forecasting is assisting small firms in predicting which categories will move the fastest, digital marketplaces are providing them with direct access to millions of customers, and logistics platforms are powering same-day and next-day deliveries that were previously only available to major players. On our end, AI/ML-powered underwriting and automated scorecards ensure MSMEs have speedy access to the working capital they require.”

Further, Unicommerce’s report adds that AI and analytics are also reshaping inventory and supply decisions, with businesses increasingly using predictive algorithms to optimise stocking, forecast category demand, and personalise shopper journeys.

For MSMEs, the festive season is no longer just about riding a temporary wave of consumption. It has become a testing ground for long-term digital capabilities—whether in financing, logistics, or customer engagement.