MSMEs And E-Commerce - The Way Forward

Covid-19 has changed the way businesses run and has given food for thought to industries across the world to evolve business models by re-evaluating and re-strategizing their survival fundamentally.

The crisis, which has left its impact on all sectors of the economy, has worst hit the Medium, Small and Micro Enterprises (MSMEs) and the government's focus on supporting and helping MSMEs through its recent special economic package is testament to this. The MSME sector gives wings to the economy, contributing more than 30% to our GDP & creating millions of livelihood opportunities. These businesses play a critical role in meeting the consumption demands of consumers and supplying raw materials to large companies.

To give a fillip to the sector, the government has changed the definition of MSMEs to increase investment limits, provisioned for collateral-free automatic loans and an emergency credit line along with subordinate debt mechanisms for stressed assets and equity infusion. Also, the government has focused on promoting e-market linkages for MSMEs as a substitute for trade fairs and exhibitions that may not take place owing to social distancing norms, which is the 'new normal'.

This 'new normal' has been immensely aided by the high speed of technology adaption, which has helped absorb the effects of the lockdown in our daily lives in a more comfortable manner. Technology is at the centre of transformation, even for MSMEs. Take the example of e-commerce, which during the lockdown has played a central role in bridging gaps both on the demand and supply side. This centricity of e-commerce and 'digital focus' is here to stay as we look at a twin focus on 'Lives and Livelihoods'.

During the lockdown, India's homegrown e-commerce company Flipkart and several others have enabled citizens to stay home by stepping up home deliveries of essential items and groceries while maintaining hygiene and sanitary conditions from delivery personnel to warehouses. Given that regulations have been eased now, e-commerce companies will be delivering 'non-essentials' as well using their safe supply chain and robust SOPs. It is now time for the MSMEs to leverage this existing infrastructure and resume business by clearing accumulated stockpiles.

In addition to the resumption of business, e-commerce can go a long way in facilitating the restructuring of companies, bringing in efficiencies and reducing costs. E-commerce can further support these MSMEs in optimizing resource allocation by enabling marketing, storage and market access. This would allow more resources for aspects such as manufacturing that constitute the core functions of the MSMEs. E-commerce also opens the possibility for MSMEs to get higher profit margins by bringing value-chain efficiencies. During such unprecedented times, consumer behavior also changes because of macro-economic environment, and hence, consumers start seeking more value. Flipkart as a marketplace brings these critical insights back to the MSMEs and allows them to renew their product offerings. This partnership could go a long way in refuelling the economy and keeping the consumption engine running.

In the short term, e-commerce continues to enable market access to MSMEs while helping to avoid in-person contact while keeping the supply chain running. In the medium to long term, e-commerce will aid MSME businesses in conducting transactions beyond boundaries of states and countries by offering platforms that can be accessed across geographies. This ease of access is critical in light of the liquidity crunch and the lowering financial capacity of buyers and producers.

Given that businesses will take some time to get back to the normal pace of a pre-Covid-19 era, we must ensure this survival. In light of this, the time is ripe for the MSME sector to adopt digital technology more rapidly than ever. E-commerce has the potential to galvanize the MSME sector, and the ability to digitize in a timely manner will be a significant differentiator between organizations as they transform themselves to suit the changing needs of the time.

(Rajneesh Kumar is SVP and Chief Corporate Affairs Officer, Flipkart Group.)

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