E-commerce has played a big role in the digital transformation of Micro, Small, and Medium Enterprises (MSMEs) in India, highlighting the benefits and challenges associated with it. E-commerce platforms have enabled MSMEs to expand their market reach, improve efficiency, and achieve sustainable growth.
According to Amit Nanda, director of selling partner services at Amazon India, e-commerce marketplaces provide MSMEs with equal access to a wide consumer base, regardless of their location or scale of operation. This increased market access allows MSMEs to tap into new customer segments and unlock their potential for higher sales and revenue growth.
Rakesh Krishnan, VP and Head of the marketplace at Flipkart emphasized that adopting e-commerce and new technologies enables small businesses to gain insights into evolving trends, consumer behavior, and customer acquisition, leading to improved customer experiences.
The government’s procurement platform, Government e-Marketplace (GeM), shared that it achieved a significant milestone in fulfilling over 50 lakh (5 million) orders worth Rs 2 lakh crore (2 trillion) in Gross Merchandise Value (GMV) during the fiscal year 2022-23. GeM serves as a key proponent of digitizing MSMEs.
Despite the transformative potential of digitalization, industry players acknowledge several challenges hindering the growth of MSMEs. These challenges include a lack of digital infrastructure, limited financial resources, and a non-skilled workforce.
The key challenges in digitizing MSMEs include limited access to capital and low adoption rates for technological advancements. To become a trillion-dollar digital economy, small businesses must embrace digital transformation.
The lack of digital infrastructure, particularly in tier 2 cities and beyond, results in inadequate access to technology, outdated hardware and software systems, and limited digital literacy among enterprises. Industry experts emphasize the need for a robust digital foundation, affordable hardware, and user-friendly digital platforms to facilitate the digitalization of MSMEs.
Krishnan from Flipkart explained that embracing digital technologies, establishing user-friendly online platforms, and implementing localized marketing strategies can help MSMEs effectively tap into new markets.
Building a digitally skilled workforce is another challenge highlighted by e-commerce players. MSMEs often struggle to attract, train, and retain digitally skilled employees. Targeted digital skill development efforts are necessary to enhance MSMEs’ knowledge of online platforms and prepare them for global growth.
Trust in online transactions and cyber security concerns are additional obstacles that MSMEs must overcome to fully participate in the digital economy.
Limited access to financial resources is also a significant roadblock for small businesses. Investing in technology infrastructure, acquiring digital tools, and providing employee training require substantial financial commitments. Access to affordable capital and tailored financial solutions is crucial for MSMEs to address this