Trends in B2B e-commerce to jumpstart MSME recovery
In this article, Ronak Chirpal takes a close look at key trends to watch out for in B2B e-commerce, which may rejuvenate the MSME sector in the country.
The Micro, Small, and Medium Enterprises (MSMEs) are the backbone of the Indian economy. According to Micro, Small & Medium Enterprises Development Act of 2006, MSMEs are of two types- manufacturing and services. Any business with an investment of Rs 1 crore and/or turnover up to Rs 5 crore is classified as micro enterprise, whereas a business with an investment worth up to Rs 10 crore and/or turnover up to Rs 50 crore is classified as small enterprise. Medium enterprises consist of an investment up to Rs 50 crore and/or turnover up to Rs 250 crore.
Opportunity for MSMEs: Ease of doing business
MSMEs can reach the broader customer base for trained and transnational exchange with B2B e-commerce, opening a wide gateway for B2B e-commerce players and MSME to work in synergy to achieve mutual goals. MSMEs employ 11 crore Indians, accounting for 29% of India’s GDP. In 2021. Rebuilding MSMEs’ financial velocity will be crucial to giving the substantial GDP growth rate an enormous impetus. There are an enormous number of challenges lying ahead of the MSME sector for hammer growth and cash upon expansion. Let us have a close look on key trends to be watched out in B2B e-commerce, which may rejuvenate the MSME sector in the country:
Adoption of new technology: The reason behind low technology penetration is the elevated total cost of ownership (TCO). The circumstance will alter considerably in 2021 due to the government’s Rs 8000 crore Bharat NET and FFTH policies that will provide low-cost broadband connectivity in more than 1.5 lakh gram panchayats across the country. B2B e-commerce criteria build themselves on cloud-hosted invitations that are scalable and thus extend a high degree of operating and financial influence. Cloud dressings from B2B e-commerce platforms drive multiple agreements and automate various functions.
Sales and distribution growth: The Covid-19 pandemic wrecked havoc on MSME sector and underlined the importance of online sales channels, reflecting how offline and manual sales can be hampered merely in a few days. Not only does the production, but also the supply chain is severely impacted, creating large gaps. The Indian government has provisioned Rs 2.3 lakh crore for 5G nationwide optic fiber network to bridge this gap and expedite MSME-B2B e-commerce partnerships. The digitally enabled SMEs can generate 50% more revenue. B2B e-commerce players will provide cost-effective and smooth digital interface to customers in manufacturing.
Scope of smooth expansion: During the pandemic, a number of MSMEs shifted to essential items from the non-essentials. Others could not due to the high cost of expansion and more dependency on offline routes. The governments’ Credit Linked Capital Subsidy and Technology Up-gradation scheme, aiming to move technology in the MSMEs rampantly, amidst the recovery path may change the game. Digital business expansion will slash up to two-third expenses.
Deep market penetration: Offline mediums have limited customer reach, with dissatisfactory numbers and limited growth. With B2B e-commerce, MSMEs can reach a wider consumer base, about 75% more. B2B e-commerce platforms will facilitate MSMEs to infiltrate wide into distant locales where OEM customers have confronted multiple challenges.
Finance issues: The pandemic sweated MSMEs with the delayed payments. Government’s measure ensured the payments within the 45 days, but the sector needed immediate relief via credit sources, providing a strong flow of finances. Institutional lenders balanced their NPAs and balance sheets, to optimize their bottom line. B2B e-commerce platforms with data analytics built alternative risk assessment models, and rescued them.
The Indian MSME sector is highly dependent on imports for various needs like raw material, finances, machinery etc. It is time to make self-reliant homegrown enterprises with robust production, strong supply chain, cost efficiency and safety. B2B e-commerce platforms aim to unlock their real potential and unleash the zeal within. It will incorporate to build stronger, superior and competitive businesses at domestic and global level, safeguarding traditional values and ensuring true potential utilisation.
About the author:
Ronak Chirpal is the CEO of Nandan Terry Pvt Ltd – a manufacturer of cotton terry towels.