How the Indian e-commerce marketplace impacts sellers and consumers both

The Indian E-commerce market is expected to grow from US$ 46.2 billion as of 2020 to US$ 111.40 billion by 2025.

E-commerce has revolutionised the consumer experience. From making shopping convenient, price sensitive and hassle-free, it has reached consumers in remote places as well.

And in something of a cascading effect, Ecommerce has enabled Micro, Small, and Medium Enterprises (MSMEs) to widen their market reach, create more jobs, and boost revenue; a trend that is expected to continue.

Challenges for MSME growth

Even though MSMEs are a major contributor to the Indian economy, they face many challenges on their path of growth.

Weak marketing linkages are the key problem for smaller businesses. Because of a lack of access and an impactful marketing platform, they lose out on many opportunities. Marketing of their products on a pan-India basis requires large budgets.

Lack of access to new technology is another thing that hinders the growth and expansion of an MSME. This is especially true for rural destinations, rendering these businesses uncompetitive.

Inadequate capital and credit facilities are another reason that MSMEs cannot expand their product line or their operations. In addition, the costs of maintaining warehouses and building a supply chain often burden them.

Growth in MSME due to e-commerce sites

E-commerce has helped the MSMEs immensely by providing them a platform that resolves all of these challenges faced by them. In the recent past, many small sellers and MSMEs have jumped onto the e-commerce bandwagon and benefited.

Not only do e-commerce platforms like Flipkart provide digital access to small businesses but also help them with cataloguing their products, deciding on price points through real-time data analysis and trends and with product replacement and returns. Other costs of running businesses like warehousing and maintaining a supply chain were also reduced significantly.

In recent news, Flipkart, India’s homegrown e-commerce marketplace, expanded benefits under its seller financing program, ‘Flipkart Growth Capital’.

Flipkart’s program enables sellers to get secured and unsecured loans at interest rates as low as 9%, with sanctions and disbursals within 24 hours of the application. The program is designed specifically to enable financial inclusion and independence for MSMEs that operate online.

Flipkart has already forged partnerships under its Working Capital loans program to increase the breadth of options and opportunities available to lakhs of these marketplace sellers, through multiple lenders and tailored to match their specific business needs. These partnerships have enabled the ‘Growth Capital’ program to provide fresh credit options to sellers ranging from less than Rs five lakh up to Rs five crore.

This took care of the capital requirement and hassle-free credit facilities for MSMEs that had partnered with the e-commerce platform.

The program further aims to bridge the gap between financial institutions and the under-served, with a new initiative called ‘Early Settlement’ in the program. This will help sellers manage their cash flow and procurement requirements with no financial burden.

Besides, seller partners opting in for the product will also benefit from processing fee waivers during this period. Once again, these options have been added to the program to ensure that it is the seller who benefits.

These initiatives are in line with the government policies of giving sellers a level playing field and all opportunities to expand. 

The future belongs to MSMEs

“To seize these opportunities, India’s SME businesses have to transform and adapt to the emerging trends in technology. This requires a careful understanding by SME players and their key management teams of what these technology trends are and how they can add value to their business model, operations and to all the stakeholders of the business, whether internal or external,” says Sanjay Aggarwal, Partner Markets, KPMG India.

A joint survey by Bain & Company and Flipkart indicates that the e-retail market in the country is expected to clock a compound annual growth rate of 30 percent in terms of gross merchandise value, from $30 billion in FY20 to $100-120 billion by FY25. 

With the advent of the internet, MSMEs have gained muscle like never before. Once considered the nemesis for MSMEs in India, the internet has now turned into their strength, and e-commerce has proven to be a game-changer. According to Statista, the e-commerce market in India is expected to reach $84 billion in 2021, owing to the ever-growing number of internet users in the country.  Governments, both state and Central, have also accepted the potential of MSMEs and their role in the Indian economy.

We, the consumers, are helping MSMEs

Thanks to the digital shift, the smaller manufacturers can now have fair competition, right from listing their products to logistics to payments when they are on an E-commerce platform.

While consumers like you and me shop online because of the convenience, wide product range and the ease of comparing prices, we are also helping the Indian economy grow because E-commerce platforms support MSMEs in a big way.

Penned by

Mayura Amarkant

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