E Commerce, MSMEs & Growth
In October 2007, well-known tech blogger V.V.K. Chandra noticed a comment on his blog from a man who identified himself as Sachin with a link to an unfamiliar site. He did not realize that clicking on it would be a landmark moment in India’s e-commerce history.
As he clicked on the link, it opened into an online bookstore, and Chandra decided to search for a book he had been looking for, for quite some time now. In search of the book, he had actually traveled to shops in Hyderabad from his hometown in Mahabubnagar. The book was written by John Wood, titled “Leaving Microsoft to Change The World”, and it was available on the site. Chandra decided to buy the book online, giving the online store its first-ever sale. The website was Flipkart, and Sachin, as we all now know, was Sachin Bansal and Chandra, the first-ever customer of Flipkart.
India’s tryst with e-commerce dates back to 1999 the real boom came nearly a decade later, with Flipkart paving the way for a host of other international and domestic platforms. India’s e-commerce market is set to grow to $200 billion, as per data from Statista.
The Indian government has been introducing initiatives such as Digital India, Make in India, Start-up India, Skill India, and Innovation Fund to accelerate e-commerce in India, since 2014. It is also encouraging MSMEs to market their products on e-commerce sites, especially on government-owned websites, such as e-Marketplace (GeM), which is used by Ministries and public sector undertakings to procure materials. As part of the Digital India initiative, the Ministry of MSME undertook numerous initiatives to digitize the entire MSME ecosystem, digitally empower all the offices, and spread awareness on the benefits of digital payment solutions such as BHIM, UPI, and Bharat QR code.
Nitin Gadkari, the then central minister for MSMEs, said at the Amazon Smbhav Summit 2021, “E-commerce will play a decisive role in the success of the Indian MSMEs, and the sector must ensure that this digital transformation happens at a pace that enables them to capitalize on current opportunities. It is increasingly evident that technology will be a crucial factor in defining the success and competitiveness of India’s MSMEs, both domestically and globally, in the coming days. Digitisation of millions of MSMEs should be a top priority”. He also urged Amazon and all other stakeholders, industry leaders, and experts to continue investing and improving the potential of MSMEs and thereby, make them more successful and powerful. Mr. Gadkari is the most progressive and innovative minister and these thoughts coming from him are definitely going to change the MSMEs echo system for the better.
Potential Benefits of E-commerce to Indian MSMEs
The emergence of online markets through e-commerce had boosted MSMEs like never before. E-commerce has helped MSMEs to gain improved market reach, access to new markets, savings in marketing spending, customer acquisition, and enhanced customer experience thus resulting in a significant increase in revenues and margins.
Through E-commerce, even the smallest MSMEs can showcase their products in any part of the world without having to spend on expansion or changing locations. These platforms have empowered small businesses by removing barriers and providing a large customer base. E-commerce is perhaps the best catalyst for the growth and development of MSMEs at minimum costs, investment, and innovation.
E-commerce platforms have also taken major initiatives to boost MSMEs sales. A few of these are Samarth by Flipkart ( to promote Indian artisans, weavers, and state handloom industries), MSME Accelerate by Amazon (launched this initiative in June 2020 to help MSMEs recover from the aftermath of the pandemic), or Collateral free loans by Paytm to name a few. Another initiative by Shopclues named Atmanirbhar was launched with the government policy of being vocal for locals.
Sensing an opportunity and boosting the MSMEs digital avatar, ICICI Bank launched ‘Merchant Stack’, a comprehensive digital banking service. These value-added services enable users (merchants, grocers, supermarkets, large retail store chains, online businesses, and large e-commerce firms) to meet their banking requirements and further serve their customers amid the pandemic.
In February 2021, Mastercard and Razorpay joined hands to help small Indian businesses and entrepreneurs embrace digital payments. This partnership will integrate Razorpay’s payment processing capabilities with Mastercard’s digital banking platforms and card services.
The future continues to look optimistic for online commerce in India. The widespread use of mobile phones and the rise of digital payment platforms have also played a significant part in the growth.
Powered by private and government initiatives, e-commerce had seen significant growth for the Indian MSME sector. The sector has seen unprecedented access to customers across the globe. It also offers insights into what customers want and the ability to deliver customised products and solutions. The technological interventions also helped in lowering operational costs and access to global supply chains and Direct to Customer (D2C) sales to a much larger pool of clients.
MSMEs have contributed significantly to India’s economic growth. If the government’s Atmanirbhar Bharat and Make In India and the world vision are to be realized, MSMEs need to continue to be a part of that growth story. E-commerce will be a key enabler in making that success story.
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