Time for Small Businesses To Go Digital

India’s Digital Transformation has been a pivotal force driving economic and social change, marked by rapid advancements in technology and digital infrastructure. The Digital India campaign, launched in 2015, has been at the forefront, aiming to improve digital infrastructure, promote e-governance, and make services accessible online. Initiatives like Aadhaar (biometric identification), BharatNet (rural internet connectivity), and UPI (Unified Payments Interface) have transformed service delivery.

India has 63 million or 6.3 crores MSMEs. These businesses form the backbone of our economy, contributing around 30% to the country’s GDP and accounting for nearly 45% of the total exports. They are spread across various sectors, including manufacturing, services, and trade, and play a crucial role in generating employment, particularly in rural and semi-urban areas, providing jobs to around 110 million people.

As of the latest available data, less than 20% of India’s MSMEs (Micro, Small, and Medium Enterprises) are fully digitized. There is a yawning gap between “as is” and “to be” if we are to achieve full scale digitization. However, many MSMEs today are not sure why should they even consider going digital. What’s the benefit and the cost? In case you’re wondering why am I blogging about small businesses, consider this:

Today there are 13 million businesses registered on the GST portal, 70% of which are SMEs. As a result, GST revenue has gone up by 50 basis points as a proportion of GDP since 2018. There has also been an 80% increase in income tax returns filed from 2013-14 till 2020-21. The future of global growth shall come from MSMEs, not from the current giants.

In order to ensure that our SMEs continue to fuel India’s economic growth, digitisation is the way to go. There are many sound reasons for this. Digitisation shall help SMEs to:

1. Increased Visibility and Reach: By going digital, small businesses can expand their market reach beyond local boundaries. A digital presence via websites, social media, and online directories allows businesses to be accessible to a global audience, increasing potential customers and revenue.
2. Cost-Effective Marketing: Digital marketing channels like social media, email marketing, and search engine optimization (SEO) are often more affordable and effective than traditional marketing. They allow businesses to target specific demographics, monitor campaign performance, and make adjustments in real-time.
3. Improved Customer Experience: Digital tools and platforms enable businesses to offer faster, more personalized customer service. Whether through e-commerce sites, online bookings, or chatbots, customers appreciate the convenience of interacting with businesses online.
4. Efficiency and Automation: Digital transformation can streamline operations through automation, reducing manual tasks and allowing businesses to focus on growth. For instance, cloud-based software, digital invoicing, and inventory management tools can enhance productivity and accuracy.
5. Data-Driven Decisions: Digital platforms provide businesses with access to data on customer behavior, preferences, and market trends. Small businesses can leverage this data to make informed decisions, optimize products or services, and better understand their target audience.
6. Competitive Advantage: In today’s market, businesses that don’t embrace digital transformation risk falling behind competitors. Going digital can provide a small business with an edge in terms of customer engagement, innovation, and adaptability to changing market conditions.
7. Scalability: Digital platforms allow businesses to scale operations more easily. As demand grows, businesses can expand their digital infrastructure without the need for significant physical investments.

Several Indian SMEs have successfully adopted digitalization to enhance their operations, reach wider markets, and improve efficiency. Some examples include: Nalli Silk Sarees, which utilized social media marketing and digital catalogs to expand its customer base beyond physical stores, reaching a global audience. It also integrated digital payment options and streamlined logistics through digital tools.

Paper Boat, a popular Indian beverage brand, leverages digital platforms for marketing, distribution, and consumer engagement. Their strong presence on social media and digital advertising campaigns helped boost brand awareness. They use data analytics to track consumer preferences and optimize product offerings.

Wakefit, a mattress and home solutions startup, digitized its entire business model, selling products directly to consumers via its e-commerce platform. The company utilizes digital tools for customer service, data analytics, and logistics management to ensure quick deliveries and a seamless user experience.

Milkbasket, a subscription-based grocery delivery startup, operates through a mobile app. It allows users to order groceries and dairy products digitally, offering flexible, hyperlocal delivery solutions. The company uses data-driven techniques to manage inventory and personalize offerings based on user behavior.

By embracing digital tools and strategies, SMEs can drive growth, enhance their market presence, and remain competitive in a rapidly evolving business landscape.

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