As micro, small and medium enterprises (MSMEs) continue to ride the ecommerce wave, the Forum for Internet Retailers, Sellers and Traders (First) India, a division of India SME Forum (ISF) in a survey report has highlighted the challenges in the space and the need for policy reforms for a conducive ecosystem and collaboration between policymakers and industry stakeholders.
The research report showed that 60 per cent of the sellers expressed concerns over regulatory biases favouring offline channels, threats to established players and burdensome compliance measures.
Additionally, worries included capital requirements for online listing (41 per cent) and consumer return habits (36 per cent), with 33 per cent advocating for policy changes in goods and services tax (GST) and returns guidelines.
Based on ecommerce during the festive season in 2023, the report stated that addressing challenges faced by sellers not only refines the ecommerce experience but also contributes to sustained growth, cementing the sector’s pivotal role in shaping India’s projected USD 2 trillion economic future by 2032.
“With retail development extending to tier 2 and 3 cities, India’s long-term consumption and retail growth provide a strong foundation for future growth,” it added.
Nearly 80 per cent of sellers generated their revenues from online and ecommerce sales, with 60 per cent doubling their sales and 90 per cent registering a minimum 30 per cent year-on-year (YoY) increase in online sales. “This shift in strategy not only benefited individual businesses but also had a cascading effect on the entire ecosystem, leading to increased inventories, new product launches, and heightened advertising spends,” it added.
The festive season preparation showcased MSMEs’ bullish approach, with over half stocking up on inventory, a third launching new products, and a quarter increasing their advertising spending. Sellers also showed a growing preference for ecommerce due to the benefits offered, citing higher sales volume (86 per cent), wider customer reach (82 per cent) and elevated brand recognition (44 per cent) as the top three reasons.
Trust remained a cornerstone in the e-commerce ecosystem, with wide customer reach (100 per cent), company reputation (99 per cent) and a robust seller ecosystem (95 per cent) cited as the top three reasons driving seller trust in ecommerce websites. MSMEs adopting an omnichannel strategy, seamlessly integrating online and offline channels, emerged as the success story of the festive season.
Vinod Kumar, President, India SME Forum and Trustee and President, First India, said, “In this era of exponential rise, the synergy between innovation and regulation becomes paramount in shaping the future of India’s economic landscape. We envision a scenario where MSMEs not only survive but thrive, leveraging the transformative power of ecommerce. A majority of MSMEs, registering a remarkable 30 per cent increase in their online sales year-on-year, signal a paradigm shift in the way business is conducted.”
Kumar added that from an estimated Rs 90,000 crore this year, we anticipate festive sales to surge beyond 100K crores in 2024, as we continue guiding these enterprises towards a trajectory of prosperity by seamlessly integrating offline and online retail.”
Geographically, tier two and tier three cities took centre stage, outpacing metros in order traffic and signalling a significant shift in consumer behaviour. The findings highlight the widening geographical reach of e-commerce in India and the growing trust of consumers in tier two and tier three, tier four and rural areas.
Diversification of sales channels emerged as a trend, with 90 per cent of retailers relying on ecommerce marketplaces. Amazon emerged as the undisputed champion among ecommerce platforms, commanding a 38 per cent preference, followed by Flipkart (20 per cent), Myntra (15 per cent) and Meesho (12 per cent).
Notably, 50 per cent utilised social media platforms like Instagram and 41 per cent leveraged third-party apps like WhatsApp for sales, according to the report.
