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The Covid-19 pandemic has forced small and medium companies to adopt digital marketing tools to stay alive. This is facilitating a quicker-than-expected rebound in this sector, which accounts for a significant chunk of GDP, employment and growth.
“This is indigenous innovation at its best. I have always maintained that the Indian tech industry can be globally competitive in all aspects and Digiboxx is such an example. It ticks all the rights boxes for India Inc’s needs but also fills a gap for the MSME universe which is untapped,” said Kant.
Traditional laggards in adopting new technologies, systems and processes, the Indian MSME sector has aggressively adopted digital sales channels since the outbreak of the Covid-19 pandemic in the country to keep itself ahead.
According to a survey conducted by Crisil, the Indian arm of global ratings agency Standard & Poor’s, in November, this has helped a large number (60 per cent) of small and medium companies in the country not only to weather the Covid-induced storm and reduce the stress of their systems but also, the remainder of cases (40 per cent), actually increase their sales significantly.
A Crisil report said: “The survey covered 566 micro and small enterprises with annual turnover below Rs 25 crore ($3.6 million). A good 45 per cent of these were micro enterprises, or those with revenue less than Rs 5 crore ($690,000). The remaining were small enterprises with revenue in the Rs 5-25 crore ($690,000-3.6 million) range… These respondents were also more positive about their near-term business situation compared with those that didn’t take the digital route.”
Meanwhile, participants at a webinar organised last May by Deloitte and Salesforce had pointed out that companies that adopt new technologies faster can improve the effectiveness and efficiency of their marketing activities.
One of the major conclusions reached at the webinar was that companies that move first and are more nimble in adapting to the new realities (of the post-Covid world) are likely to be able to benefit significantly from the competitive advantage they are able to wrest from this process of adjustment.
Companies, therefore, need to consider the following trends that are here to stay, the webinar concluded:
“Market from home: Deploy campaigns quickly from home, collaborate across teams and keep marketers engaged with apps
Engage customers with empathy: Listen to your customers, use real-time data to better understand their current situation and needs
Personalise digital communications: Accelerate digital channel adoptions, deliver the right message, to the right person, at the right time
Optimise budget spends: View unified marketing performance and make real-time decisions to minimise the negative impact.”
The webinar largely corroborates the findings of the Crisil survey, which was aimed at gauging changes in the level of usage of digital channels – including of online aggregators, social media platforms and owned websites – by MSMEs during and after the pandemic.
“About 29 per cent of the MSEs surveyed were using digital sales channels such as online aggregators / marketplaces, social media, and mobile marketing before the pandemic struck. That number has shot up to 53 per cent among small enterprises and 47 per cent among micro enterprises as of November. Despite their limitations, micro enterprises are not very far from small enterprises in digital adoption. Also, many more are now saying they will take the digital route soon. This underscores the fact that increasing digitalisation enlarges the footprint of MSEs, helping them tap newer markets and improving their access to credit,” said Bhushan Parekh, Director, Crisil.
This adoption of a new technology and, for MSMEs, a relatively untested marketing channel, augurs well for the Modi government’s ambitious plan of positioning India as the world’s next factory.
The government, which launched a very progressive production-linked incentive (PLI) scheme for high-end smartphones, has now extended it to 10 other sectors following the commitments made by US tech behemoth Apple (through its contract manufacturers Foxconn, Pegatron and Wistron) and South Korean technology giant Samsung to set up and/or expand their manufacturing footprint in the country.
The 10 new sectors are pharmaceuticals, automobiles and auto components, telecom and networking products, advanced chemistry cell batteries, textile, food products, solar modules, white goods, and specialty steel. The stated goal of the government is to attract MNCs from the US, Europe, Japan, South Korea and elsewhere, who are looking at de-risking their global supply chains from over-reliance on China, to invest in India.
One challenge this country faces is that its MSMEs, which form the “ecosystem”, which feeds the mother factories, set up by these MNCs, with inputs they need to keep their wheels of production in motion.
The quick and seamless adoption of technology by Indian MSMEs will go a long way in convincing these foreign investors that they can create the right eco-system in India to keep their operations going at optimum levels.
Encouragingly, several manufacturing sectors have shown the way in adopting digital channels to push sales during these trying times. Among them, gems & jewellery and textiles have shown the most significant jumps.
The Crisil study shows adoption of technology to push sales has soared more than four times in the former to 55 per cent in November, up from 13 per cent in the immediate pre-Covid period.
“Textiles MSEs, too, show a massive jump of 38 percentage points in adoption of digital channels compared with 20 per cent before the pandemic. The increase was more for small enterprises (44 per cent, up from 13 per cent) than micro ones (14 per cent, up from 7 per cent),” it said.
Even the real estate sector adopted the digital sales route. “Realtors were impacted by the pandemic largely due to the unavailability of migrant labour and travel restrictions. Eventually, these players adapted to the new normal by adopting digital sales channels and partnered with online aggregators to help them with lead generation,” said Manasi Kulkarni, Associate Director, Crisil.
This trend is significant as MSMEs account for 30 per cent of the country’s GDP, 50 per cent of exports and almost 40 per cent of employment. Also, this segment has been worst hit by the Covid-19 pandemic. So, an early return to good health is a necessary pre-requisite for the Indian economy to return to the high growth path this year.
Most international agencies and several noted economists have projected India to grow at 9-12 per cent in the coming financial year. The growth of MSMEs, which is a critical component of India’s manufacturing base, will play a critical role in this economic expansion.
Therefore, the adoption of the digital route to their markets by MSMEs will play a very important part in India’s economic rebound.