Just five years ago, sellers of consumer goods in small Indian towns were almost entirely dependent on festivals and holidays. Local artisans, weavers, small and medium enterprises in non-metropolitan India waited for migrant workers to return to their cities during the sowing and harvesting seasons. They waited for families to come home during holidays and festivals, and for people to visit during the tourist season, for sales to pick up. A decade ago, with the advent of e-commerce, these challenges were quickly addressed by helping SMEs offset seasonality and ensure business continuity throughout the year.
Currently, the unprecedented impact of Covid-19 has once again disrupted the economy. The crisis has had a significant impact on small businesses, especially production-based ones, as they are unable to continue operations to deliver finished products and meet high consumer demand. The sources or suppliers that SMEs rely on are in regions where the impact of CoVid is higher and where transport barriers – by air, road or sea – hinder these businesses more. Dependence on larger players for services critical to SME performance also leads to disruptions in corporate networks. This is where e-commerce comes to their rescue.
By bringing buyers and sellers together in a common online marketplace, e-commerce helps SMEs even in the smallest Indian cities. Sellers can now sell to a buyer who lives on an island in the Andamans, or in the mountains of Ladakh, without fear that the pandemic will affect business!
With that in mind, here are five reasons that will make selling online work in the small towns of the new normal.
Extensive customer awareness
One of the biggest opportunities of online retail offerings is that merchants can expand their reach through the huge customer base or traffic established by e-commerce companies. For example, the typical catchment area of an offline store would be around 5 km. Expanding it further would require additional investment in new stores, more staff, additional utility costs, etc. They should also spend a good amount of money on local marketing and advertising.
E-commerce, on the other hand, makes it easier for sellers to attract customers. Online marketplace platforms have taken numerous measures such as marketing efforts to increase customer awareness, advertising support for products sold on the platform to attract customers and enable digital payments. SMBs can also ride the wave created by big business advertising campaigns driving traffic to e-commerce websites. Online marketplaces also support sellers in small towns with listings and other operational work.
Better management of working capital
Selling online offers many advantages over selling offline to traders in Tier II and Tier III cities. The most obvious being that sellers don’t need to depend on physical storefronts for their business, which increases overhead. Instead, they can use more cost-effective warehousing solutions offered by e-commerce companies to hold inventory. Such an arrangement can also help them plan inventories, make timely payments to vendors, and only keep petty cash when needed. Over the past decade, the cost of cataloging products for e-commerce marketplaces has also dropped significantly, making it a more viable alternative.
The digital first perspective of customers and their tendency to search for products and services online has spawned many start-ups that are propelling India’s e-commerce boom by enabling businesses in small towns to go online. They handle everything from sourcing products to domestic and overseas markets to last-mile delivery. Such support helps SMEs scale faster and become more efficient.
Impact on revenues and profits
Engaging with digital technologies such as social commerce and e-commerce gives businesses greater market reach and accelerates revenue growth. According to a KPMG report, businesses engaged in digital grow twice as fast as businesses offline. Not only does digital enablement help businesses scale their operations, it also helps them invest in upgrading processes and improving communication, paving the way for increased efficiency.
Advent of digital payments
Digital technologies are transforming the landscape in which SMEs operate. This is driven by consumers moving online – a huge cluster that increasingly expects to discover and interact with businesses online.
UPI’s hassle-free online transactions are one of the reasons sellers in small towns and villages are jumping on the e-commerce bandwagon. To put things into perspective, 1.25 billion UPI transactions worth INR 2.06 lakh crore were processed in March 2020. With widespread acceptance of digital payments, sellers are spared the long lines of bank waiting or handling banknotes, especially in difficult times such as these. Leveraging e-wallets has also allowed them to manage their finances at their fingertips, ensuring that business is not affected.
Simplified supply chain management
With Covid-19 sparking widespread concerns about shrinkage, e-commerce has helped small businesses meet customer needs. The significant investments made by e-commerce companies in advertising and expanding the supply chain make it easier for sellers to take advantage of these initiatives without having to dip into their own pockets.
As the world witnesses a paradigm shift in business models, SMEs will now need to collaborate with established players, to use a combination of offline and online customer touchpoints to support their business.
According to industry reports – thanks to internet penetration in non-metro Indian cities, technology and rapidly increasing data consumption, improved logistics and new distancing standards necessitated by CoVid, online sales will see massive growth in the days ahead. In addition to government and wider industry efforts to support this sector, SMBs will also need to establish a strong digital foundation to become agile and better positioned to serve their customers as the world embraces the new normal of staying connected. the House. Digitalization will play a major role in paving the way for a future led by autonomous SMEs.
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