MSME update: MSMEs now prioritize cross-border trade, online sales and social commerce: report

As Indian small and medium enterprises learn to cope with changing market scenarios due to the ongoing pandemic, their participation in online selling, social commerce and cross-border trade has increased significantly. According to a recent survey, 9 out of 10 MSMEs say that trading across borders is a key area for business growth and 2 out of 3 MSMEs now use social media as a sales channel.

The PayPal India survey in partnership with Edelman Data and Intelligence, aims to understand how Indian MSMEs have adapted during the pandemic by adopting a digital approach while leveraging the global opportunity and their top priorities to grow.

The MSME Digital Readiness Survey 2021 was conducted between October and November 2021. The respondent included small businesses and 250 Indian SME business decision markers with an annual turnover ranging from Rs 5 crore to Rs 250 crore. The companies have an average turnover of Rs 123 crore and an average workforce of 386 people. The sample adopts a mix of industries, mainly comprising the service (36%), manufacturing (28%) and retail and hospitality (16%) sectors.

The survey highlighted that after two years since Covid-19 hit the country, more than half of small businesses (52%) saw a positive impact on their business once economies started to reopen. In fact, 29% of MSMEs found that the business environment in India had become more conducive to online sales and for 31% the cross-border opportunity was promising.

“At first it was quite difficult, but they adapted and they actually took a leap forward here. Our information clearly showed that the majority of MSMEs have benefited from the post-pandemic situation, especially guys who have taken the initiative to go digital, and one in three businesses have benefited from various payment offers and cross-border sales,” said Nath Parameshwaran, Senior Director of Corporate Affairs, PayPal India.

As the pandemic and subsequent lockdowns have led to a change in consumer behavior, this has paved the way for online shopping. The survey showed that MSMEs saw a 65% increase in online purchases from their customers and nearly 80% said their consumers were more receptive to using different payment options. The ease, accessibility and adoption of digital methods led 51% of MSMEs to see an increase in spending by existing customers, while 46% saw an increase in repeat purchases, according to the report.

“We’ve seen a whole new segment of consumers going online – what we call the silver tech generation – people typically in their 50s to 70s who can go online for the first time,” Parameshwaran said.

MSMEs have also been actively involved in harnessing technology and increasing their online presence. The survey highlighted that currently 66% of MSMEs use social media as an online sales channel, followed by the market (62%), company-owned platforms, i.e. applications (61%), their own e-commerce website (54%) and third parties. party e-commerce platforms (54%). 49% of MSMEs surveyed wanted to expand or develop their own website or app.

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