Thanks to pandemic, more micro, small businesses turn to digital platforms to shore up sales

Technology for MSMEs: Covid-19 has changed the status quo for most aspects related to small businesses. And now, to fast-track their sales recovery, micro and small enterprises (MSE) have increasingly switched to digital platforms. The adoption of digital channels such as online aggregators or marketplaces, social media, and mobile marketing has increased from 29 per cent micro enterprises using them before Covid to 47 per cent as of November, according to a Crisil survey. The jump was marginally higher among small enterprises from 29 per cent before Covid to 53 per cent during the said period for revenue generation.

“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 on the survey of 566 companies with turnover below Rs 25 crore. While 55 per cent respondents were small units, 45 per cent were micro enterprises.

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On the manufacturing side, MSEs in gems and jewellery, and textiles showed maximum improvement. Adoption of digital selling platforms among gems and jewellery manufacturers — making mostly non-precious, stone-studded jewellery, imitation jewellery, and luxury fashion jewellery — more than quadrupled to 55 per cent in November from 13 per cent before the pandemic. Micro enterprises in the segment showed the biggest jump of 41 per cent from earlier 13 per cent. On the other hand, the adoption among textile MSEs jumped 38 per cent vis-à-vis 20 per cent pre-Covid. Importantly, the jump was more for small enterprises in textiles from 13 per cent to 44 per cent, in comparison to micro textiles units wherein adoption increased to 14 per cent from 7 per cent.

Other sectors such as pharmaceuticals (excluding medicine retailers) saw no change in the adoption from 29 per cent before Covid because of relatively higher offline demand. In the services sector, real estate and human resource segments saw the highest adoption of digital sales channels. “Realtors were impacted by the pandemic largely due to the unavailability of migrant labour and travel restrictions,” said Manasi Kulkarni, Associate Director, CRISIL. For HR firms, largely recruitment companies, the social-distancing norms pushed them towards the adoption of digital channels to connect with clients and potential candidates.