Covid-19 changes status quo, MSMEs turn to digital platforms to shore up sales

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) are increasingly switching over 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.

On the manufacturing side, MSEs in gems and jewellery and textiles business showed maximum improvement. Adoption of digital selling platforms among gems and jewellery units 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 the 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 like 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, the real estate and human resource segments saw the highest adoption of digital sales channels.