30 pc MSMEs go digital due to COVID-19 led lockdown

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Mumbai: MSMEs have gone digital in India. Around 30 percent of MSMEs either started a website or expanded to e-commerce during the COVID-19 led lockdown in India, according to an online study.

The study findings are quite surprising and encouraging since MSMEs (Micro, Small and Medium Enterprises) have been traditionally not so tech-savvy in India.

However, out of the 75 million MSMEs based in India, 16-18 million have a social media presence, an online listing or a website, according to Zinnov Consulting. Out of 5 million domain names registered in India, only half have a website behind them.

Ahead of International MSME Day 2020, Endurance International Group (“EIG”), the parent company of web presence brands like HostGator, Bluehost, ResellerClub, BigRock undertook a survey with Indian MSMEs to understand their adoption of digital presence in response to challenges during COVID-19.

While 30 percent MSMEs have made digital presence through a website or enabled their business with e-commerce functionality, a more than 50 percent of MSMEs surveyed have braced video conferencing tools and WhatsApp to keep business running during these turbulent times.

The importance of digital mediums during this crisis has had a resurgence. Preference for using digital is now approximately ~1.9 x more than traditional sales interactions. MSMEs in the educational services segment recorded the highest jump in the importance of using digital mediums.

With lockdown measures in place, the MSMEs who were able to offer e-commerce functionality witnessed revenue contribution from digital route increasing to around 50 percent of their total revenues. For MSMEs in retail and educational services, increase in revenue contribution from e-commerce was 53 percent and 65 percent respectively.

However, many MSMEs were unable to transform their business digitally and failed to survive through the lockdown phase. The negative impact of COVID-19 on MSMEs has been intense with many having to pause or entirely shut their business.

In this survey, one-third of MSME respondents confirmed that they are temporarily shutting their business until normalcy resumes. This pause in business is more prominent among MSMEs in metros cities and those in the retail and manufacturing verticals.

The majority of MSMEs (nearly 60 percent of those surveyed) believe that it will take up to 6 months for the business to return to normal.

MSMEs are seeking support from the government to tide over this crisis. More than 50 percent of MSMEs expect the government to offer tax discounts or exemptions, followed by 36 percent of MSMEs asking for loans at zero interest or cheaper rates.

“COVID-19 has forced everyone to rethink daily life. In response to the lockdown, MSMEs who could embrace digital presence were able to keep some semblance of normalcy and continue to serve or engage with their customers,” said Manish Dalal, SVP & GM – Endurance Group, APAC.

“This crisis has made it imperative to digitally transform our places of work. We are fortunate to be able to aid businesses in their digital transformation journey through our products and services,” added Dalal.

Lack of technical expertise and the perceived costs of developing a web presence continue to be the key challenges to creating web presence, as per the survey.

Due to these challenges, very often MSMEs take assistance from web professionals to create a digital presence. India is primarily a DIFM (do-it-for-me) market and web professionals will play a key role in the digital enablement of MSMEs.

EIG caters to small business owners and web professionals, those who help small businesses to come online, through brands such as HostGator, Bluehost, ResellerClub, BigRock.

EIG conducted an online poll to their MSME customers in the segments of retail, educational services, technology services, independent bloggers, consultant, advertising & marketing, travel and finance. The majority of these MSMEs are in the metro cities. The survey was conducted over the first 2 weeks of June 2020.

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