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Chennai, NFAPost: Adoption of digital sales channels among micro and small enterprises (MSEs) has increased significantly since the Covid-19 pandemic struck, a CRISIL survey shows.

The survey, conducted in November, was aimed at gauging changes in the level of usage of digital channels – including of online aggregators, social media platforms and owned websites – by such entities after the pandemic.

About 60% of the respondents adopting digital selling said it helped them weather the pandemic-induced stress, while the rest said it boosted sales. These respondents were also more positive about their near-term business situation compared with those that didn’t take the digital route.

CRISIL Director Bhushan Parekh said, “About 29% of the MSEs surveyed were using digital sales channels such as online aggregators/ market places, social media, and mobile marketing before the pandemic struck. That number has shot up to 53% among small enterprises and 47% among micro enterprises as of November.”

He added, “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.”

Among manufacturing sectors, gems and jewellery and textiles show the most improvement. The proportion of gems and jewellery manufacturers – largely non-precious, stone-studded jewellery, imitation jewellery, and luxury fashion jewellery – embracing online selling platforms has more than quadrupled to 55% in November from 13% before the pandemic, with micro enterprises showing the biggest jump (41%, up from 13%).

Textiles MSEs, too, show a massive jump of 38 percentage points in adoption of digital channels compared with 20% before the pandemic. The increase was more for small enterprises (44%, up from 13%) than micro ones (14%, up from 7%).

Adoption in pharmaceuticals (excluding medicine retailers) was unchanged at 29% because of relatively higher offline demand. Among manufacturers of unbranded food products – including agro-produce processing units such as rice, wheat, and flour millers, and manufacturers of unbranded packaged foods – digital revenues slipped a notch given the localised nature of demand.

In services, realtors and human resources firms showed maximum adoption of digital sales channels. CRISIL Associate Director Manasi Kulkarni said, “Realtors were impacted by the pandemic largely due to the unavailability of migrant labour and travel restrictions. Eventually, these players adapted to the new normal by adopting digital sales channels and partnered with online aggregators to help them with lead generation.”

As for human resource enterprises (largely recruitment firms), the social-distancing norms have compelled them to adopt digital channels to connect with clients and potential candidates.

The survey covered 566 micro and small enterprises with annual turnover below Rs 25 crore. A good 45% of these were micro enterprises, or those with revenue less than Rs 5 crore. The remaining were small enterprises with revenue in the Rs 5-25 crore range. Of the 566 entities, 41% were manufacturing units across nine industries (auto-components; chemicals; engineering and capital goods; food and food products (unbranded); gems and jewellery; leather and leather goods; metals and mining; pharmaceuticals; and textiles).

The remaining 59% were service enterprises across 11 industries (commercial services and supplies; real estate; diversified consumer services; healthcare providers and services; human resources; IT/ITeS; logistics; media; power & utilities; professional services; traders; and travel and hotels).

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