One-third of MSMEs enhance digital presence during lockdown: Survey

Digital transformation of Micro, Small, and Medium Enterprises (MSMEs) has traditionally lagged behind the expected growth curve. According to Zinnov Consulting, of the 75 million MSMEs based in India, 16-18 million have a social media presence, an online listing, or a website. 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”), an IT services company specialising in Web hosting, undertook a survey of Indian MSMEs, to understand their adoption of a digital presence in response to challenges during Covid-19.

According to the survey, approximately 30 per cent of MSMEs have started a business website or enabled e-commerce functionality since the lockdown started.

More than 50 per cent of MSMEs surveyed/ embraced video conferencing tools and WhatsApp to keep business running during these turbulent times.

The importance of digital mediums has seen a resurgence. The preference for using digital is now approximately 1.9 times more than traditional sales interactions. MSMEs in the educational services segment recorded the highest jump in the importance of using digital mediums.

During the lockdown, MSMEs that had branched out to e-commerce witnessed an increase in revenue to approximately 50 per cent of their total revenues. For MSMEs in retail and educational services, the increase in revenue contribution from e-commerce was 53 per cent and 65 per cent, respectively.

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 were temporarily shutting their business until normalcy resumed.

The temporary halt in business activities has been more pronounced in metros and those in the retail and manufacturing verticals. The majority of MSMEs (nearly 60 per cent of those surveyed) believe that it will take up to 6 months for a business to return to normal.

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

Manish Dalal, SVP & General Manager, Endurance Group, said in an official statement: “COVID-19 has forced everyone to rethink daily life. In response to the lockdown, MSMEs that could embrace a digital presence were able to maintain a semblance of normalcy and continue to serve or engage with their customers. 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.”

According to the survey, lack of technical expertise and the perceived costs of developing a web presence continue to be the key challenges to creating a web presence. 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, the survey report said.

EIG administered an online questionnaire 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.