It's time for SMEs to go online

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Bikky Khosla | 21 Mar, 2017
The number of Internet users in India is expected to reach 450-465 million by June, 2017 from 432 million in December last year, a report said recently, adding that it did not factor in the impact of demonetisation, which has given a big boost to digital and mobile transactions. While these findings once again confirm the rapid pace of Internet adoption among Indians, the fact that the way that our small and medium businesses have been doing business remains largely unchanged. According to a newly released survey, a whopping 68 percent of Indian SMEs are still offline.

All evidence supports the belief that going digital can help save money, increase profits and improve productivity, but unfortunately more than half of our 51 million SMEs (MSME Annual Report 2015-16) still operate with traditional methods. Worse even, only 2 percent of our total SMEs actively sell or promote their business online, with the remaining hardly using the full potential of the Internet and digital tools. So, the sector is losing out on the benefits of embracing digital. There's additionally an opportunity of massive potential in the future, with the Internet user base in the country expanding at a stunning pace, but our small businesses are paying no heed to it just by refusing to be a part of the Internet revolution.

The survey shows that digitally engaged online SMEs are 4 times more likely to see an above average revenue growth rate as compared to SMEs which do not have digital presence. Even those SMEs, which have digital presence but do not actively sell or promote their business online, are 1.05 to 2.1 times more likely to grow revenues faster than their offline peers. When it comes to increase in customer base, digitally smart SMEs in the B2B segment see 20 percent increase in customer base, against 10 percent for offline firms. Similarly, in the B2C segment, digitally active SMEs see twice the growth rate in the number of orders. Digital engagement also helps to grow beyond local boundaries, the findings show.

So, what's holding our small businesses back from going digital? A major factor -- among others -- the survey finds is lack of awareness. Around 35 percent of offline SMEs still believe that digital technologies cannot add much value to their business. This is surprising. One may argue that this poor level of awareness is due to government inactivity or the limited reach of its programmes and schemes, but I think it is equally important that SMEs do their bits too. They have to free themselves from this reluctance to change, embrace the Internet, and make greater efforts to upskill themselves.

I invite your opinions.