The way forward for startups and MSMEs in light of COVID-19 pandemic

The PHD Chamber recently organised a webinar, in association with NITI Aayog, on the future of retail and e-commerce, in light of the COVID-19 pandemic. There have been a host of changes in consumer behaviour ever since the pandemic began. Many consumers turned to e-commerce platforms and aggregators to receive delivery of essential supplies that they may not have been able to access otherwise. There are aggregators, like Uber, which has opted to deliver medical supplies. Zomato has opted to deliver essential groceries, apart from food, and there's Netmeds, an online company that specialises in deliveries of medicines and other essential items from pharmacies.

VK Saraswat, a NITI Aayog member, was the guest speaker. He spoke about the state of startups and e-commerce in India, and on the importance of bringing MSME sector into the fold. “India is a country where we have low inflation and a large forex reserve. However, there is a need to ensure that economic activity continues, as we weather this tough period. We may not understand the impact today, but different sectors will feel the fallout as we emerge from this crisis. That’s why there has to be emphasis on quick recovery,” he said, while addressing the audience over a Zoom call.

Saraswat pointed out that at a time when brick and mortar stores are not open, a consumer's natural tendency is to depend on e-commerce to fulfil even the basic requirements. “E-commerce can empower SMEs and supplement business,” he added. Saraswat pointed out that despite e-commerce boom in India, most platforms are not able to play an active role in employment generation. “E-commerce platforms follow two main models. The marketplace model, wherein the e-commerce platform acts as a meeting point between sellers and buyers. There is no inventory that needs to be constantly replenished and generally, the buyers and sellers are expected to work out the details of the shipping, including costs. Another one is the inventory model – where there is a single seller, the invoices of stocks sold are sent to the brand...,” he said.

Saraswat talked about the reservations that people tend to have about online shopping. These included the build and quality of the product, whether the transaction itself was safe, and shipping and logistics problems. He added that shipping and logistics have been an especially difficult problem to deal with, once lockdown commenced in India. “There is a very high cost that comes with onboarding MSMEs into these platforms. In India, we have nearly 63 million MSMEs, of which 42.3 million have manufacturing abilities. They need a platform to be discovered,” he said.

“We are looking to create a universal e-commerce marketplace that is seller agnostic. We want to ensure optimum utilisation of the nation’s infrastructure and its big data archive. The platform will aim to bridge the gap between e-commerce, brick and mortar stores and e-commerce platforms,” Saraswat says.

Saurabh Sanyal, secretary general at PHD Chamber added that, thanks to the change in consumption patterns, online shopping and contactless delivery will be the ‘new normal’. Since aggregators are getting into delivery, he said, there are opportunities to create employment avenues as consumers adapt to new behaviour patterns. “Kirana stores and modern retail have been the backbone of supply in this crisis. They have played a crucial role in ensuring that consumers have access to essential commodities,” says Sanyal.

Two more speakers from the PHD chamber – Saket Dalmia and Dharmendra Kumar said that the world was fed up with China, and was looking for alternative avenues of production. This could be a golden opportunity for India to step in. Kumar mentioned that it's very possible for e-commerce platforms to reach the levels of China’s Alibaba Group, when the 2003 SARS outbreak was recorded.