52% of Indian MSMEs saw a positive impact post pandemic: PayPal survey

Study says 29% of MSMEs felt business environment in India became more favourable for online sales; for 31% cross-border opportunity was promising

After two years of the pandemic, 52 per cent of small businesses witnessed a positive impact on their business once economies began to reopen, said a survey by PayPal. The survey “MSME Digital Readiness Survey” stated that 29 per cent of the MSMEs found that the business environment in India became more favourable for online sales and for 31 per cent the cross-border opportunity was promising.

The survey further added that there’s been a shift in consumer behaviour induced by the lockdowns. It has paved way for purchasing from virtual stores. MSMEs have positively seen a 65 per cent increase in online buying from customers and close to 80 per cent shared that their consumers are more receptive to using different payments options.

The ease, accessibility and adoption of digital methods has led 51 per cent of MSMEs to see an increase in spending from existing customers while 46 per cent witnessed an increase in repeat purchases.

Going forward building an owned online presence is a key priority. Currently, 66 per cent of MSMEs use social media as an online selling channel, followed by marketplace (62 per cent), company owned platforms i.e. app (61 per cent), own ecommerce website (54 per cent) and third party ecommerce platforms (54 per cent).

Unlike third-party platforms, owned company channels typically provide business owners with more flexibility, control and freedom when selling online. With the change in consumer behaviour, businessesare also shifting their priority - intentions to adopt a company ecommerce website and company owned platforms to engage in online selling are highest at 29 per cent and 28 per cent, respectively.

This is important for India’s MSMEs as 49 per cent of respondents express a keen interest in developing their own website or app. However, this independence does bring with it some concerns, most notably the availability of technical expertise. Over half of the respondents (56 per cent) who do not currently sell on their own channels cited a lack of technical knowledge as being the number one barrier.

Social media to be a key growth enabler for businesses; competition propelling adoption founf the survey. Digital has been a key growth driver for Indian small businesses. Like Singapore and Hong Kong, social media is the most popular online selling channel. It has been noted that 26 per cent of those who are already selling on social media began to do so during the pandemic and 56 per cent of surveyed MSMEs saw it as a key driver for growth in the last 12-months.

Close to 100 per cent Indian MSMEs agree that cross border trade must be a business priority over the next year. Adoption of cross-border in India is high - 64 per cent of the merchants had adopted cross-border before the pandemic while 35 per cent did during the pandemic. Out of all, 86 per cent MSMEs selling globally claimed that they recorded growth in cross border trade during COVID-19. Much of this success can be attributed to the reopening of other economies and positive sentiment from global consumers. 94 per cent recognized that transcending borders results in growth and are making cross-border trade a business priority moving forward.

Digital payments and technology backed seamless check-out experience are a focus area says Indian

MSMEs. More and more Indian MSMEs embrace digital, investment into their digital journey has become a key priority. 98 per cent of the surveyed businesses have expressed an interest to invest in more payment options. Of this, 95 per cent are looking to introduce newer ways of payment and 89 per cent are keen on optimizing card payments. This is followed by optimization of services to accept digital wallets like PayPal (70 per cent).

An emerging area of interest for small businesses is the check-out experience they provide to customers. Close to 40 per cent are planning to invest towards improving the checkout and payment process in order to increase sales. The key reasons to do so as stated by the small businesses is to accept payment from new digital sales channels (60 per cent), integrate loyalty schemes (57 per cent), expand new, local payment methods to sell cross border (56 per cent), amongst others.

With increased competition, businesses are fighting for a consumers share of wallets. 49 per cent of Indian MSMEs surveyed will invest in technology to offer a better customer experience. A seamless check-out experience will mean increased customer loyalty as well as the ability to expand their consumer base.

The survey was conducted between October and November 2021, and is based on responses by 250 business decision makers of India’s MSME segment, which are defined as having an annual turnover of INR 5 to less than 250 crore. The businesses show an average turnover of INR 123 crore and an average employee size of 386 persons. The sample endorses a mix of industry, mainly comprising the Services (36 per cent), Production (28 per cent) and Retail & Hospitality (16 per cent) sector.