MSMEs fail to build customer loyalty and customer retention

As Digital India emerges, one can see a paradigm shift in the conventional ways of business. The small and medium scale enterprises understand the value of digital transformation for business expansion. They believe digital proficiency is vital to set foot in the online market successfully. Needless to say, digitalization has become a critical factor for all enterprises to survive. The increasing affordability of smartphones, rising internet usage, and growing digital media use are shaping the future of MSMEs and startups in India. India is amongst the biggest and fastest developing markets for digital users.

The Coronavirus crisis and the lockdown was a phase of evolution for various MSME sectors. Digitization opened the gates for many local businesses to strengthen their operations and cope up with these stressful times. To begin with, local grocery stores that functioned traditionally have now embraced the doorstep online delivery trend and use ‘google sheets’ to record received orders and their stock. Further, digital payment modes were adopted to maintain social distancing as customers did not prefer cash payments.

MSMEs have also been dealt a huge blow due to the economic slowdown associated with the outbreak of coronavirus and the subsequent lockdowns. To get a sense of the risks being faced by the financial system, the Reserve Bank of India conducted a systemic risk survey in April-May 2020[1]. According to the survey findings, 60% of the survey respondents believe that in the MSME sector prospects of recovery within the next six months appear bleak, at best. 

As India comes out of the lockdown and many MSMEs and merchants struggle to manage working capital to sustain their business, getting customers back to the stores should now be the key priority for merchants. In such a scenario, digitizing will not only enable easy access to funds but will also allow merchants and small businesses to migrate easily to online platforms. This is a turning point for digital transformation in India - one that gives us an opportunity to rebuild our economy the right way, digitally. The way forward relies entirely on how well we adapt to this new normal.