7th and 8th August 2020

Stories from the 60-million strong SME sector

Posted on 01 Oct 2020 in Blog | 0 comments

User panel at India Internet Day, 2020: MSME & SME- Behavior & Insights
Author: Vamsi Krishna Mula, Lightspeed | Ex-Mickensy | IIT Madras


SMEs (Small and medium-sized enterprises) have seen major disruptions and a turnaround in the way they run their businesses in the last 4-5 years with rise in smartphone usage and internet penetration in India.


At India Internet Day hosted by TIE Delhi in August 2020, Sahil Kini, founder of Setu and Dev Khare, partner at Lightspeed, put together a panel of SME owners, to hear from them on how internet and technology have really impacted them. Panelists spanned across sectors like education services, wholesale, manufacturing, retail and kirana business hailing from cities like Chennai, Pune and Bangalore to towns such as Annoor and Palgarh. The panel was conducted in Hindi which gave rise to interesting insights and inspiring stories. Fun fact, these business owners are far more tech-savvy than one would imagine. If you want to skip directly to the video, it’s at the bottom of this post.


Lot of these stories and discussions are about the direct impact in their day to day activities like conducting classes, following up with vendors, procurement of material, effectively spending time with clients etc.
Key highlights of the discussion:

  • Digital channels have helped merchants increase their reach
  • There is an increase in efficiency due to digitization of processes, payments, procurement etc.
  • Merchants are actively looking to offer competitive advantages over players like Amazon / Flipkart
  • A lot of these businesses run on credit and interest rates become a crucial factor
  • There is an emerging need for an app / platform to set up a virtual store
  • GST has changed consumer behaviour to become more cashless. Merchants want simple softwares for accounting


We were pleasantly surprised by incidents such as one where Preetam came up with his own B2B app called PreeTM (inspired by PayTM) to cater to payments with other kirana stores or how Syed can now spend more time with customers as his travel requirements have gone down thanks to tech startups.

Panelists spoke about the increasing reach of their business in recent times. Merchants are now able to reach out to customers across the country via digital channels which was earlier difficult to do since sales team or the owner had to physically build those relations and conversations
Shift towards digitization was cited as another major impact in recent times. Merchants now see the value in digitising processes, account maintenance, billing, meeting online etc. and Covid has further caused this shift. There is an increasing demand of going virtual especially in the services space due to the pandemic.
As a result, panelists pointed out how their businesses have become more efficient. Running a business has become more efficient as now systems are in place to track and follow up on payments, send reminders etc. Additionally, as the need to travel has reduced, merchants spend more time engaging with customers.
When asked about competition with Amazon / Flipkart, merchants had a very interesting take. They see it as an opportunity to capitalize on the shortcomings of these e-commerce players and thereby offer a competitive advantage. These competitive advantages include faster delivery (especially in tier 2, tier 3 towns), offering credit, easy availability of servicing etc. They even match rates with online retailers wherever possible.
Typically these businesses run on credit since cash isn’t always available. Merchants traditionally use a bank loan or chit system (mutual fund) to finance themselves. While B2B players do offer credit, it isn’t a preferred avenue since their interest rates are 4-5% higher than the usual rate of 10-11%
One interesting need that emerged from the discussion was the need for an app or a platform to set up a virtual store. Currently WhatsApp is being used by these merchants to interact with customers. They send photos of products and use text / call to negotiate and communicate with customers. Panelists expressed a preference for a more streamlined way to run this
GST has had a major impact on their business. Customers actively ask for bills these days and transactions are becoming more and more cashless. Merchants too are on the lookout for an easy-to-use accounting software which can be used by existing employees (and thereby avoid cost overhead). Willingness to pay for these softwares depends on the scale of the merchants. For a business with turnover less than INR 40L, the willingness to pay is very less (INR 2-3k pa). Panelists voiced preference for simple and user friendly software with a freemium model which has basic free features with paid tiers for additional services.
Thanks to NowfloatsOkcreditZetwerkMagicpinUdaan and Urbanclap (Urban Company) for giving us access to their users! Full disclosure: Okcredit, Zetwerk, Magicpin and Udaan are Lightspeed portfolio companies.


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