Non-metro MSMEs likely to surge ahead of metro cities in festive sales

This festive season, the e-commerce sector expects to be a vital lifeline for MSMEs in the retail sector. Shiprocket, an e-commerce enablement platform, estimates that Indian e-commerce will become a staggering $13 billion opportunity for Indian MSMEs during this year’s festive season.

About 56% of MSMEs’ order volume originates from non-metro cities, according to the study. This emphasises that online shopping and digital transactions are being rapidly adopted in smaller towns and rural areas. MSMEs from Tier-2, 3 and 4 cities are projected to receive higher Diwali gift orders than sellers from metro cities. 

“The growth we're witnessing in Tier-2, 3, and 4 cities in India is nothing short of a revolution. These cities are emerging as vibrant startup hubs, powered by digital adoption and entrepreneurial zeal," says Saahil Goel, CEO and co-founder, Shiprocket.

Sellers across various categories, including those in the lower average selling price (ASP) segments like fashion and BPC, are excited about this growth trend.

Every year, the contribution of e-commerce in the sales channel of MSMEs continues to swell. As per Redseer Strategy Consultants, MSME sellers expect a minimum of 15% growth in online sales compared to last year’s festive sales, with a median projected increase of 26% in sales. After witnessing back to back two muted quarters, this festive season the industry is thriving.

With widespread adoption of online shopping, the competitive edge it brings to the fore and lest we forget – the ease of shopping with the tap of a finger, e-commerce is empowering MSMEs. “It offers them global reach, cost-effectiveness, valuable customer insights, and 24/7 availability,” says the Redseer report.

Zeroing in on a combination of factors, Goel says that affordable smartphone penetration, access to the internet, and a rising wave of homegrown businesses has been driving this growth. "Tech-led solutions are bridging the urban-rural divide and making it possible for the MSMEs of BHARAT to connect with customers across India," he adds. 

With the kind of traction e-commerce is gaining, Shiprocket predicts around 10-15% of the total order volume will be attributed to first-time shoppers. Delhi NCR leads the charge with a commanding 28% share of festive sales, closely followed by Mumbai at 13% and Bengaluru at 7%, as observed in the festive sales data. Due to the robust business climate in Delhi NCR, which includes a sizable number of MSMEs, this economic activity is boosting consumer spending throughout the holiday season.

In fact, to boost engagement on online platforms, the e-commerce sector also offers cutomisation to align with sellers’ requisites. In turn, how a seller perceives the support offered by e-tailing platforms has also ameliorated. Currently, 62% of sellers agree these platforms have been helpful in their festive planning, compared to the 53% who felt the same way during the previous year’s festive season, according to Redseer’s report.

“Our surveys have revealed that sellers particularly appreciate support on aspects like data analytics, trend forecasting, and enhancing consumer visibility, among other factors,” adds the report.