Pandemic Accelerates Online Shift For Small Businesses

Small businesses use video calls to demonstrate products during lockdown
Icons for the Facebook Inc. app, the Inc. app, the Netflix Inc. app and the Google, a unit of Alphabet Inc., app sit on a Apple Inc. iPhone in this arranged photograph.  (Photographer: Jason Alden/Bloomberg)
Icons for the Facebook Inc. app, the Inc. app, the Netflix Inc. app and the Google, a unit of Alphabet Inc., app sit on a Apple Inc. iPhone in this arranged photograph. (Photographer: Jason Alden/Bloomberg)

Laxman S, like millions of business owners in India, had to shutter his electronics store for two months as India imposed the world’s strictest lockdown to check the pandemic. When he reopened after curbs were eased, Laxman had anticipated that footfalls would be thin. He started to connect with prospective customers on WhatsApp.

Laxman, 51, who sells products of Godrej Appliances Ltd., uses video chat to showcase products and answer queries. About 45% of his customers want online demos. He’s also keeping his prices competitive during the lockdown so he doesn’t lose customers to large online companies.

India’s small businesses, particularly retailers, have lobbied hard for curbs on large online retailers alleging predatory pricing and malpractices. But they too are now moving online as people are still afraid of venturing outdoors even though India has eased world’s strictest Covid-19 curbs. That will accelerate the online shift in India after cheap data and half a billion internet users triggered an e-commerce boom. Everyone from Amazon Inc., Walmart-backed Flipkart Group to Mukesh Ambani’s Reliance Group are vying for a piece of the market that Forrester Research, prior to Covid-19, estimated to double to $85 billion by 2023.

Godrej Appliances, a supplier to Laxman’s National Electronics in Aurangabad, Maharashtra, created more than 12,000 social pages on Facebook and helped dealers selling its products to get detected on Google Business. Most of its sellers had no online presence before the pandemic, Kamal Nandi, vice president at Godrej Appliances, told BloombergQuint. They now get about 10% of their orders online.

“We trained store managers and sales assistants through Zoom and MS Teams calls on how to demonstrate products online to customers,” Nandi said.

Others small businesses also tapped online retail marketplaces or social media platforms.

Nilesh Shah, owner of a six-decade-old cycle store in Bengaluru, in May joined Amazon to cushion the business from the disruption. His Shah Cycle Trading is now listed under Local Shops programme on the online marketplace

“We had apprehensions on payments and logistics and this was handled by Amazon for us,” Shah told BloombergQuint. “We have shipped cycles to Maharashtra, northern India and the Northeast.”

Since going online, Shah has sold cycles worth Rs 1 lakh and increased the catalogue and offers one-day delivery within Bengaluru.

Amazon Business saw a 50-60% increase in registrations by small businesses after the lockdown restrictions were eased following two months of complete freeze.

The online retailer started registrations in Hindi as well, which has made it easier for business in remote areas to shift online, Gopal Pillai, vice president, seller services at Amazon India, told BloombergQuint. The e-commerce website, he said, has half of its sellers from tier 2 and 3 cities.

The Seattle-based giant is working on local programmes to onboard more businesses and increase visibility on its platforms after the Covid-19 disruption, Pillai said. More than 90% of Amazon India’s marketplace business comes from small sellers, he said.

“Sellers on have been receiving orders for consumer electronics, home essentials, kitchen and home appliances, smart devices, laptops, mobile phones, phone accessories, personal grooming products, apparel and more besides groceries and other essential products,” said Pillai.

Small businesses also increased their activity on Facebook Inc.’s platform and the group’s two other apps—Instagram and WhatsApp—during the lockdown.

“Boost with Facebook”, a global digital skilling programme, has seen a fourfold increase in the number businesses enrolling to boost online presence, Archana Vohra, director small and medium businesses at Facebook India, told BloombergQuint. She said Facebook is also skilling young business owners on customer acquisition, among other things.

Selling online is not just about e-commerce. An online presence also influences users’ buying decisions.

A joint study by Facebook and Boston Consulting Group found that digitally influenced purchases are on the rise. “Industry specific deep-dives into India’s largest consumer categories—packaged goods, apparel, and smartphones—all of which have deep offline retail networks, confirm that digitally influenced purchases have increased significantly, by up to 15% among urban consumers in just three months.”

In the apparel category, digital influence increased to 55-60% during Covid-19 compared with 45-50% earlier, while for mobiles it rose to 70% from 50-55 percent prior to the pandemic, it said. As high as 90% of consumers who purchased apparel online during the lockdown show willingness to continue, it said. For foods, 84% will return online.

Laxman, too, doesn’t expect people to return to his electronics store like earlier anytime soon as people are scared to come out. He is preparing for a prolonged phase of online demand.

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