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Digital SMBs - Key Pillar of India's Economy | Zinnov

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Digital SMBs - Key Pillar of India's Economy | Zinnov

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This study is a comprehensive view of the Indian SMB landscape, focusing on key aspects like -

a) current technology adoption
b) transition from traditional SMB to 'Digital SMB'
c) the opportunity owing to SMB digitalization
d) ecosystem initiatives
d) the way forward

To get your hands on the full version of the report, drop us a note at info@zinnov.com.

This study is a comprehensive view of the Indian SMB landscape, focusing on key aspects like -

a) current technology adoption
b) transition from traditional SMB to 'Digital SMB'
c) the opportunity owing to SMB digitalization
d) ecosystem initiatives
d) the way forward

To get your hands on the full version of the report, drop us a note at info@zinnov.com.

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Digital SMBs - Key Pillar of India's Economy | Zinnov

  1. 1. 2 KEY HIGHLIGHTS Note: SMBs are businesses with FTE count of 1 to 999 further divided into 3 segments (Micro : 1-9; Small : 10-99; Medium : 100-999) Source: Zinnov Analysis ~75 Mn SMB Base in India 600+ Aggregators are enabling the rise of Digital SMBs 70% Are Digitally-Influenced SMBs $30 Bn Digital opportunity offered by SMBs (2019) 105 Mn Forecasted SMB base in 2024 ACCELERATING SMB BASE DIGITALLY-INFLUENCED SMBs AGGREGATOR-ENABLED PRODUCTIVITY-LED DIGITAL SPEND THRIVING SMB BASE
  2. 2. 2019 3 GDP (Constant Prices in $Bn) Employment (in Mn) Exports (in $Bn) Key Metrics - Indian economy & SMB contribution Contribution by SMBs 2015 2019 2024 Indian Government’s Vision (Contribution from SMBs)2958 520 535 1183 277 180 SMBs FORM A KEY PILLAR OF THE INDIAN ECONOMY 35% 40% 50% 30% 35% 45% 40% 50% 75% Overall Count Contribution from SMBs SMB Landscape Current Tech Adoption SMB to ‘Digital SMB’ Digital Opportunity Ecosystem Initiatives Way Forward Source: World Bank, News Articles, Zinnov Analysis Note: 1. In SMB contribution to GDP/Employment/Exports, agriculture vertical is excluded
  3. 3. Automotive Drug & Pharma Textile Electronics Pharmacy Grocery WITH ‘DIGITALIZATION’ BEING THE CORNERSTONE OF INDIA’S SMB ECOSYSTEM… Vertical Traditionalsegments Emerging segments1 SMBs (# Mn) Digitally-Influenced2 67%25 15 4 Key Sub-verticals witnessing Digitalization 3 3 2 2 <2 <2 <1 <1 4 3 2 2 2 <1 75Mn Retail Manufacturing Logistics Travel & Hospitality Education Real Estate Professional Services Healthcare BFSI IT/ITeS Others Content Creators Media & Entertainment Housewife Resellers Driver Partners Delivery Partners Freelancers 60% 71% 74% 67% 75% 60% 75% 67 Mn 100% 100% 100% 100% 75% 75% 100% 67% Total SMB base in India (FY 2019*) 8 Mn 70% DigitalInfluencedSMBs 70% Travel (Cabs) Hotels F&B Outlets Warehousing Transportation Packaging Accountants Architects Lawyers Coaching Centres Schools Colleges Clinics Hospitals Diagnostic Labs Brokers Developers . ISVs Resellers App Developers Trading Insurance Agents Mutual Fund Agents Web Developers Photographers .Publishers Broadcasters - Telecom Energy & Utilities - Video content Social Blogs . Apparels Eatables Jewellery 25% Charitable Service-Oriented - Cab Drivers Bike Drivers . NGOs 3 F&B Delivery eCommerce Hyperlocal 33% Web developers App developers Consulting 4 SMB Landscape Current Tech Adoption SMB to ‘Digital SMB’ Digital Opportunity Ecosystem Initiatives Way Forward Source: MSME, News Articles, Zinnov Analysis Note: 1: Emerging Segment is the new family of SMBs which are using online products/solutions to earn their living. This category primarily consists of a single business owner ; 2: Digitally Influenced: SMB having access to digital infrastructure (PC/Smartphone and Internet). It may be listed on an aggregator portal (like Justdial) or have a website presence or listed on a social platform or communicating through WhatsApp/email; * (FY 2019 refers to the financial year ending on 31st March 2019)
  4. 4. THE MODELS OF SMBs’ DIGITAL DISCOVERY ARE DRAMATICALLY CHANGING 5 SMB Landscape Current Tech Adoption SMB to ‘Digital SMB’ Digital Opportunity Ecosystem Initiatives Way Forward Source: News Articles, Zinnov Analysis Traditional Model Social media-led Discoverability Transaction-oriented Digital Presence Hybrid Model Wave 1 Wave 2 Wave 3 Wave 4 Social Media- influenced eCommerce Social Media eCommerce Domain Name + SMB Website 3+ Mn Indian SMB pages on Facebook 400K+ registered Indian Resellers 150K registered Indian Resellers Over 2Mn registered Indian Resellers on Meesho ~5 Mn TLDs in India; 53% attached to a Website SMBDigitalDiscoveryIntensity New! SSL | Chatbots | SEO/ SEM SMBs at Wave 2, 3, 4 opting for websites: • Better customer experience • Save commission charged by Aggregators • Go Global
  5. 5. 6 INDIAN SMBs ARE AT EVOLVING LEVELS OF DIGITAL INFLUENCE Level L1 Level L2 Level L3 Level L4 UBIQUITY OF CONNECTIVITY & COMMUNICATION (Smartphone/PC/Internet/WhatsApp) SPEED OF TRANSACTIONS (UPI/IndiaStack/Payment Wallets/PoS) RISE IN DISCOVERABILITY (Website/Online Listing/Social Media) TECHNOLOGY SOPHISTICATION SMBs Distribution ENHANCED PRODUCTIVITY (ERP/CRM/Accounting) 48-52 M 18-21 M 16-18 M 8-10 M <50K Level L5 (RPA/IOT/Robotics) Enabling the next billion users to go online through Free Wi-Fi zones Emergence of new businesses through Digital Literacy Digital Payments getting simplified by messaging platforms like WhatsApp Mobile-based Omnichannel platforms enabling easy and cost-effective banking Social media-influenced commerce gaining traction eCommerce platforms bridging the gap between established sellers and SMBs (~70% of Total SMBs) 75 Mn Digital Influence Trends Transforming SMBs Tech Giants partnering to provide affordable best in class solutions Government offering subsidies & free solutions to make SMBs future-ready Source: News Articles, Zinnov Analysis; L5 is a subset of L4,L3,L2,L1 SMB Landscape Current Tech Adoption SMB to ‘Digital SMB’ Digital Opportunity Ecosystem Initiatives Way Forward IOT in a box for Indian SMBs across various verticals Modern tech (RPA/Robotics) offering a competitive edge to Indian SMBs
  6. 6. 7 SMB TO A ‘DIGITAL SMB’ SMB Landscape Current Tech Adoption SMB to ‘Digital SMB’ Digital Opportunity Ecosystem Initiatives Way Forward Source: News Articles, Zinnov Analysis DISCOVERABILITY INSIGHTS-ORIENTED BUSINESS GLOBAL FOOTPRINT INNOVATION TRANSACTIONS ACCESSIBILITY LEARNING SECURITY MOBILITY BLITZSCALING D I G I T A L S M B CURRENT ADOPTION Very High Very LowTECH ADOPTION FUTURE ADOPTION
  7. 7. 8 Rising digital adoption offers a huge opportunity of ~$30 Bn in 2019 SMB Landscape Current Tech Adoption SMB to ‘Digital SMB’ Digital Opportunity Ecosystem Initiatives Way Forward Source: News Articles, Zinnov Analysis Note: : Digital Opportunity : Total addressable market across various levels of tech adoption distributed by workloads like networking, productivity solutions, payment methods and customer engagement; Spend for Smartphones are excluded in the digital opportunity ; E:Estimated, P: Predicted Tapped Opportunity Across Levels (2019) 28-30% 18-20%3-5% 40-42% 3-5% L1 L2 L3 L4 L5 % Share (Tapped Opportunity) Levels of Adoption UBIQUITY OF CONNECTIVITY & COMMUNICATION RISE IN DISCOVERABILITY ENHANCED PRODUCTIVITY SPEED OF TRANSACTIONS TECHNOLOGY SOPHISTICATION Digital Opportunity offered by SMBs Tapped Opportunity Total Opportunity $ 14-16 Bn $ 26-30 Bn $ 80-85 Bn 2024 (P)2019 (E) (53%)
  8. 8. 9 …WHICH IS FURTHER BEING UNLOCKED BY ‘CONNECTED VERTICALS’ SMB Landscape Current Tech Adoption SMB to ‘Digital SMB’ Digital Opportunity Ecosystem Initiatives Way Forward Source: News Articles, Zinnov Analysis Note: Tapped Opportunity: The market size of digital adoption i.e, the current spending of SMBs in Digital Technologies; Untapped Opportunity: The potential addressable/targetable market for solution providers L1 L2 L3 L4 L5 Legend High Medium Low Verticals Retail Manufacturing Education Travel & Hospitality Professional Services Logistics Healthcare BFSI Freelancers IT/ITeS Real Estate M & E NGOs Others Housewife Resellers Content Creators Driver Partners Delivery Partners 6.2 4.8 3 1.4 2.8 1.7 1.1 1.1 0.6 0.8 0.8 0.6 0.6 0.3 0.6 0.8 0.6 0.3 Opportunity ($Bn) % Share in Digital Opportunity FocusonTechInfluenceLevels
  9. 9. Tech ISVs Start-ups GovernmentAggregators NGOs/NPOs ECOSYSTEM IS PLAYING A KEY ROLE IN SMBs’ TRANSITION TO A ‘DIGITAL SMB’ • Innovative Pricing models to accelerate tech adoption • Frictionless access to capital using digital platforms and algorithms • Bringing digital IPs for the SMB ecosystem • Secure and fast banking through Digital Platforms 2 3 4 5 • Accelerate Digital Transformation of traditional SMBs 1 • Access to Mobile-first and Cloud-first tech solutions • One-stop destination for SMBs • Initiatives to make technology affordable for Indian SMBs • Access to newer markets through online channels • SMB-first solutions that are secure and enterprise-grade • Improve Discoverability and enable go global • Rapid adoption of Digital payment platforms • Access to capital with lesser paperwork • Drive Growth of Emerging SMB Categories such as Housewife Resellers, Driver Partners, etc. Large Enterprises • Skilling SMBs to help develop entrepreneurial mindset SMB Landscape Current Tech Adoption SMB to ‘Digital SMB’ Digital Opportunity Ecosystem Initiatives Way Forward Source: News Articles, Zinnov Analysis 6 • Accelerating hypergrowth through Training and Mentoring • Enabling entrepreneurship and creating employment opportunities • Bridging gaps between SMBs and investors 10
  10. 10. 11 Way Forward… SMB Landscape Current Tech Adoption SMB to ‘Digital SMB’ Digital Opportunity Ecosystem Initiatives Way Forward Source: News Articles, Zinnov Analysis Digital Adoption $80 Bn Digital Opportunity (in 2024) 90% Digital influenced SMBs in 2024 Growing Digital Awareness 50% increase in Digital opportunity per SMB, rising from $ 400 in 2019 to $ 800 by 2024 >10% contribution by Technology Sophistication level (L5) by 2024 ; ~5% in 2019 40% of the SMBs will be Digitally discoverable through Websites, Online listings or Social Media Emerging Segments 25 Mn by 2024 ; CAGR of 30% from 2019 to 2024 Dominance of New age technologies ~70% of the emerging segment will include Online resellers (Housewife/ Part-timers) & influencers Snapshot of ‘DIGITAL SMBs’ in 2024 Ecosystem Initiatives ~60% subsidy on cloud by the Indian government to boost tech adoption among SMBs 25% mandatory procurement from MSMEs by public sector enterprises helping in SMBs business expansion
  11. 11. 12 Growing Digital Awareness To get your hands on the full report, drop us a note at info@zinnov.com

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