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Digital SMBs - Key Pillar of India's Economy | Zinnov
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
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
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)
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
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
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
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%)
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
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
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
12
Growing Digital Awareness
To get your hands on the full report, drop us a note at info@zinnov.com
Digital SMBs - Key Pillar of India's Economy | Zinnov

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

  • 2. 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
  • 3. 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
  • 4. 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)
  • 5. 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
  • 6. 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
  • 7. 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
  • 8. 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%)
  • 9. 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
  • 10. 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
  • 11. 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
  • 12. 12 Growing Digital Awareness To get your hands on the full report, drop us a note at info@zinnov.com