Borzo’s ‘MSME meet’ to take stock of pain points and explore requirements of Indian units

In the latest study by Borzo, there are basically six clauses that form pain points and challenges for the MSME sector.

The key pain point faced by MSMEs is customer acquisition with around 16 per cent of MSMEs vouching for it. At 13 per cent recruitment is another big challenge hindering MSMEs, while packaging and inventory management at 12 per cent and 11 per cent respectively are other operational challenges they face, the report says.

According to data from the Reserve Bank of India (RBI), as of 2021, around 30-40 per cent of MSMEs in India were estimated to have access to credit from formal financial institutions like banks and NBFCs.

Talking to Bizz Buzz, Satyanarayana Raju, MD of Canara Bank, says, “We at Canara Bank have always been supporting MSMEs, including post-Covid. We facilitate them by restructuring their loans.”

Debtors and payment collection at eight per cent and lack of financing at five per cent are other factors affecting the cash flow of MSMEs. In addition to this, various other pain points such as operational efficiency, pricing and margins and competition are some of the other challenges that they have to navigate.

Kamal Mehta, Director, Parrami Finance, says, “This indicates that a substantial portion of MSMEs still depend on informal sources or self-funding for their credit needs. They will benefit more from a more dynamic approach of NBFCs, which will contribute directly to India's growth.”

NBFCs like Parrami Finance complement the efforts of traditional banks in supporting MSMEs by offering specialized financial products, faster loan processing, and a deeper understanding of the unique challenges faced by these businesses. Their role is instrumental in driving economic growth, job creation, and entrepreneurship in India's MSME sector, he said.

MSMEs have been able to cater to multiple cities through logistics support. Over 70 per cent of shipping by MSMEs takes place in Mumbai, Delhi, Bangalore, Hyderabad, Kolkata, Chennai, Pune, Ahmedabad and Jaipur. Some of the notable Smart cities, Tier 2 and Tier 3 cities that are gaining momentum include Vadodara, Nagpur, Kochi, Jammu, Nashik, Rajkot, Indore, Surat, Chandigarh, Ludhiana, Roorkee, Raipur, Guntur, Mangalore, Jodhpur, Malegaon, Dehradun, Haridwar, Ranchi, Aurangabad, Ratlam and Faridabad to name a few.

Nearly half of the respondents (50 per cent) reported that more than 70 per cent of their total orders consist of within the same city, highlighting the significance of intra-city deliveries for MSMEs.

MSMEs with diverse product categories were represented, with food and beverages being highest at 23.1 per cent, apparels and fashion at 13.6 per cent, gifting, pharma, textiles and others showcasing the diverse range of offerings by MSMEs.

The survey revealed a balanced distribution between retail and online businesses, with a significant proportion (31.5 per cent) operating through both channels retail and online, indicating a multi-channel approach adopted by many MSMEs. Only retail MSMEs were 29.6 per cent and 40 per cent were online businesses.

Giving a new spin to the debate of quick commerce and 10-minute delivery, most MSMEs (59 per cent) preferred delivery within 60 minutes, emphasizing the importance of meeting customer expectations and business requirements, while 20.5 per cent prefer any timeline but same-day delivery.

Nearly 72 per cent prefer speed and quality of delivery to ensure a seamless experience for their customers and vendors and 18 per cent value speed as opposed to quality whereas for 10 per cent it is the other way round.

The average monthly shipment value of MSMEs is approximately Rs. 1.4 million. On the lower side it ranged between Rs. 50,000 and Rs. Two lakh per month and on the higher side it was in the range of Rs. 50 lakh to Rs. one crore. Over 80 per cent MSMEs said that the monthly shipment value is in the range of Rs. 50,000 to Rs. 10 lakh per month.

Shipment value refers to the total value of products in the shipment. The survey revealed that 56 per cent of MSMEs received an increase in shipment value by 20 per cent-30 per cent whereas 18 per cent experienced an increase of 50 per cent and 15 per cent MSMEs received an increase in shipment value in the range of 30 per cent to 40 per cent. All MSMEs have not been doing that well at 2.6 per cent.

Nearly three per cent experienced a decrease in shipment value by more than 50 per cent. The varied trends in shipment value with more than 95 per cent showing an increase compared to last year, significantly highlight the potential growth opportunities for MSMEs and does not show economic slowdown.

A staggering 78.6 per cent believe that there is no slowdown in their business but rather there has been an increase in demand. However, 21.4 per cent of MSMEs said that they are facing a slowdown in business.

The average per order ticket size is in the range of Rs. 750 to Rs. 1500. On some days, the average ticket size per order can drop below Rs. 750 in the range of Rs. 180 to Rs. 650 and can increase to the range of Rs. 2500 to Rs. 3500.

The daily average ticket size of orders is in the range of Rs. 9500 to Rs. 15,000. They experience a rise in daily ticket size of orders in the range of Rs. 18,000 – Rs. 22,000.

Around 51 per cent MSMEs receive an average of less than 1000 orders per month. Approximately 25 per cent of MSMEs receive orders in the range of 1000 to 10,000 per month while 6.6 per cent received orders in excess of 10,000 per month. The scale and range of average monthly orders reflects the diverse scale of operations among MSMEs.

A staggering majority (66.6 per cent) of MSMEs reported using sustainable packaging materials, indicating a growing emphasis on environmental responsibility within the business community. Nearly 33.3 per cent have not yet transitioned towards eco-friendly packaging materials.

The survey highlighted a high adoption rate (85 per cent) of supply chain automation among MSMEs, amplifying the tech adoption, efficiency and scalability in operations.

“At Borzo, we believe that the SME sector constitutes the foundation of the Indian economy. From the bustling streets of Mumbai and burgeoning markets of Delhi to the buzzing Tier 2 cities, MSMEs stand as pillars of innovation and growth,” says Eugene Panfilov, Managing Director, Borzo India and regional director, Borzo, Brazil.

While challenges like financing, sales and customer acquisition, inventory management persist, MSMEs are also embracing sustainable packaging, precise, and cost-effective same-day deliveries to meet evolving customer demands. Companies allied to serving MSMEs need to envision and ensure that MSMEs thrive amidst evolving processes and technology and are gaining significant knowledge to do so. Given the diverse nature of cities, varying routes and delivery requirements, MSMEs need robust logistics assistance to fuel their expansion, he said, To address various MSME pain points Borzo is organizing a large-scale MSME meet called Borzo Connect in Mumbai on June 21.