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Digital transformation has been one of the defining forces of the last decade — impacting industries, consumers, economies and livelihoods. But the impact has not been uniform. A few large digital platforms have built significant scale, and network effects and the winner-takes-all characteristic propels them even further. They often compete across categories, and indeed, often with their own supplier base.
Established enterprises of the “old economy” are pursuing digital transformation initiatives — aimed at serving increasingly digitally savvy consumers and competing effectively between themselves and the large digital platforms. Some of them will succeed in their efforts and some might not — but all have the wherewithal in terms of resources and talent.
The digital economy has spawned an ecosystem of “digital natives”. They have great talent, are backed with strong venture funding, and pursue their niche vision with a strong passion. They are disrupters by nature — competing fiercely within themselves and with the old economy.
However, there’s a very large sector of small enterprises that are largely “undigitised”. Across the world, it is seen that the smaller players lose out on digitisation. This erosion does not augur well — for livelihoods, for competition and the economy at large.
There has been an inevitable shift of power, first from these sellers, and also progressively from consumers to the large platforms. This shift is most apparent in kirana stores. First modern trade, then e-commerce and, most recently, quick-commerce has been taking consumer share from the kirana stores. Consumers no doubt have some great experience on the digital platforms, including instant delivery virtually free, a great assortment (the “infinity aisle”) and compelling (even unsustainable) discounts.
Traditional channels like kirana stores provide a different facet of consumer experience — an implicit understanding of preferences and flexibility to meet needs based on human empathy. Remember when the chemist sent his boy across late in the night because you needed medicine; or when the kirana store guy just waved when you forgot your wallet or your phone?
Setting up new channels for digital outside of the existing traditional trade also creates macroeconomic inefficiency and duplication. On the other hand, if the current trade channels got some of the digital capabilities they can indeed provide the best of both worlds — a great professional experience and the personal intimacy.
Similarly, there are amazing products by nano and micro industries in many parts of the country. We pick them up on travelling or in an exhibition in our city — but are largely out of our mind for regular or even occasional purchases.
Remember when you were looking for that gift at short notice — and what came up was a nice-looking but mass-manufactured imported product? Would a hand-crafted native product not have been the ideal gift for such an occasion?
And what if the silk saree you ordered was specifically designed and crafted for you and you could see it being made in an engaging video that showed the skill and dedication of the weaver that went behind making it?
Visualisation and advanced AR/VR need not be limited to high-end brands — with cost-effective technology, this can bring real-life experience for all products. It is not just about making traditional crafts “digi-ready”, but going well beyond to build digital channels that fit the context of traditional crafts and amplify their appeal and relevance.
Need to catch up
And this true for not just for niche products. Micro and small enterprises often need to catch up on digitisation. For most, digital maturity in key processes like procurement, customer collaboration, is a challenge, and becomes a significant disadvantage when competing in the new digital world.
All of these point to the huge need for creating a “digital enablement” ecosystem that helps these industries adapt to e-commerce including effective product imaging, digital marketing and supply chain practices, effectively augmenting the expertise and passion of the micro-entrepreneurs.
Digitising the un-digitised is not just about software building. It will require several associated capabilities on quality, customer service and supply chain. Even analytics — simple performance monitoring, stripped of the jargon and sophistication: what percentage of orders got shipped on time; what were the underlying causes for delay — can complement the gut-feel of the entrepreneur and will indeed be a pre-requisite for an effective “digital way” of working.
Of all investments for the small-scale sector, those in digital infrastructure are likely to have disproportionate value and act as a multiplier for all other initiatives. Programmes like PM-Vishwakarma have called out digital as an enabler and can be channelised into an effective public-private partnership. Similarly, development agencies are also investing a greater share of their funding towards digitisation.
In all this, an open-network approach to digital commerce which ensures, by design, that all sellers have a fair and equitable opportunity. The multiplicity of applications and interoperability between them means small sellers have a multitude of options with different propositions. This is closer to the physical markets of the past — but with the added advantage of digital opportunities.
In the physical world seller co-operatives, societies and other trade bodies have helped get scale and capability to sellers. The open network encourages such entities to play a similar role in the digital commerce space. There is no reason why the aggregation and supply development role should be left only to technology or so-called “e-commerce players”. This approach to getting on board multiple diverse players will ensure no segment of sellers or buyers is left behind.
The writer is Chief Transformation Officer, ONDC
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