There is a digital platform opportunity in MSME for every vertical. The Shopify kind. Shopify helped MSMEs build an online presence. But why stop there?
Why not ‘digify’ the whole value chain? Pick up a vertical and offer end to end (raw material to sales) digital platform to MSMEs in each vertical:
- Strategic direction: Forecasting trend opportunities through big data analytics,
- Digital mapping and integration of processes of supply and demand,
- Collating all above info to source Just-In-Time Supply,
- Smart Factory
Benefits:
- Reduced inventory
- Significant cut in lead time to hit the market
- Faster decision-making to capture market share
- Improved bottom line
Apparel Business | Alibaba’s Xunxi
Alibaba Group Holding Ltd. has now set its sight on a new target: the country’s outdated factories. Alibaba’s path to smart manufacturing starts with garments, a market worth 2.2 trillion yuan ($328 billion) in China last year based on Euromonitor International’s estimates. Alibaba has said that one in four clothes purchases in the country was shipped via its e-commerce platforms, granting it access to an ocean of data that it is now deploying to assist domestic garment makers in design and production planning.
It is also centralizing the material procurement process to help reduce costs. Artificial intelligence, robotic arms, as well as many other in-house technologies have also been put into use at the Xunxi factory prototype. It usually takes months for apparel companies to bring a new design from runway to stores, but Alibaba claims it can cut order lead times by 75% with its solutions. This would address the growing demand for instant gratification among China’s Gen-Z consumers. For instance, with the help of AI, designers can review simulated rendering effects on so-called digital fabrics on their computer screens, rather than going through a time-consuming process to dye the fabric. Needless to say, all the robotics and IoT will be in place.
Auto-repair Business | Tencent
Problem statement:
The company provides 3-year warranty, and the company dealers/service centres take care of the car during that time. The independent garages handle most jobs thereafter.
Solution:
Demand Aggregation:
- Urban Clap of Auto-repair
- Mobile-based pick up and drop
- Quality guaranteed by the app
- Consumers do not need to interface with small mechanic shops
Supply Aggregation:
- Get Uber driver-type supply aggregation of the small mechanics shops
- After critical mass is built the app starts backward integrating and digitizes those processes for the mechanic shop. Plus, open own garages/franchise
- Develop Swiggy-like digital backend for your suppliers
Target: Young car owners.
Besides, China’s big tech companies are circling the auto-repair business in a bid to capture the boom in vehicle maintenance as the country’s vast car fleet begins to age.
Tencent and Alibaba are trying to make the unorganized repair shops with the choice of joining one of their new smartphone-based networks.
Alibaba’s strategy is to link its popular Tmall e-commerce platform with a new physical chain of Tmall-branded garages to create a maintenance service that starts on a smartphone and ends in a bricks-and-mortar store. Tencent has two affiliates that are both building new garages and joining with existing ones to provide physical endpoints for online auto-part sales.
Opportunities for/in India:
Indian start-ups, MSMEs have an opportunity to make billion-dollar businesses with such platforms in industries like bulk drugs, chemicals, auto repair, textile, etc. An MSME in this industry can create one for itself and then make a business out of it. India has some unique challenges such as contract workers in these industries. Such platforms can provide a win-win model for workers and employers by eliminating the intermediaries.
Guest Author: Sameer Sankhe (Head, Digital Transformation – Tata Projects)