Page 14 - ITLN May-June 2025

Industry Report
MSMEs in E-commerce

freight contracts, MSMEs often lack noting that the process “remains
the flexibility and buffer capacity to complex, fragmented, and deeply
handle sudden order spikes. The opaque. For smaller businesses,
result? Stockouts, missed delivery there is no standardised or scalable
timelines, and inflated shipping costs, roadmap. Navigating licensing
says Malik of Hexalog. requirements, documentation
protocols, and ever-evolving
Logistics network fragmentation compliance regulations often feels
India’s complex geography and like walking a minefield. The available
uneven infrastructure pose major support is scattered across a maze
logistics challenges for MSMEs. The of brokers, agents, and government
fragmented logistics sector, with portals, all offering inconsistent
numerous freight forwarders, regional guidance and little accountability.”
transporters, and last-mile providers, Documentation management
limits small businesses’ ability to Smaller businesses presents a particularly significant hurdle.
secure competitive shipping rates or looking to serve a wider “From commercial invoices and packing
build reliable delivery networks beyond customer base across lists to bills of lading, certificate of origin
their local areas. regions, proximity to high- (COO), and customs declarations—any
“As 60% of India's MSMEs are demand zones significantly error or omission can delay shipments,
making their presence online, logistical reduces delivery time, incur penalties, or even cause cargo
constraints are a giant hurdle to the rejections,” explains Malik. “Indian
long-term expansion of e-commerce. transportation costs, and MSMEs often lack digital tools or expert
Excessive shipping charges penalise the risk of stockouts. support to handle this accurately.” The
small merchants disproportionately, Vineet Malik stakes are high, with errors potentially
particularly when order volumes Hexalog leading to shipment delays, customs
are low. The charges tend to eat into penalties, or even product seizures
margins, and MSMEs cannot compete that can devastate a small business's
with their larger counterparts, who late delivery, return to origin (RTO), finances and reputation.
benefit from bulk shipping discounts,” and poor customer experience, which “Navigating GST requirements and
says Goel of RapidShyp. erodes trust and dissuades repeat managing documentation for inter-
The economic disparities between business,” adds Goel of RapidShyp. state shipments can be cumbersome,
urban and rural areas further The cost implications are equally while frequent policy updates from
complicate logistics planning. “With challenging. MSME e-commerce marketplaces can disrupt operational
e-commerce businesses thriving in sellers typically pay higher shipping planning,” says Rao of Emiza.
the country, MSMEs surely have built a costs than larger competitors who Country-specific regulations create
wide base of customers from multiple benefit from volume-based discounts. additional complexity. “Navigating
regions in the country. And, while there These higher logistics expenses country-specific Regulations—like
have been significant developments directly impact pricing strategy, forcing product certifications (e.g., CE, FDA),
in the Indian logistics infrastructure, many small businesses to either packaging standards, restricted
which have enhanced connectivity reduce profit margins or set higher items, or import duties—can be
across most parts of India, there are prices that diminish competitiveness. overwhelming for MSMEs, especially
certain regions that still lack efficient since these rules vary widely across
last-mile connectivity,” says Agarwal of Cross-border e-commerce markets and are constantly evolving.
CJ Darcl Logistics. challenges Most MSMEs don’t have dedicated
While major cities benefit from For MSMEs with global ambitions, compliance teams, so they either
sophisticated delivery infrastructure cross-border e-commerce presents rely on trial and error or inconsistent
with same-day or next-day delivery additional supply chain complexities. advice from intermediaries,” Malik of
capabilities, rural areas representing As Indian small businesses Hexalog adds.
over 65% of India's population often face increasingly look to expand He further mentions that “AI-
delivery times extending to 5-10 days. internationally, they face a distinct powered compliance platforms
The lack of reliable logistics options set of barriers that complicate their can now automatically validate
in Tier 2 and Tier 3 cities presents global market entry. Malik of Hexalog documentation, flag missing or
additional challenges. “Most Tier 2 and identifies customs clearance as “One incorrect entries, and ensure that
Tier 3 cities do not have trustworthy of the most persistent challenges for export or import filings align with
courier partners, and hence, there is Indian MSMEs in cross-border trade,” destination-country regulations. This
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