In the wake of the Covid-19 pandemic, the world is shifting to a new normal where digital platforms enable the entire ecosystem. This shift is no longer a push but a pull now. It started with demonetisation, further accelerated by the introduction of the Goods and Services Tax (GST) and has now reached unprecedented levels. Advancements in artificial intelligence (AI) and machine learning (ML) driven technologies are assisting the entire business pipeline in discovery, conversations, transactions and fulfilment for smart decision making. These platforms are progressively becoming available even for small businesses as well.
The view that advanced technologies like AI and ML are unaffordable and thereby only serves the needs of large enterprises with deep pockets has now become redundant, with the proliferation of large-scale digital marketplaces. These marketplaces are leading the way in transforming the tech-challenged MSME sector to full-fledged digital enterprises in easy-to-consume-and-pay-for models – a trend poised to give MSMEs a significant boost in their growth journey and make them future ready.
In the year 2021, here are the top 10 ways in which tech-led digital marketplaces will leverage AI to transform the MSME sector:
The AI based conversational interface across pre and post-sales channels is in demand lately. The ability to proactively answer queries like “where is my order” offers buyers instant gratification. From routing customer service requests to tracking packages and personalizing product suggestions or handling returns, AI can offer solutions in many cases before customers even ask the questions. This is essential for the modern-day consumer. In a B2B context, platforms can initiate price negotiations, catalogue displays quickly, offer smart invoicing and more in AI-assisted chat interfaces which will not only save time for sole proprietors but also result in better and faster lead conversions.
Better Access To Finance
India’s MSME sector is one of the most credit starved in the world, with only 4% of the sector availing formal financing, thereby severely inhibiting its growth. This is primarily due to the lack of traditional datasets in this sector.
One robust use case of AI/ ML on platforms or digital ecosystems is in improving access to unsecured loans to small businesses (especially those who are new to credit). These credit products are built using alternate credit scoring models, which financial institutions can trust to make credit decisions about lending to small businesses at minimal servicing cost. These alternate credit scores can use a variety of data points besides traditional underwriting datasets across GST, payments & marketplace transactions. These run on AIL/ML tech stacks enabling digital processing much faster and making the lending process secure and affordable for the MSMEs.
SOLV Score, the alternate credit scoring model that we have built for India’s MSME sector is one such example. Another important use case lies in matching MSMEs with the right financial institution.
Product Enhancement And Customer Engagement
Using data from chatbot platforms, MSMEs can drive greater customer engagement which can aid in understanding customer requirements and define purchasing patterns. This allows them to increase or modify the range of products and services to better suit customer needs. It can also help in determining better offers and rewards. Analysing customer feedback with the help of AI based models can lead to new insights. Analysing new trends to enhance products can be a boon for sellers in terms of real-time insights vis-à-vis offline customer life cycle management.
One of the biggest advantages of AI is predicting customer behaviour to forecasting sales. Advanced systems are able to combine data mining, statistics and sales modelling to better predict future outcomes. Businesses can leverage this for customer segmentation and building their digital strategies. On digital marketplaces, MSMEs can take advantage of predictive analysis to achieve leads with better conversion through an understanding of their campaigns ranging from demographics to behavioural data. This, in turn, increases their bottom lines with upselling and cross-selling.
Informed Working Capital Planning
The use of these modern technologies can reduce operational costs and help in gaining more insights from data. Current traditional business models fail to predict the need for making future investments in the market but AI can foresee and invest accordingly by applying accurate forecasting based on real-time data and thorough analysis of the demand cycle in half the time. Resulting in a sharper business decisions based on hitherto-unavailable insights.
MSMEs, using AI-powered digital platforms, can improve their supply chain & logistics efficiency for better warehouse management, smarter shipping, inventory upgrades, route optimisation and improved delivery. Since the supply chain captures data at every leg, it provides a perfect platform for AI driven optimisation algorithms to drive efficiencies & unlock value across the chain.
Identifying New Markets
The MSME sector is a highly competitive one. In order to keep growing, companies need to find new markets & upsell to existing customers continuously. AI-powered competitive analysis tools available on B2B platforms help them understand what their competitors’ strategies are, and therefore tweak their own as needed to be ahead in the game. AI also facilitates tapping into new markets through the building of buyer personas. This provides insights into who their end customer is facilitating advanced market research.
Quality Control and Error Reduction
Cognitive augmentation enabled by AI can drastically reduce human errors arising due to a lack of knowledge. AI can further be leveraged for quality checks and better assurance by using a combination of natural language processing and deep learning techniques. A popular use case is in assisting small businesses with creating high-quality digital product catalogs on e-commerce marketplaces.
MSME proprietors spend almost 50% of their time every day in managing day-to-day business functions, due to lack of manpower and enabling technology. Automation reduces the need for time spent on repetitive tasks and human resources. For instance, chatbots are addressing repetitive queries about various processes and also bringing in supply chain efficiencies. AI technologies are also automating back-office functions and financial activities.
For a small business, getting into a fraudulent transaction with unverified or illegal entities is far more dangerous than a large corporate and can result in severe losses which are hard to recover from. Technologies like blockchain and pattern recognition systems help in real-time fraud detection and to strengthen the digital trust ecosystem.