NANDINI VAIDYANATHAN elaborates on the changes seen this year in the business arena
It is not possible to speak of trends in 2023 that have impacted and transformed elements of the entrepreneurial system without referring to the pandemic of the three preceding years. Covid not only changed the way people look at businesses but also created subsects of change under each trend. For example, the trend of work-from-home not just impacted real estate prices, traffic management, and consumption pattern; the biggest beneficiary has been tourism and related sectors.
Let us examine a few of the changes that have been seen this year in the domain of entrepreneurship.
1. Digitisation of payments and mobile banking
A virtual revolution has begun to brew in the way India is paying for the goods and services. The butcher, the baker, the cobbler and the billionaire have all embraced the idea of paying online with such gusto that cash handling, according to RBI estimates, has come down by 68 per cent. Most transactions now are made through UPI on apps like GPay, Phone Pe and Paytm. And banking apps have dispensed with visits to the bank, cheque books and passbooks. Although no numbers are available, it has been said that even visits to the ATM have reduced dramatically.
The growth of e-commerce has also added fillip to the above trend. Google study estimates that over 50 percent of shopping apps on mobile phones are used at least twice a week by the consumer. Even as trust in brands like Amazon, Myntra has grown in the hearts of the customers, Cash on Delivery (CoD) has significantly reduced immediate payment at the time of ordering. And even in the few CoD cases, payments are made at the time of delivery on QR codes. More and more entrepreneurs are engaged in exploiting this trend and working on building businesses that innovatively enhance customer experience in this space. As a result, the fintech industry is all set to explode!
2. Emergence of Artificial Intelligence (AI) and Automation
AI is a fascinating technology that has made machine learning possible to such an extent that it can mimic decision-making of humans. Automation reduces human error in processes and protocols. Together, the two have improved human productivity exponentially, reduced costs of product development and increased effectiveness of fulfillment. The automotive sector has been the biggest beneficiary of this. From manufacturing, the outcomes are being migrated to other sectors as well. With the emergence of Web3, which is the democratised version of the internet, newer, faster and sharper AI tools are virtually revolutionising how digital assets are used, engaged with and cross-pollinated. A good example is block chain used in secure management of financial properties. Many entrepreneurs have made the shift to developing products using these capabilities to improve the nimble-footedness of businesses.
3. The boom in gig economy
No labour economist had predicted the emergence of this new labour market called the gig market. The idea that led to the development of the gig market was aggregation of demand. Platforms such as Swiggy and Zomato, car companies such as Ola and Uber, e-commerce platforms such as Amazon and Flipkart were the harbingers of this creation. In all of them, demand was aggregated and in order to service the demand, there was a requirement of frontline workers. It could be for delivering food from a restaurant to your doorstep; it could be to deliver you from one point to another. As convenience became the focal point of obsession in consumers, the gig market grew into an economy of its own.
This is one segment which has been the biggest beneficiary of Covid.
4. Subscription-based business model
Covid was largely responsible for the boom in this business model. People working from home not only wanted access to entertainment but also doorstep delivery of meals, especially since all apartment complexes disallowed entry of cooks and housekeeping staff. So it made sense to subscribe to Netflix and Amazon Prime for entertainment and priority delivery respectively, to Swiggy for doorstep delivery of meals and snacks, to Instamart (offering by Swiggy) for the purchase of groceries, vegetables, fruits, flowers and other such items.
Subscription models encourage brand loyalty, brand engagement and brand dissemination. McKinsey estimates that over 49 percent of shopping is done on subscription basis.
5. Social Commerce
The biggest trend in 2023 that has affected entrepreneurship is this. There has been an explosion of home chefs offering both cooked food, bakery items, savories and desserts, artisanal products in virtually every category, be it home décor products, fashion apparel and accessories, quirky jewelry, bed and bath linen, bags, wallets, travel accessories and footwear, and athleisure products that are sold on social media channels, especially Instagram. This form of marketing offers the highest percentage of engagement between the entrepreneur and the customer.
When it started it seemed the medium was designed for youthful customers who use social media compulsively. But the forty plus demographic segment has taken everyone by surprise in emerging as the most prolific shoppers on Instagram.
To conclude, these trends have not only encouraged existing entrepreneurs to pivot but have magnetised new entrepreneurs who see the cost benefit in the business models afforded by these trends. And many of these trends, as I said before, are an offshoot of the pandemic. It seems India is racing ahead of the curve in reaping benefits from Covid-induced business trends.
