A new study released by OkCredit on small and micro businesses (SMBs) across India, said that the second wave of the COVID-19 pandemic has not affected SMBs as badly as the first wave, last year.
According to the bookkeeping app, the primary reason for this moderate impact has been the absence of a national lockdown this year, in contrast to the strict lockdown in March 2020 which forced several businesses to shut down.
The study said that medical stores witnessed a 32% transaction growth this year, in comparison to an 18% decline in the corresponding period last year. This has been attributed to an increase in demand for medical supplies and rapid adoption of digital bookkeeping applications by pharmacy stores. The data has been taken from the last week of March 2021 up till May 2021.
Electronics, fruits, vegetables and dairy stores were other categories to register a 5% uptick each in transactions. The number of customers per merchant has actually increased indicating that more and more merchants are resorting to digital bookkeeping and enrolling customers when compared to the previous wave, the study said.
At a lot of locations, the state government gave prior notice before implementing the lockdown. This gave merchants time to prepare in advance by adding customers digitally, it added.
Kirana stores have seen a 7% increase in customers. According to the study, the increment in the number of customers per merchant in essential services implies that a lot of customers might have stocked up on goods prior to the lockdown announcement. Within the number of customers, the active customers have seen a drop of only 16% vis-a-vis 40% in 2020. Active customers in the case of groceries have increased by 6% when compared to the pre-COVID-19 period last year.
However, there was still a drop of 6% when compared to February. There could be two reasons for this decline–because of many customers moving to online retail and due to grocery stores finding it difficult to procure stocks, said the study.
"While the impact has not been as disastrous as last year, the fact remains that small and micro businesses are struggling. For some cash flows have been severely affected and for others, customers have moved online. Besides, the scare of the virus has ensured that a lot of them remain shut,” said Harsh Pokharna, Co-founder and CEO, OkCredit.
During the 2020 lockdown, there was a 32% decline in the number of transacting merchants, compared to just 9% this year. Categories, where this decline has been minimal, are medical stores, kirana, hardware, electronics, repair services and fruit/vegetable and dairy stores.