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The Coming Of The ECO MMERCE Boom

Monday, March 30, 2015

The e-commerce industry in India is set to increase from $4.5 bn today to $45 bn in next 4-5 years.

“e-Commerce would revolutionise the way small and medium enterprises (SMEs) do business in the next two-three years on the back of strong government policy thrust and rising internet and mobile penetration,” estimates Arindam Mukherjee, Vertical Head, Banking & Financial Services, Cisco Systems. He amongst others shared their views while speaking at an event ‘Realising the potential of E-commerce for SMEs’, jointly organized by MVIRDC World Trade Centre and the  All India Association of Industries in Mumbai last week. ADC Reports...

The fact that only 1% of the 47 million SMEs in India use internet for their business transactions, means businesses can grow their revenue by 50% more by embracing E-commerce than by using conventional channels of business operation, says Arindam Mukherjee, adding “that means that the banking sector is in the cusp of a dramatic transformation as many banks in India introduce products that enable customers to make retail transaction in a cashless way”.

Agreeing with Arindam, Mahesh Murthy, Partner, Seedfund also believes that E-commerce has the potential to transform a one-time small business organization into a market dominating firm in the course of time. “The retail giant Walmart is losing market share to e-Commerce giant Amazon and the software behemoth Microsoft lost the operation system battle to Google because both were late in entering the Indian market. Businesses like Facebook, Amazon, Whatsapp became a dominant brand in the market without spending a penny on advertising. Noting that businesses that succeed in the market are ones that “out-think” rather than “out-spend”, he stressed that “companies must evolve a business proposition that is too compelling to resist and unique from their competitors”.

Further elaborating on the various online platforms that can benefit the SMEs, Rutvik Doshi, Director, Inventus (India) Advisors gave the examples of how Flipkart and Snapdeal are helping companies to sell their products in the farmers’ websites, to raise funds from financial institutions. This has helped to raise finance easily for the SMEs.

He also explained how SMEs can adopt E-commerce for office functions other than marketing like accounts and auditing (by using accounting software vendors), human resource management, customer relation management (CRM) etc.

He however cautioned that the SMEs need to build from scratch their business models to adapt to the new internet based platforms and constantly innovate to differentiate their products. “These would make the SMEs a winner in the long run,” said Doshi.

Affirming this Sanjay Nagi, Managing Director, Market Insight Consultants suggested that the SMEs focus on long-term strategy, of 20-30 years, rather than worry about short-run factors like rise in cost. According to him, e-Commerce should be viewed as a value-proposition rather than just an alternative platform to do business.

However, Atul Tewari, COO, Quikr beleives that most SMEs in India don’t have the management or human resource capability to handle the huge flow of customers when they adopt E-commerce. It is in this respect that SMEs must outsource some of the operations like handling customer complaints or grievances to specialized companies.

Moderating the second panel session, Sanchit Vir Gogia, Chief Analyst & CEO, Greyhound Knowledge Group pointed out that while the cost of creating a website has declined considerably in the last few years, the key to survival of E-commerce model is customer acceptability and quick adaptability to changing market dynamics.

L. S. Subramanian, Founder & President, NISE India explained the emerging trend of commoditizing technologies and the need for SMEs to understand this trend. He said, “The cutting-edge technology services like cloud computing, domain hosting are provided by specialized companies and SMEs must take their service to ride on the E-commerce bandwagon.”

Noting that SMEs have reservation to reach the global market, he said of the millions of SMEs in the country, only around 1,000 of them list their products in E-commerce websites. He opined that SMEs must change their attitude towards marketing and embrace E-commerce so that their products are identified or visible to customers who are in a distant geography.

Dr. Sharat Airani, Director – IT & CSO, Intellinet Datasys advocated e-Commerce platforms must be used not only for sales but also for providing after-sale services to customers. L. K. Gupta, Chief Marketing Officer, Girnar Software (CarDekho) elaborated how E-commerce service providers can play a crucial role in providing data analytic solution to SMEs so that the latter can adapt their business model to the changing market condition, customer needs etc.

Rupa Naik, Director-Project, MVIRDC World Trade Centre stressed on the need for introducing E-commerce among the SME clusters in the country. She said in Maharashtra itself there are 70 SME clusters who must embrace innovative marketing solution offered by E-commerce so that they become more competitive. SME clusters could benefit from E-commerce as it increases the market reach of their products beyond their local area.

Vijay Kalantri, Vice Chairman of World Trade Centre in his welcome address said that the business to business transactions and business to customer transactions, have succeeded, however the business to government transactions still need to find acceptability. “Today India has 970 million mobile connections and there are 18 million social media users. this just shows the acceptability social media has today.” He added, “SMEs need to use this more aggressively for their marketing and business opportunity.” This would be enhanced if the SMEs also start manufacturing electronic hardware.

During this panel discussion MVIRDC World Trade Centre also released a handbook titled ‘E-commerce…the way forward for SMEs’

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