Snapdeal, in tie-up with KPMG, has released a report titled ‘Impact of ecommerce on SMEs in India’, outlining how the ecommerce industry is affecting the growth of SMEs. The report also spells out gaps existing in the ecosystem that need to be fixed to facilitate adoption of ecommerce by SMEs.
Speaking at the release of the report, Mr. Kunal Bahl, Co-founder and CEO, Snapdeal said,
“At Snapdeal, we are working towards building the most impactful digital commerce ecosystem in the country and SMEs form the foundation of this ecosystem in many ways. With over 200,000 sellers operating on our platform, we felt the need to conduct a systematic unbiased study to identify opportunities and challenges to further accelerate the growth of the sector. We have taken a number of initiatives like seller training programs, seller financing program- Capital Assist and Snapdeal Seller Advisor Program, with an aim of creating life changing experiences for over one million sellers in the next three years. This study has given us deeper insights into what more we can do to enable small businesses become more successful online.”
Overview of SME sector in India
- The SME sector accounted for more than 17% of the GDP in 2014 while contributing to 45% of the nation’s industrial output and 40% of the total exports.
- The SMEs in India add over 1.3 million jobs per year.
- SMEs that use the internet extensively tend to export approximately twice as much by export value when compared to SMEs using the internet sparingly.
- 43% of SMEs in India participate in online sales
- 27% of SMEs using the internet are engaging in e-commerce
- 69% of SMEs report an increase in customers due to the internet
Ecommerce promotes healthy competition and provides businesses with a level playing field to scale up globally. Out of the SMEs that have adopted ecommerce, around 77% of them are listed on online marketplaces. Also, SMEs with an active internet presence attracted 7% more customer base than their offline-only counterparts.
Potential benefits of ecommerce to Indian SMEs
The improved speed to market, global consumer base and flexibility to conduct business can potentially boost the SME revenues to the tune of 51per cent
73% SMEs agree that ecommerce helps make accurate market comparisons
46% SMEs agree that they get regular business through marketplace listings
Adoption of ecommerce may boost the profit margins of SMEs (up to 49%) by reducing overhead costs and upfront capital investment.
SMEs could reduce expenses on call centres, trade shows and even offline advertising thereby optimising the overall marketing and sales spend to the tune of 60% to 80% reduction in spend
Adoption of ecommerce among SMEs in India vis-a-vis other countries
- On an average 100% of the high-web SMEs in India have a website, use the internet for online advertising and transact using e-commerce in comparison to other emerging countries such as China, Brazil and Indonesia
- While 100% of India’s high-web SMEs have e-commerce presence, 75% of the low-web SMEs also adopted e-commerce.
- 98% of technology enabled SMEs in India participate in the country’s share of export revenues, only 11% of the traditional SMEs export goods and services
Why are Indian SMEs still reluctant to adopt ecommerce?
Although these has been a shift in the outlook of SME businessmen towards ecommerce, barriers still loom on the industry which prevents them from taking the plunge into the online selling space:
- Lack of understanding about the technological costs involved/absent.
- Inadequate exposure, language barriers
- Inadequate financing options
- Training and support
“Ecommerce offers potential benefits in the form of enhanced participation in international value chains, increased market access and improved efficiency, as well as low transaction costs. From being a phenomenon mostly reserved for large enterprises, changes in the ICT landscape are creating greater opportunities for SMEs. Therefore it is on the ecommerce ecosystem players to collaborate and provide a conducive business environment so as to enable adoption of ecommerce by SMES.”
Mehul Gupta, Associate Vice President, IAMAI