Introduction: The huge internet and e-commerce wave has not penetrated the SME sector, as just 1 percent of the 47 million companies use internet for their business transactions. But with the chances of a 50 percent growth in revenues by the use of e-commerce, SMEs need to embrace this option to go forward.
The All India Association of Industries (AIAI) and MVIRDC World Trade Centre recently held a panel discussion on “Realising the Potential of e-commerce for SMEs”.
The panellists at the discussion shared their thoughts and experiences about digitisation and the significance of e-commerce as a platform for business conducted by small and medium enterprises (SMEs).
In the welcome note, Vijay Kalantri, President AIAI and Vice-Chairman World Trade Centre, Mumbai, said that though there has been progress in the digitalisation of business to business and business to customer transactions, this process still need to be accepted in the business to government transactions.
Addressing the audience, Kalantri said, “India has 970 million mobile connections and 18 million social media users which shows the acceptance of the platform.”
He added, “The world has now become a global village, so why not take advantage of it. For SMEs, e-commerce is the way ahead. They need to use this more aggressively for their marketing and business purposes.” This could be further enhanced if the SMEs start manufacturing electronic hardware.
E-commerce is becoming an important and integral aspect of business. Key advantages of using it include reduction in transaction time and introduction of transparency in the system, allowing the company’s management to focus on its growth as many processes gets automated.
Atul Tewari, COO, Quikr observed that most SMEs in India are not equipped with managerial or human resource capabilities to handle the huge flow of customers when they adopt e-commerce. It is in this respect that SMEs must outsource some of their operations to specialised companies.
“SMEs need to understand how to use various platforms. We educate those who work with us. We have even created customised solutions for our clients. For example, we created an app for an SME which they found useful and which helped them grow. While in some cases, SME clients have worked with our specialised service team to push their products,” said Tewari.
As per estimates, there are about 200 million internet subscribers in India, and the number is growing fast. Furthermore, there are about 140 million smartphone users. In the coming seven years, this number is expected to touch a billion.
The potential for online transactions is definitely going to witness a tremendous rise in the coming years. Elaborating on this, Arindam Mukherjee, Vertical Head – Banking & Financial Services, Cisco Systems said that he expects the e-commerce industry in India to rise from $4.5 billion to $45 billion in next four to five years. He added that e-commerce would revolutionise the way SMEs do business in the next two to three years on the back of strong impetus from government policy and rising internet and mobile penetration.
Referring to the fact that only 1 percent of the 47 million SMEs in India use internet for their business transactions, Mukherjee said businesses can increase their revenues by 50 percent by embracing e-commerce. He further added that the banking sector is in the cusp of dramatic transformation as many banks in India have introduced products that enable customers to execute cashless transactions.
Sharing his insights based on a survey conducted by his firm, Sanjay Nagi, Managing Director, Market Insight Consultants said, “The survey was to understand the level of awareness as well as adoption of technology to facilitate business. We found that 25 percent were under ‘high adoption and high awareness’ category, while 15 percent were in the ‘aspiration’ category or those who are aware of e-commerce and other available digital tools but don’t use them. However, a staggering 60 percent lack awareness as well as adoption with regard to available solutions.” He further added that the benefit perception was overall low among the respondents. Also, a larger number found the solutions expensive.
An interesting point that was highlighted was that existing users had benefitted in supply chain rather than marketing activities.
Speaking at the event, Mahesh Murthy, Partner, Seedfund opined that e-commerce has the potential to transform a one-time small business 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. This is because both players were late in entering the Indian market. Businesses like Facebook, Amazon, and WhatsApp became dominant brands in the market without spending a penny on advertising.”
Noting that businesses that succeed in the market are ones that ‘outthink’ rather than ‘outspend’, he said that companies must evolve a business proposition that is compelling and unique.
Rutvik Doshi, Director, Inventus (India) Advisors explained how SMEs can adopt e-commerce for office functions like accounts and auditing, human resource management and customer relations.
He, however, cautioned that the SMEs need to build their businesses from scratch to adapt to new internet-based platforms and constantly innovate to differentiate their products. “These would make the SME a winner in the long run,” said Doshi.
Nagi suggested that the SMEs focus on long-term strategies over 20-30 years, rather than worry about short-term factors like rise in costs. According to him, e-commerce should be viewed as a value proposition rather than just an alternative platform to do business.
Providing another perspective, Murthy said, “Not just e-commerce, the SME should understand e-business. With the right tools, any SME can beat a larger company. Today’s elephant can become a dinosaur tomorrow. In the modern world, the competition is intense but there is a chance for dominance. However, in the regular market the competition is close.” He further added, “SMEs need to identify the unique compelling proposition. This is the key to succeed.”
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 the survival of the 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 commoditisi ng technology and the need for SMEs to understand this. He said, “Cutting-edge technology services like cloud computing and domain hosting are provided by specialised companies. SMEs must take their service to ride on the e-commerce bandwagon.”
Noting that SMEs have reservations about reaching the global market, he said of the millions in the country, only around a thousand companies list their products in e-commerce websites. He opined that they must change their attitude and embrace e-commerce so that their products are visible to customers in a distant geography.
Dr Sharat Airani, Director – IT & CSO, Intellinet Datasys stated that 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 solutions to SMEs so that they can adapt their business model to changing market conditions and customer needs.
Gupta said, “The biggest challenge SMEs should overcome is the mental barrier and the basic suspicion about using technology to boost business.”
Highlighting another interesting point, he said, “SMEs don’t have access to data in any form. If they could, it could unleash a lot of new opportunities. Data harnessing can itself become a big opportunity.”
Rupa Naik, Executive Director, All India Association of Industries stressed on the need for introducing e-commerce among the SME clusters in the country. She said that in Maharashtra itself there are 70 SME clusters which must embrace innovative marketing solutions offered by e-commerce to become more competitive. They would benefit as could increase the market reach of their products beyond the local area.
During this panel discussion, MVIRDC World Trade Centre released a handbook titled ‘E-commerce…the way forward for SMEs’.
