E-COMMERCE: A BOOMING PLATFORM FOR SMEs
Updated: Oct 16, 2020
The Indian e-retail market is primed to reach nearly 300 to 350 million shoppers over the next five years—propelling the online Gross Merchandise Value (GMV) to $100 to 120 billion by 2025. After China and US, India has emerged as the third largest and fastest growing e-commerce marketplace globally. In the context of the Indian economy, small and medium enterprises (SMEs) are critical due to their all-round impact, from driving employment to innovation as well as economic sustainability and inclusive growth.
The future is full of possibilities for SMEs with the opportunities provided by the e-commerce boom in the country. The e-commerce platform has actively helped SMEs in overcoming the technological hurdles and infrastructural barriers with a sound business environment that fosters participation in a globalised economy. This is even more significant in the current context, as competitive pressure and rapid technological changes demands more agility and access to strategic resources.
There are assessed to be nearly 48 million SMEs in India, representing 95% of the industrial units, contributing about 45% of the GDP. The huge SME base in the nation basically comprises of merchants searching for worldwide consumer base to sell out their items, and furthermore become a customer themselves to buy stock in the online commercial center. SMEs can arrive at more business sectors all around the world by selling on the web, than those in customary business.
On a normal, firms can arrive at 30 unique economies utilizing online business stages. They can profit by the normal development in online shopper request and extending open doors for web based business in the up and coming years.
Amazon will set up performance centres, upgrade logistics services, and develop mobile platform and new tools and techniques to help small and medium businesses in their trajectory of growth. MSMEs having adopted E-commerce have reported 27% higher revenue growth than their offline counterparts.
Studies show that MSMEs that use Ecommerce platforms are around five times more likely to export than those in the traditional economy. This gives the domestic players a much wider consumer base in different geographical regions thereby opining on the increased revenue generation model.
MSMEs can enter into the E-commerce space with small investment of about 100 US$. They have significantly reduced their cost in marketing and distribution as the E-commerce platform provides an online base for clients and sellers to meet and make purchase.
Ecommerce is facilitating MSMEs to scale up their operations by providing a means of financing, technology and training. Evolution of technology led innovations such as digital payments, hyper-local logistics, mass customer engagements and digital advertisements have enabled the E-commerce industry to help SMEs grow speedily.
The internet helps Small and Medium Enterprises (SMEs) break free from the limitations of location. Traditionally, Indian businesses had to invest in a capital intensive and multi-tiered distribution network to have a nationwide footprint. Online platform have helped SMEs rake in more profits than before.
E-commerce applications push firms to re-examine the cost structure of the value chain, and their competitive strategies by redefining functions and skills. The entire cycle of business operations may be affected: production planning and logistics and inventories, and change of value-added components. The flexibility and ability to innovate and adapt to rapid change of SMEs mean that they are well placed to take advantage of these opportunities.
New opportunities for SMEs stem from the integration of supply and demand chains through horizontal inter-firm linkages between suppliers and customers and from the creation of production clusters. These forms of industrial organization allow SMEs to overcome their isolation by interacting and sharing information with partners. They can contribute to solving SMEs’ problem of lack of resources and access to technology by promoting transfer of knowledge through the use of integrated processes or through system-wide interactions in R&D.
SMEs can develop effective e–commerce tools and use them proactively as part of their own strategies that increase their competitiveness in global markets. Preliminary evidence from case studies of e-commerce adoption and use by SMEs shows that strategies differ depending on companies’ behaviour in response to global competition.
Many SMEs do not know how to profitably develop their e–commerce activities or how to cope with the complex rules governing this area. The lack of appropriate human resources, in terms of technical and/or managerial staff familiar with the IT environment, constitutes a major barrier for SMEs wanting to adopt e–commerce technologies and strategies.
Since SMEs can be instrumental in pushing innovation, employment and technology, it is imperative that they embrace digitization, which would enhance their participation in an open and global economy. The advent of e-commerce marketplaces have presented an unprecedented growth opportunity for the Indian SMEs which is slowly transforming into a revolution.