E-commerce gives boost to India’s SME sector, says study

Extensive use of internet can double the export of SMEs, says a study carried out by online shopping platform Snapdeal and research firm KPMG

The Dollar Business Bureau

The growing e-commerce sector which is expected to cross $80 billion by 2020 in India has proved to be a driving force for the country’s small and medium enterprises (SMEs), adding to their exports value and revenue, a study has said. According to the study carried out by online shopping platform Snapdeal and research firm KPMG, extensive use of internet can double the export of any small unit. “SMEs that use the internet extensively tend to export approximately twice as much by export value when compared to SMEs using the internet sparingly,” it said. At present, the SME sector accounts for more than 17% of the country’s GDP and contributes to 40% of the total exports. With its share of 45% in the country’s total industrial output, the sector adds more than 1.3 million jobs every year. The study titled ‘Impact of e-commerce on SMEs in India’ also found that SMEs who actively adopt the internet for business activities boast 51% higher revenues, which results in 49% more profit and a 7% broader customer-base than their offline-only counterparts. India has 348 million internet users and about 100 million people shop online. By 2030, the country’s e-commerce sector is projected to cross $300 billion. While describing the internet as a cost-effective marketing tool, the study said that 98% of technology enabled SMEs in India participate in the country’s share of export revenues. At the same time, only 11% of the traditional SMEs export goods and services. Besides, e-commerce also improves competitiveness and provides businesses a platform to achieve on a global scale. While 85% of the SMEs who adopted e-commerce believe that it is a cost effective medium to grow sales, around 77% of such units were listed on online marketplaces, it said. On the potential benefits of e-commerce to Indian SMEs, the study said, “The improved speed to market, global consumer base and flexibility to conduct business can potentially boost the SME revenues to the tune of 51%.” The 36-page study report also sought to allay the apprehensions of local grocery shop owners, saying that minuscule presence of e-commerce and issues related to last mile connectivity, payment costs, and regulatory barriers “keep the competition at bay”. “The kirana stores are hyper-local in nature and tend to focus their attention on the loose and unbranded products which can be customized as per the consumer's requirement as opposed to online e-tailing which focuses on the sale of standardized products to an organised market,” it said.  

October 07, 2015 | 2:28pm IST.  

The Dollar Business Bureau - Oct 07, 2015 12:00 IST