E-Commerce: Ticket to Export Trade
From being the world’s ‘back office’ providing customer service and technical support for global brands, India is transforming into a lucrative domestic market and a major exporter. The rising Yuan value, raw material prices and operating costs in China, traditionally known as the ‘world’s factory’, are encouraging international buyers to source products from new low-cost manufacturing countries, such as India. This presents a great opportunity for Indian businesses to expand their business overseas.
Much of this activity is being driven by India’s micro, small and MSMEs and SMEs in India, which comprises an estimated 26 million units, many of whom are involved in the export business. For many, however, the question remains: how can an MSME or SME forge into the global marketplace given their limited resources?
Most small enterprises dismiss the export market as ‘too expensive’ and that it is only possible for big companies. However, the emergence of the Internet has made it easy to bring potential trading partners together, whether they are based in Chennai, Mumbai, Gujarat or London. For approximately Rs. 400 a day, MSMEs can develop a premium online storefront on a virtual marketplace like Alibaba.com to tap into an active international buyer community looking for everything – from frozen vegetables to industrial machinery.
DVN Traders, a small jewelry trading company, grew from one workshop with four employees, including family members, to an established jewelry brand with eight factories employing 785 workers in just over one year using e-commerce. The brothers originally established the company in 1975 to sell different kinds of jewelry, ranging from diamond studded gold rings to silver necklaces. It was in 2006 that they ventured into the export business by marketing their products on the Alibaba.com platform. DVN Traders now sell their jewelry products across the US, Australia and various other European nations.
In addition to global reach, e-commerce also provides accessible business opportunities, even when conventional approaches seem inadequate. Sanjeev Katoch founded his wig and hair extensions business after an accident left him paralysed from the waist down. He came across the power of the Internet as he underwent rigorous treatment and took his company, Indian Remy Hair Organisation, to global shores. His online business model today yields an annual turnover of over a million US dollars. Mr. Katoch, who attributes 95% of his business to Alibaba.com, believes e-commerce has helped him identify a whole new business opportunity and develop a strong client base worldwide.
E-Commerce has made it possible for companies in large cities and rural villages alike to connect and trade with customers from around the world. Many companies in India are small, with less than 50 people who cannot afford to invest in expensive marketing strategies, such as trade shows, advertising and sales offices. They need one reliable, simple and cost-effective solution that can help them find customers in India and worldwide. Many businesses are finding that solution online.
E-commerce can help SMEs grow their business globally in a variety of ways:
Reach to business partners from all corners of the globe: Today, procurement officers around the world are looking online to find potential trading partners. E-commerce is growing in prominence because of its ability to penetrate a more geographically dispersed customer base, thus providing a very large database of qualified buyers and suppliers.
Information access at the click of a mouse: The Internet is a vast resource of information – from facts about markets to research and analysis of trends, stock figures as well as contact information for buyers and suppliers. All this information is just a click away and mostly free.
Reduced time spent on lead generation: The process of discovering potential business partners is often the lengthiest and costliest phase of the sourcing cycle. With the Internet offering ready information on products and suppliers from across the globe, SMEs can greatly reduce the time required to find a potential partner.
Convenience: With information available at their fingertips, business owners do not need to leave the comfort of their offices or homes to conduct their business. E-commerce also provides the edge for SMEs around the world to be accessible 24 hours a day, seven days a week, and 365 days a year.
Improved marketing efficiency: By using a standardized supplier storefront on an online marketplace, SMEs in India can utilize e-commerce to promote their products online. Moreover, e-commerce portals are targeted to specific customers, attracting only relevant buyers or suppliers; hence saving resources and time that businesses invest to drive relevant traffic to their company websites.
Overall reduction in cost of sale: With the rise of e-commerce, SMEs in India reduce large costs on labour, phone calls and travel as all the information they need to build their customer base can be handled from where they are based. Also, SMEs can promote products directly to potential buyers, cutting out the mark-up costs of middle-men.
Real-time communication: Negotiations on business deals can be tedious and time-consuming. However with e-commerce, SMEs can reach a consensus with global partners faster as it facilitates instantaneous communication. E-commerce also offers improved customer service as it is simpler and quicker to get in touch with customers directly to receive almost immediate feedback.
Building and sustaining business networks: The internet enables instant contact with buyers and suppliers around the world. Thus creating and sustaining business partnerships is made simpler, and comes at a fraction of the cost of using traditional means of correspondence.
International trade is no longer simply the realm of multinational companies. Millions of MSMEs around the world have gained visibility in the global marketplace through e-commerce. With the focus of business shifting towards India, it is time for more Indian MSME suppliers to make their move.
(Sandeep Deshpande is the Country General Manager, Alibaba.com, India)