Trade, import, and export for MSMEs: "Every possible category that you can think of, Indian MSMEs are exporting that to different countries through 17 marketplaces across the world we operate that caters to customers in over 200 countries."
Trade, import, and export for MSMEs: Amazon’s flagship programme for MSMEs to start or expand their e-commerce exports business – Amazon Global Selling — has onboarded over 70,000 exporters since its launch in 2015. The cumulative sales by these exporters so far stood at over $3 billion. This assumes significance amid the government’s vision to boost MSME exports from 48 per cent share in total exports last year to 60 per cent in the following five years. To achieve this, e-commerce exports by MSMEs could prove to be a vital component towards achieving the overall goal of Atmanirbhar Bharat, Abhijit Kamra, Director, Global Trade, Amazon India told Financial Express Online’s Sandeep Soni in an interaction. Kamra, who leads the Global Selling programme, explains its evolution and shares his views on the upcoming foreign trade policy (FTP), challenges to e-commerce exports, learning from Covid for such exporters, and more. Edited excerpts:
How the Global Selling programme has evolved over the past six years to enable e-commerce exports by MSME sellers?
From a global selling standpoint, we started the Amazon Global Selling business in 2015. A lot of data was telling us that Indian entrepreneurs including manufacturers, weavers, artisans, etc., are creating very good quality products. And our thought was that, how do we connect all this good supply coming out of India with customers across the world by leveraging our technology and expertise in supply chains for anybody who’s motivated to build an export business. We identified few fundamental challenges that were holding the Indian MSMEs back from an export standpoint. It was about market intelligence such as what products to manufacture for which export country, then it was related to market access of how do you start exporting to these countries because, in the erstwhile offline export channel, it’s very difficult and expensive to do that. Another challenge was how do you take care of cross-border logistics because it was overwhelming to create a cross-border supply chain for individual entrepreneurs. The fourth issue was around cross-border payments that how do you take care of your global remittances and payments and do it efficiently. And lastly, it was a lot about how can you build a brand connecting directly to customers outside India.
Along the way, we’ve seen a lot of homegrown brands become global brands. This has never been possible in the history of commerce in India and that’s reflecting in the progress we are seeing. So we have now over 70,000 exporters associated with us. We are looking at billion dollars of MSME exports as a milestone for us. It took three years for us to get to the first billion dollars while the next billion dollars came in in 18 months, and the last billion dollars came in 12 months. So that, in a nutshell, is what Global Selling has been all about for Amazon in India.
How do you see this from a forex perspective as MSME exports are a critical part of India’s overall export?
Everybody knows how critical the MSME sector and its exports are as the backbone of India’s economic activity. And, specifically now as we are putting the pandemic behind us, it is important to see how can we create more opportunities for the economy to jumpstart more avenues for forex to come into the country. So from that standpoint, e-commerce exports is a very efficient way. Every possible category that you can think of, Indian MSMEs are exporting that to different countries through 17 marketplaces across the world we operate that caters to customers in over 200 countries. Overall this has such a large multiplier effect leading to product innovation, technology, advancement, job creation, and finally, contributing to India’s economic growth.
In light of the upcoming foreign trade policy (FTP), what definitive measures need to be taken to boost e-commerce exports?
This is where FTP actually comes in. Because the current FTP was initiated in 2015, it primarily caters to offline exports because at that time there were no e-commerce exports. But now as the channels have evolved, e-commerce exports are growing really fast. So it is critical that FTP acknowledge e-commerce and technology-led exports and then take definitive measures towards it. To realize the Prime Minister’s vision of Aatmanirbhar Bharat, and increase the share of MSME exports from 48 per cent to 60 per cent, we have recommended end-to-end digitisation in the upcoming FTP. If we want it to be a broad-based and large-scale movement where every MSME can participate in exports, it has to be digitized. We need to increase awareness about exports and increase the radius of digital exports. Also, we need to enhance our logistics capabilities, ease compliances and create very specific capabilities for export through e-commerce, which will foster operational efficiencies. So broadly, that’s where our thinking regarding FTP is.
Digitisation is important but what about challenges related to efficiency in production, supply chains, storage, etc.?
It all comes down to efficiency in every leg of the value chain. The first part is efficiency in what you’re producing. The first thing done is providing market intelligence that is very machine learning-led and provided to all exporters so that they know in which market what products are selling and at what price points because that allows you to be very efficient in what you’re producing, knowing the capabilities that exist in our country. So, technology allows you to be precise and reduce overheads in terms of products that fail. The second thing is market access. If you want to be an exporter, typically you will have to visit one of the trade fairs, set up a booth, take samples, and show products. That’s a lot of costs built-in even before you start. So now with market access what we’re trying to do is wherever you are in the country, you can open an account, like a social media account that reduces your cost right from step two.
Then the third thing is the supply chain which is very expensive. If you are an offline exporter, you need to get your own container and warehousing in the destination. Sitting in India, getting a warehouse let’s say in the US is going to be expensive and intimidating. Also, there are minimum order quantities in terms of where you need to take a certain size of warehouse because otherwise, nobody’s going to give you a warehouse. The way we’ve designed the model is that if you want to store one product with us for one day, we will charge you for one product for one day. By variablizing that cost structure, there’s a lot of fixed costs, money blockage, and inefficiency that go away.
How many MSME exporters are likely to be added as Amazon targets $10 billion worth exports by 2025?
We’ve got multiple scenarios playing out right now and it is very difficult to say. I think the short answer is more and more because $10 billion is a large export number. The only way one could do it is if we are able to achieve our goal of large-scale enablement of exports, a lot of people will participate in the export journey.
Are you looking at a dedicated export programme for women sellers you are looking at similar to Amazon Saheli for domestic women-run businesses?
We don’t have a focused export programme for women entrepreneurs, but we partner with women who are part of the Amazon Saheli programme, and wherever there is interest for them, to export, we partner with them. But the Saheli program is largely focused on the domestic market.
Any learning out of the pandemic for you and exporters on your platform?
While Covid badly impacted all of us, but it also exposed the importance of diversifying for entrepreneurs because during Covid what happened was that people who had exposure to exports when the India business was impacted, the US business was still doing well. When the US business got impacted, the UK business was doing well. So, they were able to really hedge their businesses. And that’s become a learning.
Lastly, a lot of e-commerce sellers are scouted by Thrasio-style startups to acquire and grow them. Do you think sellers’ growth could be accelerated through this model?
I’m not super privy to their thinking and operating model. I look at it from a customer standpoint because, in the long run, that’s the only thing that succeeds. So any brand, whether they manage it on their own, or they are managed through one of these entities, as long as they can do the right thing for customers, which provides good quality products, innovate, and provide a good experience, I feel any brand on our platform can succeed.