Online marketplace Snapdeal today released a study in partnership with KPMG, which examines the macro-impact of ecommerce sector on growth of small and medium enterprises (SMEs) in India and identifies remaining gaps in the eco system needed to be plugged to facilitate adoption of e-commerce by SMEs.
The report, ‘Impact of Ecommerce on SMEs in India’, compares the ecommerce-led growth trajectory of SMEs in India vis-à-vis other emerging and developed economies. Additionally, it outlines different roles that various participants like the government, industry bodies and ecommerce companies themselves can play in making the SME ecosystem more robust.
“At Snapdeal
“We hope that the findings of this report will assist policymakers, industry bodies and e-commerce companies to strengthen the support ecosystem, which enables SMEs to ride the e-commerce growth wave successfully,” Richard Rekhy, CEO, KPMG India added.
Study highlights:
* 85% of the SMEs who adopted e-commerce believe that it is a cost effective medium to grow sales
* SMEs using internet for business saw 51% higher revenues and 49% more profit
* 73% SMEs felt that ecommerce enables them to understand their markets better
* 46% SMEs reported increase in business through listings on online marketplaces
* E-commerce enabled SMEs reported 60% to 80% reduction in distribution, marketing and sales spend to get incremental business
Study key findings
Overview of e-commerce industry:
The e-commerce sector in India is projected to cross USD80 billion by 2020 and USD300 billion by 2030 and is already changing the way small and medium businesses operate in India.
2.9 billion Internet users worldwide. 348 million internet users in India in 2015
50 million of the 100 million online shoppers in India shall belong to tier I and tier II cities in 2016
Overview of SME sector in India:
The SME sector accounted for more than 17% of the GDP in 2014 while contributing to 45% of the nation’s industrial output and 40% of the total exports.
The SMEs in India add over 1.3 million jobs per year.
SMEs that use the internet extensively tend to export approximately twice as much by export value when compared to SMEs using the internet sparingly.
43% of SMEs in India participate in online sales
27% of SMEs using the internet are engaging in e-commerce
69% of SMEs report an increase in customers due to the internet
E-commerce improves competitiveness and provides businesses a platform to achieve on a truly global scale
85% of the SMEs who adopted e-commerce believe that it is a cost effective medium to grow sales
Around 77% of the SMEs who have adopted e-commerce were listed on online marketplaces
It has been 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
Potential benefits of e-commerce to Indian SMEs
The improved speed to market, global consumer base and flexibility to conduct business can potentially boost the SME revenues to the tune of 51per cent
73% SMEs agree that ecommerce helps make accurate market comparisons
46% SMEs agree that they get regular business through marketplace listings
Adoption of ecommerce may boost the profit margins of SMEs (up to 49%) by reducing overhead costs and upfront capital investment.
SMEs could reduce expenses on call centres, trade shows and even offline advertising thereby optimising the overall marketing and sales spend to the tune of 60% to 80% reduction in spend
Adoption of e-commerce among SMEs in India vis-a-vis other countries
On an average 100% of the high-web* SMEs in India have a website, use the internet for online advertising and transact using e-commerce in comparison to other emerging countries such as China, Brazil and Indonesia
While 100% of India’s high-web SMEs have e-commerce presence, 75% of the low-web** SMEs also adopted e-commerce.
98% of technology enabled SMEs in India participate in the country’s share of export revenues, only 11% of the traditional SMEs export goods and services
* High-web SMEs use wide range of internet tools to operate
** Low-web SMEs only have a website or social networking site or do not have a web presence at all
For details please refer to “ Impact of Ecommerce on SME in India” paper by Snapdeal and KPMG