Deep-pocket e-tailers like Amazon, Flipkart and Snapdeal are turning to the country’s 47 million small and medium enterprises (SMEs) to host a unique assortment of products on their online stores. They are providing specialised training, logistics, infrastructure and technology support to these SMEs to enrich their product selection in categories like apparel, jewellery, handicrafts, fashion accessories and leather goods. Flipkart plans to on-board 50,000 SMEs in the next two years while Snapdeal is inching close to the 100,000-seller mark, a majority of them SMEs. Amazon already has 10,000 sellers on its platform, many of whom are small units.
In turn, such tie-ups are helping SMEs gain access to an otherwise elusive market and an association with the likes of Amazon, Flipkart and Snapdeal leading to prominence and confidence among their consumers. An exposure to the online channel also helps SMEs cut through intermediaries like wholesalers and retailers, thus streamlining payment processes.
Snapdeal co-founder Rohit Bansal told FE his firm has introduced services like Payship and Snapdeal Plus to boost logistics capabilities of SMEs, besides an exclusive mobile app. The e-tailer will also help them secure loans from banks and NBFCs. “We see ourselves as an enabling company for the over 1,000 businesses built on Snapdeal who do more than R1 crore in annual sales. Before we came in, small businesses saw the internet as a threat but that’s changed,” Bansal said, adding that it has already tied up with the Karnataka government to help the state’s SMEs sell online.
Amazon India country head Amit Agarwal says Amazon offers services like Fulfillment and Easy Ship to enhance a seller’s logistics capabilities. “We do all the heavy lifting on behalf of the sellers so that they can focus on pricing and selection,” Agarwal said. The global major has also tied up with the Federation of Indian Export Organisation, Manufacturers Association of Information Technology, Trade India, and Export Promotion Council of Handicrafts to identify SME clusters and to popularise the benefits of selling online.
Flipkart, on its part, has tied up with the Federation of Micro, Small and Medium Enterprises (FISME) and the National Centre for Design and Product Development to help small manufacturers and artisans. The online marketplace is also working with the Centre to train people in semi-urban and rural areas to prepare them for employment at Flipkart or its business partners. On Monday, the homegrown e-tailer inked a pact with the textile ministry to provide an online marketing platform to handloom weavers across the country.
SMEs have limited muscle when it comes to reaching out to an audience and building a brand. Another problem with them is managing finances. “When SMEs work with online marketplaces, they are assured of payment within a specific period of time, which is otherwise not the case and has a bearing on their finances,” said Anil Bhardwaj, secretary general, FISME. According to data available with the ministry of micro, small and medium enterprises, India had 46.7 million MSMEs by the end of FY13, employing 106.1 million people. The sector has …continued »