Golden Rules for SMEs to market effectively on E-Commerce Platforms

Vinod K Pandita
Strategic Leadership Coach| Management Consultant | Master Trainer | Motivational Speaker

Ever since the onset of the financial crisis, the global economy has been struggling to revive itself and achieve a healthy growth rate. The global growth rate for 2017-18 and 2018-19 are projected at 3.40% and 3.80%.

But compared to this, India’s GDP continues to grow at a fast pace, outstripping major world economies. According to IMF, India is projected to grow at 7.80% for this fiscal year.

Without any dispute, SMEs are one of the key drivers behind this growth story. This sector, comprising of manufacturing, infrastructure, service industry, food processing, packaging, chemicals, and IT, has emerged as the most vibrant and dynamic engine of growth of Indian economy over the past two decades.
These self-funded proprietary firms, private co-operatives, private self-help groups, Khadi, and Village and Coir industries, not only provide huge employment opportunities but also ensure regional balance by taking industrialisation to rural and backward areas (about 20% of MSMEs operate out of rural & backward areas – CII)

To communicate the importance of the SME sector, I am sharing with you some key SME statistics, trends and reports.

  1. Number of SMEs in India: The number is estimated to be at 42.50 million, registered & unregistered together.  A staggering 95% of the total industrial units in the country.
  2. SME & Employment opportunity: Employs about 106 million, 40% of India’s workforce. Next only to the agricultural sector.
  3. Products: SMEs produce more than 6000 products.
  4. GDP Contribution: Currently around 6.11% of the manufacturing GDP and 24.63% of Service sector GDP.
  5. SME Output: 45% of the total Indian manufacturing output.
  6. SME Exports: 40% of the total exports.
  7. Bank Lending: Accounts for 16% of bank lending.
  8. Fixed Assets: Current fixed assets at INR 1,471,912.94 crore.
  9. SME Growth Rate: Has maintained an average growth rate of over 10%.


Comprehending the sector’s contribution towards employment numbers, towards GDP, innovation and entrepreneurship, the Government of India has launched numerous initiatives to further the cause of SMEs. Mentioned below, in a table form, are the performances of some of the key schemes:

  1. Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE).
  2. Export Promotion of Capital Goods (EPCG).
  3. Credit Linked Capital Subsidy Scheme (CLCSS).
  4. Lean Manufacturing (National Manufacturing Competitiveness Programme).
  5. Intellectual Property Rights.
  6. Marketing Development Assistance (MDA) Scheme.

E-commerce Advantage
For SMEs in developing countries e-commerce poses the advantages of reduced information search costs and transactions costs (i.e., improving efficiency of operations-reducing time for payment, credit processing, and the like). Surveys show that information on the following is most valuable to SMEs: customers and markets, product design, process technology, and financing source and terms. The Internet and other ICTs facilitate access to this information.

In addition, the Internet allows automatic packaging and distribution of information (including customized information) to specific target groups.
However, there is doubt regarding whether there is enough information on the Web that is relevant and valuable for the average SME in a developing country that would make investment in Internet access feasible.

Underlying this is the fact that most SMEs in developing countries cater to local markets and therefore rely heavily on local content and information. For this reason, there is a need to substantially increase the amount and quality of local content (including local language content) on the Internet to make it useful especially to low-income entrepreneurs, eMarketer estimates that SME e-business revenues will increase: from $6.53 billion to $28.53 billion in Eastern Europe, Africa and the Middle East combined; $127.25 billion in 2003 to $502.69 billion by 2005 in the Asia-Pacific region; $23.51 billion in 2003 to $89.81 billion by 2005 in Latin America; from $340.41 billion in 2003 to $971.47 billion by 2005 in Western Europe; and from $384.36 billion in 2003 to $1.18 trillion by 2005 in Northern.

There are at least five ways by which the Internet and e-commerce are useful for developing country entrepreneurs:
1. It facilitates the access of artisans47 and SMEs to world markets.
2. It facilitates the promotion and development of tourism of developing countries in a global scale.
3. It facilitates the marketing of agricultural and tropical products in the global market.
4. It provides avenues for firms in poorer countries to enter into B2B and B2G supply chains.
5. It assists service-providing enterprises in developing countries by allowing them to operate more efficiently and directly provide specific services to customers globally.

Following are five golden tips, which can prepare SMEs to use e-commerce platforms:

  1. Awareness of ICT and digital marketing
    This calls for a structured training and exposure to e-commerce technology from established experts in this field
  2. Decision of building own e-commerce platform or using already established platforms 
    Small and medium business owner must take a decision to own or outsource e-commerce platform based on his/her financial feasibility, understanding that technology, availability of resources and market size.
  3. Market research to know market feasibility, understanding of global market and business environment in that space
    It is essential to conduct market feasibility study to understand the dynamics of market for acceptance of that product/service line of business.
  4. Selection of products and services and its backend supply chain process
    Based on market study and feasibility report, it is important to select products/services to market online. It is also vital to determine supply chain strategies and have strong back end to ensure uninterrupted supplies at the minimum cost of logistics.
  5. Developing a great team
     SMEs must take human resource very seriously, educate them and empower them most effectively to support back end operations in case of successful e-commerce journey.