'If consumers are moving online then why aren't SMEs'

India is a land of unorganised & unstructured business. There are people who are experts in their domains- Manufacturing, Trading, Sourcing, Designing etc and they build small business out of this 'skill'. These people build a small business in their respective catchment areas and manage to grow at a rate marginally higher than the inflation.

This sector, which employs close to 40% of India's workforce contributes a meagre 17% to the GDP. This statistic sums up the untapped potential in this segment. But, multiple problems exist:

1. Family members start working in the same business without much addition to the overall business. More working hands don't result in additional business.
2. The business doesn't grow fast because the deployed capital doesn't change much. Access to capital is a major challenge
3. For most SMEs, the catchment areas are pretty small and there is no way they can expand it in a cost efficient way.
4. Most of these SMEs use little or no technology in their business operations. This leads to a lot of inefficiency & lost opportunity.

SMEs contribute to over 50% of India's retail and can contribute in a much larger way if the above mentioned problems were solved. China had a similar profile of SMEs (mostly in manufacturing) a few years back and today those SMEs are the backbone of China's burgeoning economy. What led this transformation?

The advent of Online Marketplaces helped these small manufacturers reach out to a much larger audience (at low marginal costs) and also enabled them through various ancillaries such as capital providers, technology providers and logistics providers. Today SMEs' contribution to China's GDP is north of 60%!

India is at a similar junction where the SMEs can benefit from the fast growing internet base and the fast developing e-commerce infrastructure. In next 3-5 years, over a million SMEs will go online and start selling products & services to millions of consumers through the Online Marketplaces. Like in China, the marketplaces provide all kinds of ancillary services to make the SMEs successful!