E-Commerce Driving Growth for India's Small and Medium Enterprises

The surge of e-commerce in India is driving growth of small and medium enterprises (SMEs), which in turn is contributing to new job opportunities and GDP contribution, says a study.

The recently-released study, jointly conducted by domestic e-commerce player Snapdeal and consultancy firm KPMG, claimed that e-commerce sector in India is projected to cross $80 billion by 2020, examined the macro-impact of the sector on the growth of SMEs and identified remaining gaps in the ecosystem that needed to be plugged.

As per the report, 85 percent of SMEs who adopted e-commerce believe that it is a cost effective medium for sales growth. The study also claimed that SMEs who actively adopt the internet for business activities boast 51 percent higher revenues, which results in 49 percent more profit and a seven percent broader consumer base than their offline counterparts.

"At Snapdeal, we are working towards building the most impactful digital commerce ecosystem in the country and SMEs form the foundation of this ecosystem in many ways," said co-founder and chief executive Kunal Bahl.

"With over 200,000 sellers operating on our platform, we felt the need to conduct a systematic unbiased study to identify opportunities and challenges to further accelerate the growth of the sector.

"We have taken a number of initiatives like seller training programmes, seller financing programmes - Capital Assist and Snapdeal Seller Advisor Programme, with an aim of creating life changing experiences for over one million sellers in the next three years. This study has given us deeper insights into what more we can do to enable small businesses become more successful online," he added.

The study also highlighted the importance of SMEs in the country which accounted for over 17 percent of the gross domestic product (GDP) in 2014 and contributed to 45 percent of the nation's industrial output and 40 percent of the total exports.

It also claimed that SMEs are capable of creating 1.3 million jobs per year.

"The fast-paced growth of the e-commerce industry in India represents an unprecedented opportunity for SMEs. We hope that the findings of this report will assist policymakers, industry bodies and e-commerce companies to strengthen he support ecosystem, which enables SMEs to ride the e-commerce growth wave successfully," said KPMG India chief executive Richard Rekhy.

Snapdeal also said that it is aiming to disburse Rs. 1,000 crores by the end of the year under its seller financing programmes.

"We have zero non-performing assets (NPA) under the programme," Bahl added.