Exports 2.0 to enable small businesses reach customers worldwide and create global brands

Exports are pegged to play a big role in powering India’s economy in the years to come, though India’s global merchandise exports share has remained flat at around 1.7 percent over the last five years. An increase in merchandise exports from India would be an important factor for the growth of the manufacturing sector, leading to job creation and driving India’s economic growth. The “Make in India” program of the Indian government focused on manufacturing various products in India which are now catering to the domestic market. The question arises, how can these manufacturers and MSMEs (micro, small and medium enterprises) leverage this export opportunity?

How do exports happen now?

How does a buyer find India made products in a foreign country today? A buyer in some European country looking to Indian jewellery or artefacts will have to find a local seller who deals in those items. Reaching out to the local seller, the buyer may or may not find an adequate number of options available for purchase. The local seller does not know enough manufacturers from India to expand the variety of stocks and is solely reliant on the distributor supplying such goods.

In India, businesses are always looking for avenues to export their manufactured goods to different countries. They depend on trade associations for market intelligence on probable markets and often help them with lists of importers in those countries. Such intelligence is usually based on the historic trade information with only those countries with whom Indian traders/manufacturers have worked in the past. This means that any exporter wanting to explore a new market would likely have to start from showcasing their products in exhibitions or trade trade shows in those countries to gauge interest of sellers in those countries. Travelling internationally to such trade shows can be an expensive affair and only large manufacturers or traders from India can avail of this opportunity. Those unable to travel are dependent upon the country trade reports published by the Commerce Ministry or trade associations dealing with a particular product category.

The next step is finding buyers (importers) in the foreign market – this process involves research on aspects like market size, competition, quality requirements, payment terms, etc. and much of this information is often unavailable in these reports. Lack of adequate insights can be challenging for small manufacturers in reaching out to foreign importers. Once they close on importers, the next is ‘sending product samples’ and pricing information to get favourable responses from their end. This can be a tedious process with little chances of success leading to roadblocks for the local manufacturers.

Now, with the advent of digital technologies a number of these processes can be made simpler for exporters. On the other hand, e-commerce has revolutionised the domestic retail market, let’s take a look at how e-commerce can also help in exporting India manufactured products?

How can e-commerce help?

Let us look at the same buyer looking to buy Indian jewellery or artefacts where there may or may not be physical retail stores selling those items. The prospective buyer visits an e-commerce site and finds products of her choice These products are listed on the ecommerce channel by a seller based in India. The buyer makes the purchase onsite and pays in her local currency and doesn’t have to transfer payment to someone abroad. Serendipitously, the buyer often gets the products within a couple of days, the manufacturer based in India receives the payment for the product within a few days of the order fulfilment into their bank account without having to worry about exchange rates, foreign payments, etc. Technology-based global selling programs of the international e-commerce playes  enable such seamless transactions of products across international borders.

Now, let us delve deeper to understand how technology can enable such seamless e-commerce across borders.

•       Market Intelligence: Ecommerce exports provide MSMEs and manufacturers access to information and market intelligence to understand demand patterns, latest trends, pricing preferences for markets across the world. This allows for more efficiencies in product manufacturing and improves the probability of new products being successful.
•       Market Access: Ecommerce exports or Direct to Customer (D2C) exports enables businesses to sell directly to customers across the world. It helps businesses transcend boundaries and open a much larger pool of customers. It also provides an ‘easy to adopt and scale’ mechanism for MSMEs and manufacturers to grow their business outside India, without having any footprint locally in international markets and reducing dependence on intermediaries – bringing the ‘seller’ closer to the ‘customer’. It also allows businesses to test new ideas by running experiments with small product quantities and getting direct customer feedback.
•       Simplifying Supply Chain: Historically, managing the cross border supply chain has been overwhelming and expensive for Indian exporters. Sometimes, exporters need to purchase an entire container for shipments, work with warehouse partners to get a share of their space etc. With Ecommerce exports Indian MSMEs and manufacturers can leverage the global presence and existing infrastructure of online marketplaces for shipping, distribution, returns management and customer service. Sellers also get access to variable cost structures for warehousing and logistics – when they store one product, for one day- they will only be charged for that product and time period. This helps bring down fixed costs, and addresses issues like capital blockage and other inefficiencies that can arise for the manufacturers.
•       Faster and simpler payments: Understanding currency conversions, tax laws and other intricacies of global finance is an entry barrier that prevents businesses from expanding operations overseas. Ecommerce exports can address this by simplifying cross-border payments. Payment cycles for exporters are generally 90 days or more. In the case of Amazon Global Selling for example, a seller receives payment within 7-14 days of product sales, accounting for currency conversions and reducing inefficiencies.
•       Building Global Brands from India: For the longest time, many Indian exporters have doubled as contract manufacturers, providing products for other brands. With e-commerce exports, being able to directly interact with customers has resulted in the creation of brands that manage all components of a business, from production to branding and sales. This results in brands owning the intellectual property for their products and higher profit margins- all of which aid in the creation of ‘global brands’ from India.

In the years to come, exports will play a crucial role in India’s economic growth and ecommerce exports provide an easy and rapidly scalable route for Indian MSMEs and manufacturers – to generate higher forex for the country while creating employment opportunities. The immediate priority areas to fuel e-commerce exports start from creating more awareness about e-commerce exports on the ground; end-to-end digitization of processes for MSMEs and manufacturers to start their journey as exporters and building effective yet low-cost logistics solutions. And this is where the upcoming Foreign Trade Policy can be an instrument of transformation. There is a growing demand for Made in India products across the world and this demand cuts across categories. This presents a phenomenal opportunity for lakhs of MSMEs and manufacturers to tap the export opportunity and power the next phase of India’s economic growth story. 

If we were to draw a parallel, we can see what technologies like automation and robotics for example have done to manufacturing and are ushering in the fourth industrial revolution. We firmly believe that India has all the right ingredients to emerge as a strong export’s hub. In the 21st century, the power of the internet, combined with rapid digitization levels and use of machine learning and artificial intelligence can lead us to the vision of Exports 2.0. This vision can empower millions of MSMEs across India to benefit from global market access, integration with global supply chains and enable them to create global brands.