A report on the project titled

E-commerce in MSME- India Perspective

Submitted to

Prof. Hema Date

As part of the course

E-Commerce

By
Jayant Kar-1502080 PGDIM
Alekh Lambat- 1504005 PGDMM

National Institute of Industrial Engineering

Mumbai

ACKNOWLEDGEMENT

We express our heartfelt gratitude to Prof. Hema Date who

provided us constant guidance throughout our work. She
was the source of knowledge and inspiration for us. She
motivated us with his ideas and thoughts and allowed us to
make use of the limited resources to the maximum possible
extent.

Jayant Kar-1502080 PGDIM 22

Alekh Lambat- 1504005 PGDMM 02

Introduction
Most of the international economies depend basically on the role of SMEs in
supporting the national economy in different countries. For example, in the non-oilexporting states, SMEs account for a greater proportion of economic activity and
international development organizations are active. The growth rate of the Indian
SMEs was 11% every year till 2010-11. Nearly, 1500 lakh people were employed in
the MSMEs during 2013-14.
Problem
Low adoption of e-commerce in managing the day-to day activities at MSMEs leads to
difficulty in supply chain collaboration with bigger firms who leverage e-commerce to
reduce their operational costs.

Business Analysis using SWOT

Analysing the Strengths, Weaknesses, Opportunities and Threats for the MSMEs in
India, we can do a thorough business analysis to identify their shortcomings.
Strengths
Contribution to Indian Economy
As mentioned above, Small and Medium Enterprises (SMEs) play a crucial role in the
growth of Indian economy with a contribution of 45% in the industrial output and 40%
in exports. They produce a large number of quality products for both Indian and
international markets. SMEs are gradually gaining foothold in almost all sectors such
as manufacturing, food processing, pharmaceuticals, textile, IT, etc. Today Indian
MSMEs enjoy a plethora of opportunities for expansion and diversification across all
sectors.
Employment Generation and Promotion of Indian Brand at the Global Level
Indian SMEs create millions of job opportunities every year. Over the last 5 years,
nearly 3500 lakh jobs were created by the MSME sector. A lot of skilled & semiskilled manpower are employed in different SMEs across the country. Besides, the
SMEs help Indian products get global recognition too. This leads to increase in
demand for the Indian products in the international market.

Expansion of Export Market

It is evident that the products and services of Indian SMEs have started occupying a
foothold in the international arena. Over the years, Indian products have achieved
great accolades in the global market. It has helped in the expansion of export market,
and thus can be considered as one of the greatest strengths of Indian SMEs.

Weakness
Lack of Marketing Skill and Information
The inability to make and execute effective marketing strategies is another big concern
for the SME segment. With poor marketing strategies, all your efforts go unnoticed in
the market. Similarly, lack of information prevents many small enterprises from
making further progress. Many of the small entrepreneurs are not aware of the
government schemes and policies available for MSMEs.

Lack of Management Skills

Most of the Indian SMEs are home grown units where the entrepreneurs lack
management skills & outlook to effectively manage & help grow the SMEs optimally.
Many small businesses fail due to poor management skills. Poor management of
finances, manpower as well as other resources are responsible for the failure of many
enterprises.

Lack of Access to New Technology

To take your business to the next level, you need to keep in tune with the latest
technology. Technology helps you perform more efficiently and optimally incorporate
new strategies. Unfortunately, many Indian entrepreneurs are unaware of such

technologies or find it difficult to adhere & adapt new technologies. Moreover, they do
not have easy access to these technologies either.

Basic Need of Internet is Still a Challenge

As per one of the research reports (in 2013) where BCG surveyed 4000 SMEs in five
countries, it found that nearly 90% of SMEs in India have no access to the Internet,
compared with only 22% of SMEs in China and 5% of SMEs in the US. Though,
initiatives like Google My Business are aiming at getting 20 million SMEs online in
the next three years.

Opportunities

Support for Technological Up-gradation

A few technology up-gradation programs for the SMEs have been introduced in the
last couple of years. These programs have been initiated by the Ministry of MSME.
The core aim of these initiatives is to help the small and medium enterprises upgrade
their technology and enhance their production facilities.
Bilateral and Multilateral Trade Agreements
Keeping the weaknesses aside, Indian SMEs today have access to opportunities like
never before. A number of bilateral and multilateral trade agreements have taken place
which open the door to a great source of revenue for Indian entrepreneurs.

Threats

Quality of Products/Service Still to Meet the International Standards

Although, the Indian MSMEs have upgraded their product and service in terms of
quality, it is yet to match the international standards. If one wants to occupy a
formidable position in the global market, the offerings need to be in accordance with
the international standards.

Lack of Collaboration with Bigger Players

The bigger players in various sectors leverage e-commerce to have
higher efficiencies in their value chain. The slow pace in adoption of
e-commerce systems related to procurement, distribution, CRM etc.
are usually seen as a disadvantage from the MSMEs side.

Shortcomings
The major shortcomings of the MSMEs sector from the above business analysis can be
listed down as

Lack of funding assistance

Lack of Marketing skill
Restricted access to information
Lack of Management skills
Restricted access to new technology to enable e-commerce
Longer time taken in design to market phase
Absence of Innovation capturing mechanisms

Scope of Improvement
From an e-commerce point of view, the collaboration with bigger players, which will
not only give a sustained business, but also provide quicker access to markets as well
as access to newer technologies. Thus, from the lens of e-commerce initiative we have
major scope of improvement in the following aspect
Adoption of e-CRM

Establishing e-commerce framework for B2B trade

Typical E-commerce framework in B2B communications

ELECTRONIC FRAMEWORK

The major factors to be considered while implementing an e-commerce framework for

MSMEs are
Infrastructure Management
Resources
Partners
Value driven methodology
Customer Relationship Management

Information Strategy
Customer Data management
Lead generation and customer retention
Customer Trust and Loyalty

Product Innovation
Product lifecycle management
Value innovation
Target Customer
Finance Management
Cost structures
Revenues
Ledger maintenance