57% of SMEs use internet as sales channel: Google

Over 57% of SMEs in India use the internet as a sales channel and to get direct business leads, according to a survey conducted by Google India.

The survey was conducted to understand usage patterns and the importance of the online medium to small and medium enterprises (SME) in India.

"While the absolute number of SMEs with an online presence is very low compared to the actual (number of) businesses in India, we are pleasantly surprised to see increasing understanding amongst Indian SMEs to use the web for business growth," Google India Head (Online Sales) Sridhar Seshadri said.

He further said, "In the last two years, we have seen a significant increase in the number of businesses that have started to advertise online. But with over 35 million SMEs in the country, we have a long way to go."

Out of 785 SMEs, 71% use the internet to search for vendors and suppliers and about 40% of them use the internet to create online listings and advertise online.

However, accessing email is the main purpose for using the internet for all the SMEs, the survey noted.

The internet is also emerging as one of the fastest growing avenues for SME advertisements, with 58% of SMEs with websites using the web to generate business leads. Nevertheless, traditional media like newspapers and outdoor hoardings still accounts for most of SMEs' advertising spend.

Amongst the SMEs that have a online presence, 56% of them feel the internet is a cost-effective medium as compared to traditional advertising mediums like print and television and 79% of SMEs believe that internet advertising can provide a greater reach.

Among all the SMEs surveyed, those involved in insurance, IT hardware, travel and tourism spend around 30-45% on online marketing. Annual online spends are also high among SMEs in the media and entertainment, gems and jewellery and apparel space.

In this regard, display advertising and email marketing are the most popular forms of internet advertising and 30% of SMEs use search engine advertising to market their product and services.