57% of SMEs use internet as sales channel, finds survey

There are around 35 million medium, small and tiny enterprises across the country, but less than two million of them are online, according to Sridhar Seshadri, Head of Online Sales at Google India.

The world's leading search engine spoke to around 800 SMEs across the country and found that 57 per cent of them use the internet as a sales channel to grow their business and find it cost effective. While 71 per cent also use the Internet to search for vendors and suppliers, about 40 per cent of them use the internet to create online and advertise online.

While the absolute number of SMEs with an online presence is very low compared to the number of businesses in India, Google has found through its survey that theunderstanding among Indian SMEs of the uses the web for business growth. Google India’s online advertising platform Google Adwords is expected to help open up new markets for SMEs, Seshadri said.

“They (SMEs) allocate 30-45 per cent of marketing budgets towards online marketing and advertising, and 62 per cent of them also plan to increase their budgets in future.” He noted that newer businesses started in the last five to 10 years are more attuned to adopting digital advertising and creating an online presence.

According to Google's study, 81 per cent of the SMEs who have used Internet marketing have said it helped them to increase their customer base. SMEs possess huge opportunities in the export market that would enable them to contribute to the growing GDP of the Indian economy and to expand their business to wider audiences.

The Indian export market has shown a robust growth of 37.5 per cent in 2011 and aims to achieve merchandise exports of $500 billion by 2014. Retail, apparel and travel and tourism sectors will be the biggest contributors in future and sectors that have seen an increase in the market are engineering, pharma, chemical products and gems and jewellery.

Despite the imminent export market potential for Indian SMEs, factors that have hindered their growth include lack of credit and regulatory issues and to overcome these issues Google simplifies their process through the digital medium, said Seshadri. He added that Google has been working with SMEs for the last three years. The number of SMEs who were using the Google advertising platform tripled and was expected to grow by 100 per cent this year.

To support their customers, Google has launched a call centre with six languages. According to Seshadri around 1500 SMEs utilise the services of the call centre on a daily basis.

“The search engine helps these units to reach out to new markets and customers. Our primary focus is to connect the buyer and seller, we give only choice, we do not recommend,” said Seshadri.

As far as investment is concerned, SMEs have to make two kinds of investments – one is on a website (aroundRs 1,000 toRs 10,000) and the other is for search marketing, which can range fromRs 100 a day toRs one crore a day.