If 10 Small and Medium Enterprises (SME) are asked what’s the greatest challenge they face – chances are 9 of them would say ‘how to sell more’. SMEs in India face myriad challenges – non-availability of bank credit, govt regulations, deficient infrastructure, lack of productivity etc. – but they are brave and capable enough to face all these. However, one area that SMEs are consistently failing is to sell more and consequently lack of growth – leading to what is popularly called ‘Missing Middle Syndrome’ – SMEs are not evolving to become mid-sized enterprises for many years.
With introduction of GST, a great opportunity opens up for SMEs to sell across India as hassles of inter-state trade is set to go from July 1. But how SMEs can make use of this opportunity without access to distribution channels ? SMEs do not have financial resources to open sales and distribution centers across India – even very large companies like Hindustan Unilever or Nestle depend upon distribution channels to reach all corners of India.
Distribution Scenario in India
Distribution is the backbone of Indian market. It facilitates flow of products from factory gate to all parts of India. Reaching customer’s doorstep in a large country like India using poor infrastructure (transportation, warehouse, cold chain etc.) is a challenge. The challenge gets even more difficult given huge diversity of language, custom and local regulations. Indian distribution industry is highly fragmented – to get products to all corners of the country – the manufacturer has to manage large number of small and medium intermediaries. In a nutshell – unlike developed countries, India does not have a national network enabling manufacturers to distribute their products far and wide.
Using Online Route for Building Distribution Channel
To be successful in India – companies have no option but to build distribution network bottom up. Successful Indian companies like Hindustan Unilever, Asian Paints, Pidilite, ITC, Maruti, Tata etc. are known for huge distribution networks spanning all corners of India. On the flip side, gaps in distribution provide opportunities to new entrants. For example, in bottled water industry, many small companies have built strong local businesses, by focusing on small towns where national brands like Bisleri or Kinley are not available easily. Similarly, in mobile handset industry, Micromax gained significant share by targeting customers in tier II and tier III cities.
Its clear that no SME can grow without a quality distribution network. Since this is not available off-the-shelf, it must be built up (and maintained) slowly and painstakingly. And to do this, companies have to locate potential distribution partners across India and engage them in meaningful way.
What is required is an on-line platform exclusively devoted to agency/distribution business where manufacturers and importers on one hand and distribution partners such as distributors, super stockists, c&f agents, franchise etc. on other, meet and freely communicate for mutually beneficial agreement. Online interaction transcends distance and language barrier – as has been demonstrated by successful Indian e-commerce portals. What’s more, even overseas companies can use such a route to reach out to Indian distribution partners.
Online Distribution Exchange for SMEs
Smart entrepreneurs are using online way to build pan-India and even overseas distribution network. As their partner for many years – I have seen how Internet is changing the way small business sells. Time has come to consolidate this individual brilliance into a national grid for distribution opportunities. The grid will act as an enabler for all participants and fulfill the business cycle of distribution in online space, namely
Vanik.com – First Step Towards Online Distribution Exchange
Vanik.Com is an Online To Offline (O2O) marketplace connecting manufacturers with distribution partners in India. Its the largest b2b portal on agency/distribution opportunities in India – serving manufacturers, distributors, c&f agents, super-stockists, sales agents, franchises, PCD etc. since 2004. Presently, it has discovery and dialog functions. Our plan is to connect it with b2b e-commerce marketplace bazara2z.com for transaction.
Vanik is not a funded venture – customers are its investors. Its among rare boot-strapped but profit-making Internet ventures in India. From seed stage to today, customers have been its guiding force helping it survive and grow to create a unique marketplace out of nowhere. It has helped many entrepreneurs build pan-India distribution network – see case studies at vanik.com
Conclusion
Online distribution exchange like Vanik has the potential to change the way SMEs in India sell – bringing a level playing field for capable SMEs to compete with far larger companies. SMEs will have a window for pan-India and even overseas markets. This is a bold and audacious journey to make a lasting impact on lives of 35 million SMEs who account for 80% of total industrial enterprises, 45% of total manufacturing output and 40% of total exports. I invite interested entrepreneurs who want to make an impact on society and numerous lives to join us in this bold and daring journey.
