Emails (Others): Re-Inventing of Business

Saturday 20 August 2016

Re-Inventing of Business

METRO AG is a German wholesale giant , having 22 stores in 13 Indian cities , from where your local grocers buy goods at " Wholesale Prices " , for retailing in your neighborhood at " Retail Prices "

It plans to invest Rs 2100 cr in India , to open 50 stores by 2020

Now , out of self interest , METRO is reaching out to help create thousands of " Start Ups " all over India

These could be , small hotels / catering businesses / dhabas / kirana stores etc

METRO is helping " Create " these brick-and-mortar Start-Ups ( as opposed to Online web sites ) by :

# Sharing expertise and business secrets / Providing office equipment at competitive prices

# Designing an exciting menu / Putting you in touch with chefs / Kitchen Supplies / Food Safety ( for hotels )

# Help you manage your back-end operations / Keeping costs low / Streamlining supply chain

# Managing your stocks / Inventory Management / Displaying your products

# Helping entrepreneurs understand customer demand and market trends / Quality standards and hygiene

# Plan more efficiently / provide better customer service and delivery techniques

No doubt METRO's competitors ( Ambani / Adani / Biyani / Tata / Walmart etc ) , are keenly watching !

But METRO is not the only one " mentoring / guiding / lending a helping hand " to small retail businesses

To know how a new set of " Online Middlemen" are also helping India's retail shops ,read my following earlier blog :

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Wednesday, 18 November 2015

Rise of the Middlemen ?

For long , marketing pundits have been telling us :

" Internet is all about disintermediation . There is no place for middlemen .

Distributors / Dealers / Agents / Retailers etc , will gradually become redundant .

With arrival of Online Market Platforms ( aka, e-Commerce web sites ) , manufacturers

will accept orders online and directly deliver to end users , bypassing supply chain "

Coming from Marketing Gurus of Harvard etc, this was accepted as Gospel Truth !

Now a bunch of Indian Start-ups are proving them wrong !

These are , Bluebox / Browntape / Unicommerce ( and others I have not heard of )

How ?

By acting as " Middlemen " ( of some sort ) between e-Commerce web sites and MSMEs of India

And what role do these " Middlemen " play ?

* Getting MSME listed on e-Commerce web sites as " Sellers "

* Cataloguing their products

* Managing their inventories

* Reconciling payments

* Maximizing Sales

* Photo-shooting products.......etc

Is there a big enough " Market " for such " Middlemen " Start-ups ?

Consider this :

# There are 500 lakh MSMEs in India

# Of these , barely 3.6 lakhs are currently registered as " Sellers " on e-Commerce web

sites , distributed as follows :

* Flipkart............... 60,000 sellers

* Amazon.............. 100,000 sellers

* Snapdeal............ 200,000 sellers

# Indian e-Commerce market was worth mere $ 5.3 billion in 2014

# As per Merril Lynch , this would go up to $ 220 billion by 2025, with 530 million buyers

So , there is scope for many more of such " Mentoring Middlemen "

May be some such " Middlemen " can help the MSME to export their products, considering that India's exports have been continuously shrinking for past 10 months

Is there a " Scope " to increase exports from MSME ?

Take a look at the following :

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Country / No of MSME / Ave Export / year ( $ )

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Singapore / 9,296 / 6.74 Million

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Malaysia / 28,840 / 2.05 Million

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S.Korea / 2.9 million / 45 , 000

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India / 30 million / 4, 000

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Now , even if each of our MSME succeeds in exporting just $ 40,000 worth of exports per year , that would amount to ,

$ 40,000*50 million !

Currently each MSME ( on an average ) employs 2.5 persons

How many more persons would 50 million MSME need to employ , if each were to raise exports by 10 times ? ( from $ 4000 to $ 40,000 )

It is reported that , even at the current level of operations , India's MSME sector creates 1.3 million jobs every year

For raising (Ave) MSME exports by 10 times , would that figure go up to 13 million new jobs / year ?

Enough to absorb the 12 million persons joining our job market each year ?

It is time for Indian Governments ( Central + States ) , to encourage these " Mentoring Middlemen " Start-ups , by abolishing for them , Corporate Income Tax , for next 10 years

Anything other than such a " BIG BANG REFORM " , will amount to tinkering !

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20 Aug 2016

www.hemenparekh.in / blogs