India’s ecomm scene is centred on big players like Flipkart and Snapdeal. But a growing bunch of small businesses tells an equally compelling story.
ET Bureau
A seller of homegrown fairness creams, tooth powder and herbal products hits upon huge demand in Russia, Israel and Turkey. Hospitals in Korea turn to a retired navy commander in Mumbai for dental products. A leather jacket maker in Dharavi ships his wares to London and New York. A German power company — how is that for a customer of auctioned imported goods? In the dingy corners of Mumbai, the nondescript localities of Delhi, the remote villages of Rajasthan and Gujarat, small businesses run from cramped spaces are slowly driving an e-commerce revolution. India’s e-commerce story has largely centred on big players such as Flipkart, Paytm and Snapdeal. But a growing bunch of small businesses are laying down an equally compelling, if not more audacious, growth track by pushing e-commerce exports. They cater to discerning clients in abroad by listing products on online market places eBay and Amazon and then shipping them through logistics service providers like DHL Express. SME exports on these platforms have grown 50%-70% from zilch in the past five years. “We have 25,000 plus exporters. Up to 68% of these are SMEs. From the confines of their homes, they sell to more than 239 countries through listings in 39 countries,” says Navin Mistry, head of retail exports and imports at eBay India.. Gopal Pillai, director, seller services at Amazon, says over 50% of the online market place’s 1 lakh active sellers are SMEs. Of these, over 12,000 sellers export 20 million products to nine markets, including the US, Italy, and Japan. These sellers range from textile traders in south India to sellers of cattle products in Haryana. Look at it this way: the e-commerce boom has now spread to smaller towns. So much so that eBay has tied up with India Post for setting up its counters at 11 cities and towns in India. One of the towns is Bassi, Rajasthan whose residents are making a fortune selling gemstones after diversifying from their family occupation of farming. Amazon recently partnered the Union Ministry of Textiles to enable weavers in Kota in Rajasthan, Nadia in West Bengal, Bargarh in Odisha and Pochampally in Telangana to sell their products.
Women entrepreneurs too are a major driving force of this trend. Delhi-based Jyoti Wadhwa’s used and vintage garments have buyers in the Europe and the US. Manju Kripalani, also a Delhi resident, sells jewellery — some items cost Rs 10 lakh — to buyers in London, New York, Singapore and Kuala Lumpur. Many of these businesses are sole proprietorships. All they need is a VAT registration, a PAN card for the business and an Exim code and a member certificate. All these can be done online. A seller either contacts an e-commerce retailer or is brought into contact via government bodies or at seminars. Listing is easy too. An SME seller starts with a few items. On eBay for instance, one can list 10 items for free.
The entrepreneur scales up as the products gain popularity, paying additional listing fees or setting up a virtual store for a lump sum. For example, at $39.99 on Amazon, a seller can get a virtual storefront with unlimited listings in the US. Transactions aren't complicated. The seller gets his money either a few days after the online transaction or at the end of a monthly cycle. The e-commerce companies either deduct their cut - 12 per cent-15 per cent - at the time of payments or give them an invoice later.Thanks to the business SMEs get them, ecommerce and logistics providers invest time in handholding them.
“We get a few hundred queries,” said RS Subramanian, managing director at DHL Express, India. “They range from paperwork to costs to customs.”
Smart logistics solutions are crucial for SMEs especially as they don’t sell in large bulks. "We live and breathe by SMEs. So we have to bring out solutions for them such as shipping tools, seamless support, assured deliveries, money back guarrantees, shipment to shipment insurance etc. Here, DHL’s reach is also important," he added.
Both Ebay and Amazon have regular webinars for sellers. They are trained on the latest product trends abroad, how to best describe and market their products, dealing with customers in case of interactive transactions and even responding to emails.
There are drawbacks too. “India is possibly the only country in the world where commercial exports through courier are not allowed,” says Vijay Kumar, chief operating officer of the lobbying body Express Industry Council of India. Another problem, he says, is the “humongous amounts” of paperwork required to clear customs. Still, these irritants have done little to curb the enthusiasm of these entrepreneurs. Here are some of their stories.
Deven Rao’s small workplace in Mahim bears the stamp of an old general store. Shelves in his office groan with brands such as Monkey Brand tooth powder, Afghan snow fairness cream, Dabur Amla hair oil and a range of indigenous herbal and Ayurvedic concoctions.
The products are a rage in several overseas markets. When Rao reminisces about his business decision taken one night five years ago, he can’t help but smile.
A chemical engineer and MBA, Rao, 32, first toyed with the idea of selling products online when he exhibited his father’s coin collection on eBay. Simultaneously, he tried to physically export vanilla beans. “Someone gave me the bright idea to display vanilla beans on e-commerce sites. I did that along with four other products such as saffron in 2011. They were instant hits,” he says. Now he lists 2,500 products. Next year, he aims to list 5,000. He says he doesn’t sell anything in India. “We are the global online Big Bazaar of indigenous Indian products.”
The more products he listed, the more Rao was surprised at which geographies wanted them. He discovered Russians loved Monkey Brand tooth powder; sandalwood soaps were popular in the UK and Dabur Amla hair oil sold really well in Israel. Last year, Rao clocked revenues of a skosh over Rs 2 crore. Rao is essentially doing what hundreds of touristy shops in the country do: sell Indian exotica to the world. The difference is that he is marketing goods online and delivering them to their doorsteps.
Rao admits he wasn’t the first one to get the bright idea. He is competing with 15,000 other such sellers on several online platforms. The trick lies in rapidly picking new products and their matching markets. Product placement is crucial too.
For example, on his US storefront, he gave special discounts on herbal products on July 4, the US independence day. 80% of Rao’s customers are foreigners but he aims to expand the lucrative NRI base too. For the upcoming Ganesh Chaturthi festival starting September 5, he plans to sell ingredients for the ceremonies online. He plans on listing Patanjali Ayurveda products, khadi clothing and Anna Hazare caps shortly.
The Valentino of Dharavi
Tausif Ansari, 27
Qualification: 10th standard
Sells: Leather jackets
Selling online since: 2012
Sells on: eBay, Amazon
Annual Revenue: Rs 60-80 lakh
No. of listings: 800-2,000
Tausif Ansari arrived in Mumbai in 2006 from Munger in Bihar with Rs 1,000 in his pocket, an unfinished high school term and plenty of financial worries. He worked three years for a relative in Dharavi who stitched leather bags and jackets. The business folded. Ansari went to Goa and did similar jobs. There he came into contact with foreign tourists and discovered their craze for Indian products.
Within a year, he came back to Dharavi and resumed work at a different leather garment shop. This time however, he saved money and bought a laptop. He started stitching leather jackets and showcased them on Amazon and eBay. He was soon in business.
“Once a week, I carried about five jackets by train to the general post office near Chhatrapati Shivaji railway station. It had a DHL outlet which shipped my consignments,” he says.
Ansari, 27, now clocks sales of Rs 60-80 lakh every year. His brand Skin Outfit only sells overseas, largely to customers in the US. Ansari aspires to reach the size of Boda Skins, a London-based leather apparel maker which started as an eBay store and has grown into a major online retailer, dressing celebrities such as American socialite Khloe Kardashian and rapper Wiz Khalifa. Ansari follows western styles and trends but sells jackets at a fraction of overseas prices. “What is sold in a New York outlet for $1200 (Rs 80,400), I sell for $150 (Rs 10,500),” he says. Still, they cost significantly higher than in any outlet in Mumbai.
Like Rao, Ansari too has many competitors. An eBay executive said Dharavi itself has more than 200 leather jacket makers and about 60 of them sell online.
Ansari has learnt to plan his logistics according to the seasonality of business, stocking leftovers from a good sales season for the next period of high demand. He avoids large numbers as styles are fickle. He has a tight team of 10 employees, including five tailors.
Not all of Ansari's transactions have been good experiences. He speaks of an NRI designer in London who asked him to stitch jackets to her designs. Ansari used to spend hours on Skype with her, cutting newspapers into jacket designs for approval and making changes as she constantly nit-picked.
“But she asked me for a per-piece quote for 1,000 jackets and then said I should deliver 100 jackets at that rate. That was unreasonable. I agreed on Rs 4,000 per jacket. Later I saw on her website that she was selling the same product at ten times that price. I refused to do any more business with her,” he says, adding that now he steers clear of designers and retailers.
Ansari's brother works with the Bank of Baroda. He himself couldn’t complete high school, but now wants to pursue a diploma in export-import management.
"This will really help me understand the dynamics of the business. I have learnt passable english over the years. And I have been told by an institute here that I can take the course, given my business experience," he said.
Dental tools for the world
Surendra Nangia, 63
Qualification: Former commander, Indian navy
Sells: Dental equipment
Selling online since: 2010
Sells on: eBay, Amazon, local dealer sites
Annual revenue: Undisclosed
After voluntarily retiring as a commander in the Indian navy in 1998, Surendra Nangia tried his hand unsuccessfully at several businesses. He eventually found his true calling in selling dental equipment and machinery that very year.
But his business took off only six years ago when he started listing his stuff online for overseas customers. “From five or six international customers annually, I went to 1,000 in a few years,” he says. Today his company Golden Nimbus has agents in almost every Indian state, sells to major speciality hospitals and dental colleges and even has distributors in Germany, Korea and Switzerland. He has a team of 20. His wife and one of his sons help him in the business.
It took time and some major mistakes for Nangia to learn how online transactions worked.
“One of my biggest mistakes was that I forgot to click on the 'Accept' button at the end of transactions. Several months later, I saw no money had come to my account” he says.
Logistics is trickier for Nangia, 63, than many other sellers, especially since some of his equipment are extremely fragile. “Courier companies don’t handle the equipment well,” he says. Understanding the web of rules governing each country can also be difficult. For instance, South American countries such as Mexico and Brazil have tough custom regulations, he says.
“Also, there is a constant need for innovation. No one wants individual products anymore. I have to combine a drilling machine with some other tool and also provide services for a year. The medical profession is extremely dynamic so we have to be updated with the latest processes,” he says.
He visits several doctors and hospitals every week, just to keep up with the latest trends in dentistry. He had to travel to Korea twice in one year to understand the workings of a new dental micro motor that he had sourced from that country.
Many takers for discarded imports
Devang Shah, 33
Qualification: Commerce graduate
Sells: Unclaimed imported goods auctioned by customs department: garments, chemicals, machinery, marine, aircraft parts
Selling online since: 2001
Sells on: eBay
Annual revenue: Rs 5 crore +
Devang Shah was introduced to the world of e-commerce more than a decade back when he sold an Aiwa music system on Bazee. in for Rs 25,000. Shah, 33, buys unclaimed imported goods which are auctioned by the customs department — Shah and his team track 15 sea and airports in India which hold about 200 auctions every month — and then resells them mostly overseas. Sales have swelled to as much as Rs 35 lakh a month.
Shah sells garments, chemicals, machinery and even small marine and aircraft parts such as bearings and cutlery used to serve food on board. “Buyer patterns are beyond our imagination. For example, there are lot of people in the US who stock aircraft parts, even though they don’t work for any plane maker,” he says.
Shah’s USP is pricing. The bids at the customs department actions are usually a fraction of the original import price. Such is the gap that Shah can sell them at 100% profit and the price will still be lower than the original. This fuels demand and ensures margins. The room for interactions and bargaining between buyer and seller that sites such as eBay enable also helps his business.
But it isn’t all easy peasy. The customs department auctions unclaimed imported goods, after several weeks and reminders. Two days before every auction, Shah and his team makes a checklist of the goods they want to bid for. Auctions happen online. Bidding can go on till as late as 4 am. Shah enters late, barely half an hour before close of an auction. He calls a smartly calculated amount that easily trumps the last bid. By that time, many bidders would have called it a day or bowed out of the race.
As soon as Shah’s wins a bid, he has to pay 30% of the bid amount. There is then the painful wait for the final approval from the customs departments. This could take as long as six months. The delay happens when the original importer claims that he hadn’t received any reminder or notification that the goods had arrived. In such cases, the importer sometimes files a case against the department. There have been occasions of a product being handed to the original importer while Shah was waiting for the final approval.
Once, a German power company executive who had bought his Shah's products before, wanted him to supply a transformer tester worth a few thousand dollars. Shah eagerly waited and after a few months found one such part being auctioned. He bid for it, won and told his German customer that he could expect a listing shortly. A few weeks later, the original importer claimed the product. Shah lost a major deal.
Shah currently works out of a 900 square feet rented warehouse and has rented another one with an area of 150 square feet. He aims to own a warehouse in Mumbai in a few years.
ET Bureau
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