Hi Friends,

Even as I launch this today ( my 80th Birthday ), I realize that there is yet so much to say and do.

There is just no time to look back, no time to wonder,"Will anyone read these pages?"

With regards,
Hemen Parekh
27 June 2013

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 :

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

Singapore     /    9,296                /       6.74    Million
------------------------------------------------------------------------------------
Malaysia       /    28,840               /       2.05    Million 
-------------------------------------------------------------------------------------
S.Korea        /    2.9 million           /       45 , 000
-----------------------------------------------------------------------------------
India            /   30 million        /          4, 000
------------------------------------------------------------------------------------

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 !

---------------------------------------------------------------------------------------------------

hemen  parekh

19  Nov  2015

B2BmessageBlaster

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