India is the largest supplier market outside of China on Alibaba.com

Today Alibaba.com platform serves millions of buyers and suppliers from more than 240 countries and regions, showcases products ranging from raw materials to finished goods in more than 40 industry categories. Since setting-up its independent India operations few years ago, Alibaba.com has continued to see sustained growth in the market. Working closely with Indian entrepreneurs and small business owners, and combined with the expertise with global buyers, Alibaba.com has gleaned valuable insights about the opportunities and challenges for Indian SMEs on the e-commerce platform.

We caught up with Khalid Isar who is the country general manager of Alibaba.com operations in India and is responsible for driving the company’s local growth, to know about roadmap of Alibaba, initiatives taken by Alibaba in the country to support and train its Indian SME members and the major challenges that a B2B ecommerce company faces in India.

[Edited Excerpts]

Inc42: How is Alibaba doing in India ever since its launch? What are your expansion plans for this year?

Khalid Isar: India is a unique and very important market for us because it has a large MSME population and has both a robust domestic market and growing export sector.

A recent study by Assocham and ComScore revealed that India is among the three fastest growing Internet markets in the world adding over 18 Mn Internet users and growing at an annual rate of 41 per cent. With increasing Internet penetration and the availability of more payment options, Indian SMEs who have traditionally been focused on domestic trade are now in a position to develop export trade through the internet.

We’ve been committed to helping export growth in India for a number of years and have offered various offline and online training and business matching sessions for our members.  This type of training will continue to be our focus through 2014 and beyond, but we’ll also grow our local features and services that help serve our members better.

The India Channel caters specifically to Indian suppliers on our platform providing an easy and efficient space for international buyers to source from India, if they prefer to. We are also rolling out new membership levels for new members which will help in raising search rankings for more Indian products.

As buyers around the world are looking for alternative sources of suppliers and products, we hope to better equip Indian suppliers for meeting the changing buyer needs, as well as making Alibaba.com their go-to platform for reaching out to local and international buyers.

Inc42: Can you please share the size and scale of Alibaba’s business in India?

Khalid Isar: Our year on year growth has been steady over the last few years and as of December 31, 2012 membership reflected a 22% rise in India. As of June 30, 2013, there were more than 3.3 Mn registered members from India on Alibaba.com’s international marketplace. India continues to be an important market for the Alibaba.com business as it represents the largest member base in the world, outside of China.

Inc42: How different is Indian market in comparison to China?

Khalid Isar: India is the largest supplier market outside of China on Alibaba.com platform and the third largest buyer base after China and the US. Both markets have become sourcing hubs and have a lot to offer. What India is able to offer is a great jewellery industry, along with a strong, quality textile industry and a diverse agriculture industry. This is reflected in the top three categories on our website, with the top buyer inquiries made to Indian suppliers around the Machinery (9%), Agriculture (8%) and Apparel (7%) industry categories, according to June 30, 2013 data.

As manufacturing costs across the world continue to rise, overseas buyers are increasingly looking for sourcing options from countries with distinct, quality products at competitive prices. With the incredible number of growing enterprises in India, the country is increasingly being recognized as a hub for manufactured products for export.

The following are the key areas on why Indian manufacturers stand out among their counterparts:

Indian manufacturers can offer Quality: In various industries such as apparel, handicrafts, gems & jewellery etc, Indian suppliers are recognized for their proven artistry and expertise.

Better price points: With relatively lower labour costs than other markets, India has been able to sustain manufacturing at globally competitive prices.

Low linguistic barrier: English, although a secondary language in India, has become the language of business, especially in urban areas and commercial centres.

Inc42: What sort of marketing strategies have you picked up in the country?

Khalid Isar: In India, Alibaba.com’s strategic focus is clear: grow the pool of quality suppliers from India, encourage local suppliers to increase the number of unique product listings on the site and encourage suppliers to be more active on the site to help them reach global buyers looking for long-term supplier partners.

Inc42: What kind of initiatives has Alibaba taken up in India to support and train its Indian SME members?

Khalid Isar: Because of our global reach, Alibaba.com can provide great benefits over traditional marketing efforts with limited or even no investment and minimum time. We  drive various local initiatives to raise the competitiveness of our members. The Verified Membership initiative allows non-paying supplier members in India to establish trust with potential buyers.  The India Leading Supplier programme is another initiative that trains and educates active members on Alibaba.com to further enhance their online profiles. Designing templates or mini-sites follows next, these tools make it easier for suppliers to highlight their expertise and top-selling merchandise.

Another is Customs Data, it helps suppliers provide greater confidence to buyers by showing that they are experienced in doing export with solid export data (or authentic records of production and shipment. And lastly, there is Expo-Centre, it gives leading suppliers who have built a consistent reputation for supplying high quality products get additional exposure and a marketing channel for their most competitive products

In the past few years, we conducted workshops in more than 10 cities, where we trained our supplier members. Additionally, we do online trainings and events such as Open Sesame (monthly events) for suppliers to understand how the platform works.

Inc42: What are your views about ecommerce in India? What are the opportunities for Indian SMEs on the ecommerce platform?

Khalid Isar: The internet has opened up a large range of opportunities for entrepreneurs of all ages, income levels and expertise – particularly small businesses. We have seen that SMEs who embrace the internet are growing faster and adding more jobs than those that don’t. E-commerce has made it possible for SMEs from large cities to rural villages to connect and trade with buyers from across the world.

B2B ecommerce platforms like Alibaba.com provide small businesses with opportunities to establish their presence on the internet by providing them a one-stop shop, identifying potential trading partners, learning more about global trade, sharing trading experience and interacting with each other to conduct business online. Because of their huge scale, these virtual marketplaces can provide great benefits to users with limited or even no investment and minimum time.

It also helps small business to explore new markets and diversify its risk by expanding the customer base effectively. The geographical reach of potential customers that an online marketplace brings to small business is beyond what traditional marketing efforts can offer, What once used to be challenging for businesses to reach out to new customers and markets, is now easy with ecommerce and the internet.

Inc42: What according to you, are the major challenges that a B2B ecommerce firm faces in India?

Khalid Isar: As with any market, there are both challenges and opportunities. We believe the opportunities for local SMEs have yet to be fully explored but also, that the internet will help them reach new heights.

To excel, Indian SMEs are taking the extra step to increase the market demand of their products. For instance, to cater to the increased demand for jewellery leading up to the Lunar New Year celebrations, Aligarh-based Masterpiece Jewellery created a special range of pendants and neck-wear for customers in China, Taiwan and Korea. This shows that businesses are continually working to customize their products to meet buyer requests.

However, one of the most critical elements to B2B e-commerce in India is the broadband infrastructure. A boost to this industry will enable Indian SMEs from all corners of the country to be competitive in the international marketplace. While 3G spectrum has enhanced internet usage, it hasn’t filtered down to the general population. The solution to this would be to boost internet infrastructure, particularly in Tier II and Tier III cities. It is among the major contributing factors to the lack of widespread adoption of e-commerce by local businesses.

Another challenge that B2B platforms face is to understand local customer needs – keeping up with their ever evolving needs and continually serving them effectively. We make it our priority to provide our Indian members with a high level of service and support while maintaining an accessible cost structure.

Sadly, the myth of being too small to trade globally still permeates but we remain confident that with training, exposure and the growth of e-commerce in India, small business owners will see the benefits of listing through our platform.

Inc42: What key insights you would like to share about the challenges for Indian SMEs on the ecommerce platform?

Khalid Isar: One of the biggest obstacles faced amongst Indian SMEs is the lack of awareness about the power of the internet for business growth. We continually have to overcome the perceptions of SME owners, who are the ones driving the engine of economic growth around the world, to enhance their exposure through the internet in order to export overseas through e-commerce websites like Alibaba.com.

We see major hindrances for rural SMEs as well. These are slow growth of internet penetration, lack of awareness, lack of trust, abysmally low credit card penetration, and lack of convenient payment options. We remain confident however, that e-commerce has a bright future in India.

To improve the level of awareness about e-commerce in India, we have been partnering with several prominent industry bodies like FICCI and FIEO to get our message across to targeted business owners, and help them understand the benefits of global sourcing & exports through ecommerce.

As the industry continues to develop, the bigger the potential for local SMEs to reap the benefits of online platforms like ours to grow their business.

[Stay tuned  to know “What suggestions Khalid Isar Has For Entrepreneurs” who are planning to venture into ecommerce.]