This article is written by Ashwini Sharma, a 2011 graduate of NUJS, Kolkata.

The Small and Medium Scale Business (SMB) sector has been struggling in India, as it continues to groan under the burden of license raj era labour laws that do not take into account the different challenges and work environments prevalent in the SMB sector, when compared to the larger cap companies. On another note, the online retail business is still perceived as an unknown beast that may turn out to be an insurmountable challenge for brick and mortar retailers.

The online retail space in India has undergone a big bang stage of growth and now faces the challenge of maintaining a steady rate of expansion. This, of course, is the difficult part, especially when the highly competitive space of e-tail has commoditized online offerings. Most digital marketplaces have the same categories and the same offerings and the same delivery plans. Any new innovative change is quickly replicated throughout. The only differentiating factor then boils down to a race to the bottom pricing strategy, which, if extrapolated, has the potential to make few disappear through sporadic black hole like implosions.

E-tailers’ woes are further compounded by specialist e-tail websites that market only one type of product. Pepperfry.com is an example. Such websites are rational first choices for consumers looking for a specific type of product. So how are Indian e-tailers planning to overcome these challenges?

Digital markets are increasingly looking at integrating the SMB ecosystem to fuel the former’s future growth aspirations. So we see, Amazon and Snapdeal typing up with the Govt. of Karnataka for giving a push to the SMB units(SMBUs) in that state. Amazon has also tied up with Murthy’s Catamaran Ventures to create a joint venture entity that aims to provide a fillip to small and medium enterprises in India. Snapdeal.com recently opened an exclusive store for regional jewellery. Most recently, Snapdeal.com also entered into a deal with www.dharavimarket.com to sell products made in Mumbai’s Dharavi residential area.

It’s a symbiotic benefit exchange for both the e-tailers and the SMBUs, both of who faced competitive resistances from the big brick and mortar stores. It’s an example of ‘co-operation competitiveness’, i.e., unlocking of competitive efficiencies through synergies generated from co-operation.  It is akin to a tag-team strategy to bowl down the Goliaths. E-tailers benefit the following way:

1. Unique Branding Opportunity: Companies are toying with developing a social face in their marketing strategies. Snapdeal.com understood this clearly when it’s 15 hand-pumps brought it much admiration when a small village in Uttar Pradesh’ Muzzafarnagar district changed its name from Shiv Nagar to Snapdeal.com Nagar.It has decided to keep this face alive by partnering with Dharavi’s entrepreneurs. Amazon too has launched the Amazon smile program which lets online buyers choose a charity of their choice and donate while making purchases.
2. Differentiation from a commoditized proposition: Close on the heels of a ‘social face’ marketing strategy, lie benefits that are unlocked through ‘differentiated’ sub-market places, such as the regional jewellery section in Snapdeal, and now the soon to come, Snapdeal’s Dharavi market place. These differentiated sub-market places reinforce the umbrella brand instead of pulling eyeballs away from it. Snapdeal has indeed taken a leader’s responsibility among all e-tailers, especially when considered in the backdrop of the most recent news of its tie-up with IndiVillage, a BPO company focusing on rural areas, to promote skill development and employment opportunities.
3. Diverse branding: E-tailers now no longer will be seen as one giant marketplace where everything is lost inside in its loch-ness monster sized logo. Such a humongous uni-brand could work against them when their brands are inhibited from telling specific product based stories to their customers, or create an emotion in them. Creation of sub-market places based on cultural themes, such as promotion of ‘regional designs’ existing in the diversity of Indian designer wear, conveys a clear intent and message. It is a proposition waiting to be applied.
4. Regionalization: Inventorying region specific products unlocks efficiencies from ‘regionalization’ of one’s offerings. The value proposition lies in the region specific customer base that is easily targetable and can be marketed to. This is a strategy which STAR TV had realized quite early, which led to its acquisition of major regional channels in India, around the start of this decade. This ‘regionalization’ strategy has been further continued by STAR TV through enablement of multilingual commentary in its sports content.

As for the SMBUs, they get a worldwide market place to position their wares on digital shelves. The benefits are immense and hence any fears of online retail marginalizing offline ventures should be set aside. Hope the government does not stultify this energetic horse racing through the business map of our country, by implementing regressive regulations for the e-tail sector.