Indian brands face friction points for cross border e-commerce

Rohit Kulkarni, Vice President, Payoneer (India), explains that while brand building for small & medium businesses (SMBs) online may be difficult, it is essential to boost global growth. Indian SMEs need to gear up for the growth in lobal e-commerce business, which is expected to be worth US$ 1 trillion dollars in the next two years. 

Rohit Kulkarni

IBT: What interesting trends have you observed in India’s cross border e-commerce trade in the light of the pandemic?

Rohit Kulkarni: COVID-19 was an unanticipated development that unleashed a lot of unexpected things for businesses. Globally, e-commerce has got transformed completely. For example, in the US, the e-commerce penetration of total retail rose from 15-16% before COVID to 26% during the pandemic. This proved to be an excellent opportunity for cross-border e-commerce exporters from Korea, Vietnam and China to increase their exports to the US. India, however, missed out on this opportunity initially since the country had imposed lockdown for nearly 3 months, which affected air travel of cargo. However, once the lockdown restrictions were eased, Indian exports registered a bell curve recovery due to the onset of festivities in the West like Thanksgiving, Christmas & New Year.

Another concomitant development was the rise in online customer acquisition costs. While many assumed that e-commerce doesn’t entail costs like the rent of a showroom or remuneration of salesman, there was a rise in the cost of advertising on online platforms like Facebook and Google. That cost escalated by as much as 50%. Moreover, while brand building for SMBs online may be difficult but it is essential for global growth and Payoneer helps them in this process.

IBT: How are Indian goods perceived abroad? And how can brands ensure repeat sales through online channels?

Rohit Kulkarni: There are certain categories of goods that enjoy a great reputation abroad. These include home and linen, bedsheets, curtains, upholstery and apparel. Cities like Lucknow, Ludhiana, Tirupur and Coimbatore are export hubs for these products. Indian handicrafts are equally popular. From Bengal to Gujarat and from north to south, every state will have their own versions like the phulkari to Pochampalli. Jewellery, both imitation and fine jewelry, is also a popular export commodity. Automotive components & accessories as a segment is doing very well from India. Leather products from India also fare well in the overseas markets. However, electronics are not that popular from India.

Brand building through e-commerce channels is difficult for SMBs, because people turn to these platforms to find products and not necessarily brands. Further, overseas customers are not used to two-factor payments. This acts as a detriment for them while buying Indian products online. Indian exporters selling their products through e-commerce websites also face the risk of bearing the costs of chargebacks. In the US, if a customer charges a card for up to 180 days, he can ask the card company to charge back and the merchant has to return this money. So the Indian merchants, when they sell abroad, bear the risk of these chargebacks. These friction points obstruct brand building.

IBT: How can Indian SMEs be encouraged to embrace more cross-border trade?

Rohit Kulkarni: Payoneer is working very closely with both RBI and the government agencies to help them. The Government of India has formulated many policies like Make in India and Export Duty Drawbacks, which many Indian SMBs are not aware of. Payoneer does sessions with Indian SMBs throughout the country to educate them in this regard. It also partners with companies like DHL & Ernst and Young to offer them logistical assistance and to guide them with their tax queries and access to working capital.

IBT: What role does Payoneer play in facilitating cross-border business transactions for SMEs?

Rohit Kulkarni: Payoneer is a B2B payments platform with a mission to empower businesses to go beyond – beyond borders, limits and expectations. It enables any business, ranging from aspiring entrepreneurs in emerging markets to the world’s leading digital brands like Airbnb, Amazon, Google, Upwork and Walmart, to access new economic opportunities by making it possible to transact as effortlessly globally as they do locally. It facilitates global commerce for millions of small businesses, marketplaces and enterprises from 190+ countries and territories. Founded in 2005, Payoneer’s digital platform delivers a suite of services. These include cross-border payments, working capital, tax solutions, risk management and payment orchestration for merchants.

Payoneer helps users to open local bank accounts in various country currencies within 24 to 48 hours. It saves them the effort of fulfilling lengthy KYC obligations and makes the process less cumbersome by leveraging tools like machine learning. These payments are aggregated through API integration. The only cost the customers bear is the foreign exchange costs of a dollar and within 24 to 48 hours, they get their money in their bank accounts. Now compare it with any other service, such as banking. The benefit of using this platform for traders is that these transactions involve only two banks. The transaction is faster and more economical.

IBT: How do you expect e-commerce’s contribution to India to expand over the next five years?

Rohit Kulkarni: It is estimated that in the next two years, the global e-commerce business will be worth US$ 1 trillion dollars. And more than 47% will be through global sellers. The world opens up for Indian exporters.

Currently, Indian e-commerce exports amount to about US$ 4-5 billion dollars. Bangladesh, for example, exports garments worth US$ 39 billion. Indian e-commerce sector, thus, has a vast untapped trade potential. India can explore exports of its goods & services to the Gulf, Southeast Asia and even Africa.


Rohit Kulkarni is the Vice President and Regional head of Payoneer for South Asia and MENA Region. Rohit has over 22 years of experience in the payment, e-commerce, internet, consumer services, and financial services industry. As Payoneer’s regional head, he leads efforts to empower professionals across all industries by connecting businesses and professionals with Payoneer’s innovative cross-border payments platform. Prior to joining Payoneer, Rohit worked with Amazon India, where he led seller marketing and new business initiatives. At Amazon.in, he led the seller business to launch Amazon.in in the multiple categories. In previous positions, Rohit led sales and business development for Yahoo Small Business, managed sales and product management at GE Money, and was a member of the start-up team at Sodexo Pass in India. Rohit has a bachelor’s Degree in Economics from University of Pune.

Comments

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