9 benefits of e-commerce - Has your business made the move yet?
Traditional models of offline commerce have fuelled the industrial economy for over 150 years. In today’s technology-driven world, these models are woefully inadequate at meeting needs and mitigating risks.
Traditional channels are prone to several risks, including –
Poor quality products
Rogue or maverick spending (dark purchasing)
Runaway unaccounted procurement expenditures falling outside the purview of the defined process
Contracted work from vendors bypassing empanelling
Inadequate governance mechanisms causing significant losses due to purchases falling outside allocated capital outlay
Outdated technology and data causing loss due to inventory shortfalls or wastages due to excess inventory
As an MSME, it is important to be cognisant of the risks traditional models pose and stay ahead of the curve. E-commerce offers a convenient option for organisations in any industry looking to procure high volume, big-ticket goods like steel online. In India, e-commerce and procurement has long been a focus area for central and state governments, with an emphasis on utilising information technology to boost the MSME sector.
How does e-commerce work for MSMEs?
Electronic or Digital Commerce is the effective utilisation of online platforms and the worldwide web to make the purchase and sale of products significantly faster and less expensive for MSMEs. It differs from traditional commercial marketplaces as it typically involves a closed marketplace that provides access to suppliers only to registered, verified business users.
E-commerce systems create a direct link between MSMEs and suppliers, facilitating bidding, requests for information, requests for proposals, request for quotations, and purchase orders, with the help of a web interface. For larger organisations, e-commerce portals also offer a convenient way to conduct business-to-government purchases and supplies.
Here are 9 benefits of procuring steel digitally that MSMEs across India have realised by making the shift.
9 benefits of e-procurement for MSMEs buying steel
1. Improved ROI and cost savings
The single most important benefit of moving your purchase process online is the impact it has on cost reduction.Most e-commerce systems ship with inbuilt tools to standardise and reduce administrative overheads, and paperwork. Automated stages result in a streamlined workflow from order creation to order fulfilment.With a wide variety of products and services on offer from suppliers, MSMEs can further rationalise their costs by choosing the right product mix from different vendors. Maverick or out-of-contract spending, a serious source of losses for small to medium enterprises, can be eliminated with electronic commerce. All this results in a better return on investment on the business.
2. Improved inventory controlA robust electronic purchase system empowers your team to quickly locate products from preferred suppliers, while implementing checks and balances to limit the order size or multiple orders from a single supplier, allowing tighter control over your inventory. Such systems also provide comprehensive information on bid prices and supplier contacts, helping you edge out other buyers and optimise your inventory levels.
3. Better utilisation of in-house purchase departments
E-commerce portals are fairly declarative in functionality, allowing users considerable control and customisability. This helps procurement managers better organise workflows, achieving process efficiency. Procurement specialists using electronic platforms also do not need to be as highly trained as traditional specialists, since the standardised systems are easy to learn and use from the get-go.
This also frees in-house procurement departments from repetitive, manual, low-value tasks to focus instead on contract negotiations that have a direct bottom-line impact.
4. Eliminates laborious manual work
Traditionally, excessive hours are spent filling out long supplier contracts and security questionnaires. E-procurement eliminates this and other labour-intensive tasks across the cycle, including building RFPs, RFQs, tenders, and auctions. With the right one-time setup, e-procurement also allows teams to fill out purchase order creation, and supplier onboarding questionnaires in a few clicks.
5. Shortens the procurement cycle
E-commerce also eliminates another major time-sink for MSMEs: Supplier – buyer coordination. A safe, dependable e-commerce marketplace can help buyers cut down on time spent visiting or calling suppliers for physical verification and inventory checks, all of which can be managed online. Due to purchases being made online, e-commerce also reduces the time delay in having to wait for a monthly credit statement to verify transactions, which can now be done instantaneously.
6. Saves time on delivery of goodsSince online purchase orders are instantaneous, suppliers can solution, fulfil, and ship orders significantly faster than traditional channels. With commodities like steel expected to hit a supply crunch globally, timely delivery and fulfilment of goods become more important than ever before.
7. Better reporting and transparency – reducing fraud and corruption
E-commerce platforms use robust reporting dashboards and metrics, improving visibility into enterprise spending for MSME management teams and owners. Information across the purchase cycle is centralised and documented in accurate detail, providing easy access to stakeholders at all levels of the organisation.
With this transparent access to information, digital payment gateways improve process transparency and accountability, reducing opportunities for supplier or buyer fraud and corruption. This becomes particularly important for firms dependent on capital goods and industrial products such as steel, as the scope for fraud is much higher for big-ticket sizes or bulk orders.
8. Shorter purchase cycle
One of the benefits of centralised transactions in e-commerce is the impact it has on complex orders and requisitions tracking. Electronic systems simplify tracking and reporting, and ensure strict contract compliance, thereby reducing the length of the purchase cycle.
9. Improved decision-making process
With improved reporting and the capacity to handle large volumes of transactions end-to-end, e-commerce allows for quicker and improved decision-making based on readily available data.
Has your business moved to e-commerce yet?
In today’s volatile business environment, going digital is key to securing the future of your business. A key component of successful digital transformation for your MSME is to move to online marketplaces for all your steel supplies. Robust, dependable online partners like JSW One Platforms can help you modernise your purchase process into a smooth, frictionless, cost-effective experience, and free up your time to focus on growing your business.
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