Jul 7, 2016

Wish a million exporters from India

A couple of months ago, I installed an app named 'wish' on my phone. While all other e-commerce firms strive to deliver at the earliest, Wish didn't seem to be in a hurry. Most of the products listed seemed ridiculously cheap, originated from China, and showed delivery timeline of around 30 to 45 days. And there was no cash-on-delivery option, just upfront payment. I would have dismissed the site as hoax and deleted the app, but for the buzz it has already created. Items on the site are unbranded and usually cost less than 1000 rupees; and I could sense that their backend AI is pretty good given that it zeroed-in correctly on my interests within a few sessions. I seldom see useless recommendations, and given its Pinterest type clean layout,  the app is a joy to browse. No wonder millions are hooked. 
I ordered some stuff, and all of them landed up between 30 to 45 days, except one which came in two weeks. No complaints there. The quality was better than what I expected. China is known to make both high quality stuff as well as cheap knock-offs; somehow Wish had suppliers who were honest to the price. You got better than what you paid for. 
There were rumours that Amazon and Alibaba eyed this app last year for an all cash deal of $10 Billion. And apparently the makers of the app walked off! 
Wish is based out of San Francisco, USA. It is a marketplace model which brings buyers and sellers together, and keeps a commission for that work. The buyers are spread across the world, mostly in North America and Europe. The sellers are mostly from China, ASEAN and to a small extent, US. Most sellers appear to be manufacturers, and small scale. 

Some salient points to note:

- The payment is taken care by the app. While the app may take its commission, it ensures that the payment is assured and there is no default once the item is supplied
- The shipping price comes to around 30% of the cost of item for most items from China to India. Given that the import duties would be around 10 to 25% for these, the shipping prices are extremely competitive. Mode of transport can be either sea or air. 
- The shipment tracking is available online. 
- The sellers seem to use logistic hubs efficiently, based on the tracking details of the items I purchased. 
- The border paperwork is taken care by the third party logistic partner. 
- There is a strong mechanism to weed out fakes and cheats and quality maintenance on the site. There is good refund mechanism to take care of customer's interests. 

The above points sum up all aspects of an efficient globalised trade; A good market  to bring buyers and sellers together, payment assurance between strangers without resorting to costly letters of credit, efficient logistics for shipping and delivery with tracking, and mechanism to ensure quality and avoidance of fraud. The aggregators and middlemen get weeded out. The only aggregation is probably in terms of logistics where the hubs collect the items directed to same destination and bunch them together. Wish probably represents what one wishes in an ideal globalised trading system with given constraints of today's technology. 

India has millions of small suppliers and manufacturers who are cut-off from global markets. Some who export are dependent on middlemen (the so called merchant-exporters) and aggregators. This is a loss not only to the manufacturer, but also to the country as we lose competitiveness. An exposure on apps like Wish would go a long way to get the buyers directly to the manufacturer. The payment assurance, a usual stumbling block for starters, is taken care through the app. 

However, shipping from India is relatively costly and the number of door pick up services of international standards is few. The cost of shipping for smaller packages is way higher when compared to China. This has more to do with lack of scale efficiency, and poor export related infrastructure. Shipping cost is a direct function of these. 

While export infrastructure will take time to come up, some amount of handholding and guidance is needed to develop small scale Indian manufacturers and suppliers to start thinking global. This activity can be done at relatively lesser cost and may have high impact in increasing exports. An interesting idea about how Government should go about creating a national level trade network towards this objective is outlined here in an article by Ajay Srivastava, an experienced Indian Trade Service officer. There has lately been good initiatives by the Commerce ministry in this direction through various initiatives such as handholding startups, iSeva twitter handle, Niryat Bandhu scheme run by DGFT to handhold newcomers in international trade, and so on. More such measures are welcome. And existing efficient tools such as Wish should be exploited by spreading the news about them. This post is an effort in that direction.