How B2B marketplaces became a common ground in India?

Hashtag
0 SHARES

Looking at Indian startups, one might assume that majority of them are mostly concentrated towards IT or Finance. But, in reality, they are vastly diversified and occupy all sorts of fields. According to Redseer, B2B digital services are growing at a strong pace of ~39% compound annual growth rate driven by rise of 7000+ digital start-ups in India.

So in this article, we are going to take a closer look at B2B marketplaces and try to answer why B2B startups are gaining popularity and how this development can improve infrastructure in various sectors. By doing so, we can reach a conclusion as to where this industry’s growth is headed.

There’s nothing new in knowing that Alibaba, the Chinese giant, is the largest B2B platform in the world. But according to DigitalDoughnut, what’s more interesting is that Indiamart, a two decade old internet firm, holds the second largest position in the world. Getting to know this company can provide relevant information on the current and future trends of the field in India.

When it comes to hard facts, DigitalDoughnut noted that Indiamart has 1.6 million daily visitors, nearly 1.5 million sellers, and made 2.8 Billion dollars worth of sales in 2014 alone. In contrary to its name, Indiamart is operated worldwide and offers B2C premium services as well. According to livemint, in 2016, Indiamart became a fast-growing, profitable firm with successful stock market listing.

RedSeer

From the above image we can see that there are not many companies operating in all three segments except for Indiamart, making it unique in that sense. Since Indiamart covers all these three segments, it can be considered as the benchmark for other companies who wish to try their luck at establishing a B2B e-commerce digital marketplace.

Looking at the data obtained from App Ape, it is evident that the monthly active users are increasing by the month. The more people begin to understand how these services work on Indiamart, the greater the usage scenario will be.

How did B2B marketplaces become a common ground:

It is no mere coincidence that Indiamart introduced its IPO and Udaan became the fastest growing startup at the same time. A report by livemint believes that 3 changes have contributed to the rapid growth of those two companies: the launch of 4G services by Reliance Jio, the introduction of Goods and Service Tax, and Demonetization in 2016/2017. The latter two have damaged the informal economy and contributed to the overall economic slowdown whereas B2B e-commerce was one of the few sectors that benefited greatly from such changes.

It is also said that small and medium enterprises were forced to use digital means to do business. This could have been a major factor for why B2B e-commerce began to gain traction suddenly. Since then, the demand to look for material suppliers on internet has skyrocketed and that very development gave birth to many B2B startups in India.

Which companies are growing quickly?

According to livemint, Udaan is the fastest Indian startup to achieve unicorn status, with overall valuation rounding to $2.5-$3 Billion. Unlike Indiamart, Udaan is developing its entire ecosystem from logistics to software services dashboard for MSME’s to take full advantage of digital B2B marketplace.

Moreover, Udaan is a horizontal player that covers all kinds of products in marketplace. It has been striving to improve long term storage facilities such as warehouses and farm silos for storing food related products in order to improve the shelf life and increasing product’s value drastically. It is working on implementing new methods in logistics and providing related software services to tie all these digital aspects of B2B marketplace for an average retailer to make their purchase safe and secure.

In a statement, Martin Lau, president of Tencent, said: “Udaan’s unique approach can enhance the capabilities of millions of retail stores across India. It represents a powerful example of how technology can empower the business of small merchants, improve the efficiency of industries, and bring benefits to consumers.” Techcrunch

As shown above, Udaan has seen growing and almost steady rise in its MAU. As the popularity of the firm increases, its mobile application user base may also see a sharp growth.

Other vertical based B2B startups that are also growing quickly are ShopX, Jumbotail, Ninjacart etc.

Infrastructure, Transportation, Digitization

Unlike Indiamart or Udaan which are horizontal inclined businesses, the growth of B2B e-commerce in India is generally vertical meaning it mainly focusses on specific areas of product line. Such a scenario is integral for improving the overall quality of that specific product line and creating stiff competition among manufacturers and retailers. In that sense, there are enough possibilities for B2B e-commerce startups to change business practices taken by manufacturers and retailers for a more efficient and secure approach to sell their products online.

“Empowering tens of millions of small businesses to more effectively procure and sell goods is not only a massive business opportunity, but will help transform the economy by providing internet-scale productivity gains to merchants, wholesalers, and manufacturers,” Brad Gerstner, founder and CEO of Altimeter Capital, said in the statement. livemint

Some challenges such as raising awareness still need to be addressed properly. For example, according to Redseer, micro, small, and medium enterprises in India spent nearly $1.5 billion on digital services in 2018. This figure is accounted for only 6% of MSMEs, meaning that most of the retailers are not aware of such services. This calls for the Government to get involved in raising awareness to MSMEs regarding those services.

Some of the other advantages of strong B2B services are efficient communications through software among companies while effectively closing the gap on language and digital payments bring security that was previously non existent in the informal economy. Redseer believes that digital services market value will increase from $1.5 billion to $10 billion in less than 5 years iff everything goes as planned.

Finally, these companies are also focusing heavily on domestic trade instead of export. This development will eventually bring the country to rely on its own for buying or selling products in a secure fashion rather than forcing to be dependent on other countries for basic necessities.

If this trend continues, India should see a rise in GDP growth rate. This change can build strong business foundations for millions of retailers and consumers who had not seen such level of efficiency in terms of last mile connectivity in all aspects.

To register and know more about App Ape, please click here.

Should you have any enquiries regarding the content of this article, App Ape, or registration please do not hesitate to contact us through service@appa.pe