Online B2B marketplaces: The Next Big Wave

IndiaMART is one of the leading online marketplaces connecting buyers and sellers from across India. The company has just celebrated the milestone of 1,00,000 premium (paid) sellers out of the 20 lakh sellers it has empanelled. While many e-commerce firms talk about the seemingly impossible task of achieving 100,000 premium sellers in five years’ time, IndiaMART has already achieved that milestone. Dinesh Gulati, Director, IndiaMart explains how information technology is opening new vistas for SMEs across India
Tell us about your initiatives for Small and Medium Enterprises (SMEs). How are you helping them grow their businesses?
We’ve come a long way since our humble beginnings in 1996; now we are more focused on SMEs to facilitate their business growth. Whether it is about access to market, finance or technology, making business easier for them is our goal. To achieve the aforementioned, we have created a marketplace, which has now achieved a size and scale of significance. We are empowering SMEs by equipping them with right information on sellers.
Currently, almost 80 per cent of the major consumer brands have started using IndiaMART either on a daily or monthly basis. Our top categories range from industrial products, electrical goods to foods supplies, cutlery and so on.
The original belief was there that information about suppliers was not available. Over the past 10 years, when we started to focus on domestic B2B enablement, we have gathered almost 20 lakh sellers and almost 2.5 crore products on the IndiaMART platform.
Apart from SMEs, how are the bigger brands leveraging your platform to scale up their business?
After mastering the suppliers’ marketplace, we have now moved to the Request for Quotation (RFQs) market. When we touched a million-plus suppliers on IndiaMART, we started to think about our next target: How do we make doing business easier now for big brands?
We found that large companies and government buyers don’t run around scouting for sellers; information; in fact, they float tenders, expressions of interest and RFQs. And, sellers contact them and fulfill the requirements. We thought that with the advent of information technology, and the kind of scale we have achieved, we were in a good position to float similar a mechanism. Therefore, we created a buyers’ marketplace. Anybody who wants to buy anything and in any particular quantity, can create a simple RFQ. Via these RFQs suppliers get to contact buyers within 15 minutes.
Last month alone we generated half a million RFQs. In fact, we get 20 thousand RFQs everyday. And, it is just the beginning.
On top of this, earlier suppliers never had the luxury of choosing their buyers. Thanks to the interactive nature of our marketplace, we have seen even companies like Tata, Reliance and Indian Oil using the IndiaMART directory.
How many registered suppliers and buyers do you currently feature?
We have 20 lakh suppliers on the platform generating approximately 75 lakh business inquiries every month. We also have almost 17 lakh buyers registered with us. They all have managed to do business worth Rs 30 crore this year. We have conducted transactions worth almost six million GMV (Gross Merchandise Value) on IndiaMART this year.
How do you see the online B2B marketplace model taking shape over the next five years?
Well, the SME sector accounts for close to a USD 300 million market in India. By 2020, it should touch USD 700 million. That is the opportunity that we are operating in here. Having said that, how much of this will convert into online sales will depend on many things. Naturally, one of the biggest contributors will be internet penetration.
As of now, only 20 per cent SMEs across India have internet connections. In the next five years, this figure could go up to 50 per cent. The SME opportunity should grow at least by 100 per cent if not more over the next few years. The marketplace opportunity in the B2B segment is humongous. And, the best part is, there is not much competition as of now in this domain Over the next five years, B2B will achieve similar traction as B2C has right now.
B2C has already achieved an INR 100-plus crore market, including in top metros and tier II locations. B2B is yet to achieve those figures and size.
Investments are pouring into the B2C space, but not so much into online B2B businesses. Do you think VCs will shift their attention to this segment anytime soon?
Well, we have many people who are chasing us for investments. In fact, Intel Capital India has already invested in IndiaMART. They own close to 15 per cent stake in the company. However, as of now, we are not seeking any further funding. Unlike online B2C platforms, we are a cash-positive business.
How you ensure quality control of the merchandise being offered by suppliers on your platform?
At the time of signing up with a supplier, we issue a certificate after checking all necessary documentation, including sales tax number, PAN number, etc. We do not work with fly-by-night suppliers. Suppliers on whom we are unable to perform quality checks — especially from tier II and III areas — are displayed in the low priority list.
Any plans to initiate a pure-play e-commerce venture?
We have just launched ‘Tolexo’, which is a nine-month-old venture and largely deals in business hardware products. We have a separate team working on this project.