As the traditional supply chains that served Indian businesses dried up amid restrictions imposed by Covid, well-capitalized B2B e-commerce players took hold of the market by helping companies starving for raw materials. Companies like Bizongo, Udaan, Medikabazaar, Moglix, Ofbusiness and Inframarket have seen 100 to 300% growth in order volumes and revenues since April 2020.
These companies are also showing considerable investment interest from institutional investors at high valuations. In 2021, B2B e-commerce players raised a record $ 2 billion (around 15,000 crore) in 60 rounds, according to data from Tracxn.
âThe growth of B2B e-commerce will have an impact on the global economy; it will reduce inefficiencies and ensure better quality and better prices for everyone in the value chain, âsaid Sujeet Kumar, co-founder of Udaan, a unicorn B2B platform with operations across food commodities, fruits and vegetables, consumer goods, electronics and lifestyle products.
According to Bizongo founders Aniket Deb and Sachin Agrawal, traditional supply chains were disrupted when Covid lockdowns were imposed.
âThe lack of digital options to maneuver supply chains is a big problem; raw materials often come from multiple sets of suppliers, fragmented players and even SMEs. Traditional supply chains are full of ad hoc processes … Actors like us are helping companies streamline their supply chains, âsaid Deb, CEO of Bizongo.
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During the pandemic, access to capital and finance became extremely difficult, providing B2B e-commerce companies with new and greater opportunities.
âThis has improved the product margins of these B2B players, making them very profitable with a high return on equity to boot,â said Pankaj Naik, ED and co-head (digital and technology) of Avendus Capital, who has helped several B2B companies raise funds.
Bizongo, Moglix, Udaan, OfBusiness, Ninjakart and Zetwerk are among the companies that have raised significant sums from institutional investors this year. As recently as last week, the industrial goods and services procurement platform OfBusiness raised $ 325 million from a group of private investors.
âIndia’s B2B e-commerce market is one of the fastest growing in the world and is expected to reach over $ 1,000 billion by 2024,â said John Curtius, Partner of Tiger Global, which has invested in multiple B2B platforms. Indian. âOver the past two years, adopting a digital and automated supply chain ecosystem through platform-based methods has become the key to business growth for manufacturers, traders, retailers, resellers, wholesalers and retailers. Such growing digital adoption by Indian consumers presents a lucrative opportunity for B2B startups, âhe added.
However, Curtius is quick to point out that limited digital penetration in remote areas and among many MSMEs could pose a challenge for this industry. âIn addition, a slow post-Covid recovery or other protracted economic downturn – similar to the one that hit the economy before Covid – could hurt the outlook for the sector,â he told ET in an interaction by e -mail.
Pankaj Makkar, MD, Bertelsmann India Investments, estimates that the B2B e-commerce market in India is 2-3 times larger than the B2C market. âIt will help B2B businesses to grow at a much faster rate,â he said.
âAs a general rule, the margins of B2B e-commerce players should be lower than those of direct consumer companies; but this could be offset by high volumes of repeat orders. Another option available to these players is the launch of private labels … The B2B sector will continue to show investor interest, âhe added.
The B2B e-commerce players in India can be divided into 3-4 ways – a few focusing on multi-product categories (or sectors), while many specialize in one or two sectors. The likes of Udaan or Bizongo serve several sectors; but Infra.market (supplier of building and construction materials), Medikabazaar (supplier of medical / health products), Moglix (industrial products) or Zetwerk (manufacturing and heavy engineering) target narrower segments.
âThe opportunity is huge, even if your business is limited to one sector or sub-sector,â said Vivek Tiwari, Founding CEO of Medikabazaar. âWe are currently managing the entire supply chain of several large hospital chains across the country. Our customers also include small nursing homes, free-standing hospitals and dispensaries. We have also started to attract customers from small towns, âhe added.
B2B e-commerce operations are different from B2C players such as Amazon or Flipkart. Take the case of Moglix, which sells products in price ranges from low to very high, often reaching thousands of rupees per unit. The quantity requisitioned can also vary, from a few grams to several tonnes. Their delivery locations are mostly remote, on a manufacturing site or a factory.
âWhile GMV is a metric, customer retention, strength of the supply chain, digital infrastructure and finance are more important when it comes to looking at B2B businesses,â said Rahul. Garg, founder and CEO of Moglix. âWe are seeing the penetration of technology deepen; in B2B, customers are looking for complete solutions, including financing options. Keep in mind that for every B2C transaction, 6-10 B2B transactions take place in the background. ”