Swati Gupta, Co-Founder and CEO of IndustryBuying: The rise and rise of B2B E-commerce in India
July 27th, 2016
Thanks to booming industrialization and a steady influx of FDI in its coffers, the latest buzzword doing the rounds in India’s E-commerce ecosystem is “B2B”. After a long wait in the wings, B2B in India has made huge strides. Businesses, primarily the SMEs, are adopting the model much faster than anticipated and a J-curve growth might just be around the corner! The scenario looks rosy on the global front too! According to industry estimates—by 2020—the global B2B e-commerce market will be twice as big as the global B2C market — that’s an impressive $6.7 trillion stacked against $3.2 trillion!
Back home, the tables have smoothly turned in the e-commerce landscape that was dominated by B2C companies until recently. The exponential growth in B2C E-Commerce has educated the population and has laid the groundwork for a more rapid adoption of its B2B counterpart. A rapidly increasing number of distributors and manufacturers are now seeing significant returns on their investment in online channels through higher sales, improved productivity, lower costs, and increased profit margins. This spurt in growth is prodded by a new generation of business buyers in their late 20s and 30s who prefer researching and buying products online. Among SMEs, a new breed of entrepreneurship is cropping up in the Tier II and Tier III cities of India that is just as eager and earnest to climb the ladder of success as anyone else. They are putting out their industrial goods for sale on e-commerce portals to reach out to more and more potential buyers. B2B does have its fair share of differences with B2C wherein buyers are impulsive while B2B buyers seek ease of search in locating the products they need, pricing for bulk buying, ability to negotiate and timely delivery of products. However, on the other hand, repeat purchase and stickiness is very high among B2B customers.
Currently, the sector faces a few key hurdles such as establishing a better logistics & supply chain, increasing the adoption rate by creating awareness and building trust among the businesses. However, the biggest challenge facing the sector now is managing working capital. A lot of banking institutions refrain from providing loans to SMEs due to strict banking norms, policies, laws, etc. Although, some progress has been witnessed in this regard, and a new wave of financial institutions are helping both new and old SMEs find their feet and keep them steady by lending them working capital for manufacturing their products at lucrative interest rates. These NBFCs also help SMEs sell their products on B2B websites.
Bolstered by these developments, B2B has emerged as a promising force in spite of being a largely untapped and unorganized realm of E-commerce. B2B e-commerce has helped SMEs tremendously by providing options such as pricing for bulk buying, logistics and timely delivery of products. With an increased outreach, many Indian B2B websites are housing a plenitude of industrial items in verticals as diverse as construction and hardware, electronic components, raw materials, wood/lumber, auto spares and components.
Riding high on the bandwagon, Industrybuying has consistently racked up some impressive figures over the past few quarters by providing a unique one-stop-shop concept for industries. Industrybuying is amongst a few players that are pioneering the concept of B2B via their ability to seamlessly bond with pan-India SMEs. By disintermediating distribution layers and laying core emphasis on seller sourcing, this B2B marketplace has devised a way to provide 15-20% savings to customers. The company currently maintains a stunning catalogue of over 1.5 Million plus industrial items. Moreover, the company has stitched up global alliances with the likes of American B2B heavyweights Grainger and German B2B powerhouses Würth, who are trying to expand their B2B ventures in the lucrative Indian market.
In a nutshell, the future of B2B in a dynamic India looks brighter than ever with the emergence of so many new opportunities for all the stakeholders involved.