B2B eCommerce leads a steady growth story
eTailing India Thought Corner
According to Walmart report, India’s B2B eCommerce opportunity is currently valued at $300 billion and it is estimated that the market will expand to $700 billion by 2020. With this estimated growth of $400 billion in next 5 years, the market presents tremendous growth opportunities for B2B focused businesses.
Big players in the B2B eCommerce space
- Mjunction services limited
Funding in the B2B eCommerce space
A total of $75M was invested in the B2B Commerce space in the first quarter of 2016, with contributions from large ticket deals such as IndiaMart receiving $22.2M , Power2SME raising $20M, JustBuyLive’s raising Series A funding of $20M and Ofbusiness picking up $5M.
- Horizontal Marketplaces is the most funded segment
Within the business models of B2B Commerce, the horizontal marketplace sector has received the most VC with startups raising $59.7 million. Also, investors have shown interest to newer sectors such Grocery B2B, which consists of Ninjacart which had raised $3 million in funding. Moreover, the Industrial segment has also been gaining interest with the Industrial Tools and Industrial Supplies sub-segments getting good amount of funding.
Accel Partners was one of the most active investor with investments in Power2SME, Moglix, and Bizongo. Besides, Kalaari Group funded Power2SME, IndustryBuying.
Being a price-sensitive country, many eCommerce companies are incorporating loyalty based models with discounts, coupons, to pull in a fair share of market much alike the B2C cousins like Flipkart, Amazon, Snapdeal, etc.
Firms are leveraging the power of m-commerce with respect to their competitors and are gradually catching up with the B2C sector.
B2B eCommerce are relying on predictive analysis for the business strategies. Online and differentiation marketing techniques are on the move especially for startups to sustain the competition.
Unlike B2C eCommerce, this trend for the B2B eCommerce companies shows profit with greater GMV values.
Credit and boon
Most B2B players have tied up with banking institutions for supply chain finance that helps in improving access to credit. Also, B2B has proved to be a boon for the SMEs. It takes care of an SME’s marketing, distribution and advertising costs along with technical expertise.
Realizing the untapped potential of the B2B eCommerce industry, the Government has allowed 100% FDI in B2B eCommerce which has enabled global successful B2B eCommerce companies such as Walmart and Alibaba to exhibit interest in the India B2B eCommerce industry.
Key challenges to be addressed
According to a Deloitte report, here are the broad challenges faced in the B2B eCommerce industry
- Highly technical barriers to market entry
The B2B e-Commerce ecosystem currently is highly fragmented due to factors such as technical and domain expertise.
- Lack of robust technology integration
Integrating existing standalone systems with B2B e-Commerce is critical, but is usually not implemented efficiently for sharing information and selling online.
- High costs associated with complex logistics fulfilment
The challenge in handling delivering orders quickly and efficiently often depends on size, scale and location that demand the use of specialist freight services increasing cost considerably.
- Long customer acquisition process
Impulse purchase is less likely to happen in B2B e-Commerce, owing to the bulk nature of orders, and slow decision making process. This makes the customer acquisition process longer.
- Rigid Procurement Processes in Large Corporate
Large corporate have stringent procurement and approval norms for buying goods in bulk which restricts the procurement teams to buy on B2B e-Commerce platforms.
The change in technology after its obsolescence and the growth in e-marketplaces have resulted in a hyper-informed and commoditized B2B marketplace. In the next few years, India will have a much larger share of global B2B eCommerce.