India’s eCommerce market is booming, with the latest reports showing big growth potential over the coming years. But how can B2B merchants, especially small businesses, snag a piece of the country’s eCommerce pie? PYMNTS sat down with Brijesh Agrawal, founder & CEO of Tolexo, to examine what the future holds for India’s B2B eCommerce and the challenges facing the highly fragmented B2B market.
PYMNTS: What is your assessment of the eCommerce market in India and how do you compete against Amazon, eBay, Flipkart and Snapdeal that have built a $3 billion eCommerce market in the country?
BA: As per a report by Walmart, India’s B2B eCommerce market opportunity is currently valued at $300 billion, which is expected to expand to $700 billion by 2020. With this estimated growth of $400 billion in next five years, the market presents tremendous opportunities for B2B focused businesses.
From the visible trends in this space, we believe B2B eCommerce is entering a transformative phase. Businesses are adopting the model much quicker than anticipated and a J-curve growth may be around the corner.
So we are very excited about the eCommerce opportunity in the B2B domain and that is one fundamental difference between us and B2C eCommerce players like Amazon, eBay, Flipkart or Snapdeal.
Our DNA is built in the B2B domain. We understand the Indian B2B market and believe we are in the best position to solve real problems for business customers a lot quicker and better than anyone else. We are leveraging IndiaMART’s data analytics, marketing reach – both on buyer and supplier fronts – and our deep understanding of Indian businesses to build a clear leadership position.
PYMNTS: All products are listed on IndiaMART, which does not actually make the transaction. What are the benefits of this business model and what percentage of these products have an option to buy online via Tolexo?
BA: IndiaMART is a discovery platform and with the addition of Tolexo, the value proposition for buyers and sellers is now extended from just discovery to delivery. We have been adopting a category-specific approach towards building this transaction model, and so far we have been able to cover 28 categories on Tolexo.
As of now, this feature is available for nearly 1 percent of the products on IndiaMART. It should be expanded to roughly 5 percent of the products over the next few months.
PYMNTS: What is the profile of early adoptions of Tolexo’s platform and how are these profiles likely to evolve as you grow?
BA: We have seen the highest adoption among the small- and medium-sized businesses, many coming from Tier 2, 3 and 4 cities. SMEs from more remote locations, such as Durg and Kachchh, are also transacting on our platform.
As we grow, we see that being driven by a similar audience because the value proposition is strongest for this large, fragmented buying audience. We are picking up key solvable points upfront, such as those related to product assortment, online shopping experience and order fulfillment, which helps us get the early adopters on Tolexo.
Over a period of time, as we solve additional problems like credit, we hope to attract a larger number of customers by offering solutions to key issues that prevent them for coming online.
PYMNTS: As a B2B e-marketplace arm of IndiaMART, the expectation is that Tolexo will achieve over $1 billion in gross merchandizing value by 2017. Where are you at today toward this goal?
BA: We are well ahead of our plans for this year in terms of key business metrics. The adoption rate of online buying by businesses has surpassed our expectations and we have witnessed unprecedented growth in the last eight months.
Our base of transacting buyers has already crossed 1 lakh (100,000) businesses, capturing a share of approximately 0.2 percent in a total of 47 million SMEs in India. The next milestone for us would be 1 million transacting businesses.