India-based B2B eCommerce company Industrybuying is reportedly shrinking its staff, unnamed sources told TechCircle on Friday (Sept. 7), raising concerns about the industry just days after investors made another B2B eCommerce company India’s fastest-growing unicorn.
Sources told the publication that Industrybuying has cut staff levels to fewer than 300, while several top executives have also exited the company in the “recent past.” Industrybuying, though, denies claims of any cutbacks. Chief Executive Swati Gupta told TechCircle that there have not been any senior-level departures in nearly a year, and that hiring to expand staff continues.
However, the reports of cuts may raise concerns over India’s B2B eCommerce market, which has garnered significant attention from investors in recent years. Industrybuying has secured funding from SAIF Partners and Kalaari Capital, while Udaan, another B2B eCommerce company, recently announced funding to the tune of $225 million — making the company India’s fastest-growing unicorn.
TechCircle spoke with another anonymous source, an executive at an unnamed B2B eCommerce company, who explained that the business model of B2B eCommerce poses challenges, particularly when working with small companies.
“Around 90 [percent] to 95 percent of the business with SMEs works on credit,” the executive said. “Payments are made over 45- to 60-day cycles. That is how traditional distributors or sellers operate. It becomes difficult to sell a basket of goods worth Rs 10,000 [about $139 USD] at prices that remain competitive with those offered by traditional distributors while waiting for payments to be settled.”
According to IvyCap Ventures Founder and Managing Partner Vikram Gupta, the industry “has much lower margins and the cost associated with the entire workflow makes it difficult to make this business viable.”
One source said gross merchandise value for Industrybuying has halved since October of last year. Recent Goods and Services Tax (GST) reform for India has also placed pressure on industry players.
“The company has lost out considerably on its sales to SMEs,” said an unnamed Industrybuying executive. “Sales to large enterprises, though, remain steady and currently make up half of its revenue stream. However, the lack of focus on growing a specific line of business and the absence of senior leadership has cost the company.”