A clear supply chain network will be built for B2B ecommerce portals in 2016: Brijesh Agrawal, founder of Tolexo predicts

Business-to-Business is fast becoming the next ‘must-invest’ sector in India and 2015 has been the year. With Venture Capitalists pouring in millions of money into B2B ecommerce start-ups this space saw exceptional growth in just one year. It also saw some spectacular decisions being taken with the plan to set up the country’s first B2B international ecommerce platform for manufacturers and exporters to sell any product that is made or valued in India, to overseas vendors.

“2015 is the year when B2B became a sector on its own,” said Swati Gupta, founder of industrybuying.com that is growing at 25% month-on-month since December 2014.

Another portal in the space Tolexo.com, India’s first and largest online bazaar for Industrial products, has hit a major milestone with over 1, 00,000 businesses buying from its online platform and records more than 40% growth in the customer base month-on-month, within 10 months of its launch. Further, the brand is expected to serve 1 million businesses by 2020.

“The adoption rate has been phenomenal,” said Brijesh Agrawal, founder of Tolexo. He was leading IndiaMart for 19 years.

These portals have also attracted huge funding. Industrybuying raised USD 9 million in Series B funding in September 2015. The latest to join the bandwagon is rivigo, which offers on-demand B2B logistics services to companies in the e-commerce, FMCG, auto, pharma and the cold chain industries and has secured a funding of USD 30 million.

The numbers have proved well why this sector is going to be the ‘next big thing’ in the start-ups revolution. But what changed in 2015 that made it so huge an industry?

Drivers

“What existed earlier was the classified platform where typically businesses would find out with whom they want to do businesses with. But with these portals, businesses can sell and buy instantly, without having to negotiate as the price and availability of the product are there on the site. Hence the overall buying decision becomes a lot easier and quicker for them to make. These portals not only allow you to find the right product and the right supplier, it also ensures the product is picked up from the supplier and delivered to the doorstep,” said Brijesh.

He further said another added advantage was that the products can be delivered in small cities too.

Tolexo has managed to penetrate into the deepest parts of the nation, with customers from remote locations on its list, from among more than 900 cities, with over 65% of this traction coming from Tier 2, 3 & 4 cities.

Challenges

The sector mainly faces four main challenges, taxation systems in different states, supply chain network, adaptability to the new online platform and awareness.

1. Taxation

Different states have different taxation for different products. Dealing with that is a bit of a problem as the supplier can come from any city for that matter.

2. Adaptability

“B2B has never been exposed to ecommerce before, both from the seller side and the buyer side. So, the nuances that come along a typical B2B ecommerce business are something that we are experiencing for the first time,” said Brijesh.

3. Supply chain network

The third challenge is with the logistics infrastructure itself. The major traction that comes from Tier 2,3 and 4 cities. The existing supply chain network is not predictable in these areas.

“So delivering within a specified timeframe is big challenge,” said Swati.

4. Awareness

Also, lack of awareness is something that cause lack of trust between the supplier and the customer.

Some predictions for 2016

A clear supply chain network would be built for B2B ecommerce portals, predicts Brijesh while adding that they are planning to build a credit based payment mechanism for business to buy online in 2016.

Swati predicts her platform will witness a growth of 3x in the next six months.

(Image credits: Indiatimes)