Business To Business. The Next Big Thing In India?
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B2B e-commerce is rapidly catching up with the burgeoning B2C e-commerce sector that has shaped the much celebrated startup success stories in India.While many players have started making a mark in the B2B e-commerce sector, there area plethora of opportunities still waiting to be unleashed.
According to a Walmart report, B2B e-commerce opportunity is currently valued at $300 billion and it is estimated that the market will expand to $700 billion by 2020. Let’s find out where the opportunities in the B2B sector lie and the factors that can fuel the growth of this sector all the more.
Unorganized B2B space in India
In India, the B2B space is largely unorganized, with presence of archaic and unorganized distributors and wholesalers. There is no symmetry in the information available and most of the industry products in India are not catalogued in one place. Rather, they are available in a very fragmented manner. If you need a product, you would have to contact probably numerous vendors to get the quotes and then negotiate a lot to purchase the product. If you need multiple products, the process only becomes that much more painful. But this is not the case with B2B e-commerce. Bringing all the information on one e-commerce platform is a desirable move for B2B consumers who are looking for some ease in their business. After all,who doesn’t like to get neatly catalogued products, a wider variety, transparent pricing and convenience that a B2B portal can offer.
Opportunity of going global
The growth of internet has opened huge opportunities for B2B entrepreneurs and the vendors associated with them. Increasing Internet penetration and the availability of more payment options have opened the global market for Indian entrepreneurs,especially the SMEs who had been focusing only on domestic trade. They can now focus on developing export trades through their e-commerce platform. Even entrepreneurs based out of small cities can think of tapping these opportunities and go global. All they need is to put everything on the cloud and they are good to go!
No restrictions on FDI
Unlike B2C, B2B ventures do not face restrictions on foreign direct investment (FDI) in India. It is, therefore, attracting investment of multinational retail giants such as Walmart, Alibaba etc. Walmart has launched its ecommerce portal, Best Price, in four states over the past year, while Amazon is preparing to launch an online B2B portal this year, according to news reports. It will not be surprising to see Alibaba, a retail giant known for providing a B2B platform to China's unorganized sector entering India. These companies are providing efficient delivery solutions to the customers along with various payment options and a lot of convenience, which is why they are becoming hugely popular with customers, which constitute ‘kirana’ stores, hotels, restaurant etc. Indian players too have the opportunity of getting foreign investment and grow their business exponentially.
Startups will drive the B2B e-commerce sector
While big players have entered this space, in the coming years, it is the startups that will drive the success of this sector. In the last 2-3 years, many startups have entered this space. Globally, B2B startups are running successfully,especially in developed countries like US and China. According to a report by Forrester, globally, by 2020, the B2B e-commerce market will be twice as large as the B2C market — $6.7 trillion vs. $3.2 trillion.
Although the potential of the Indian B2B e-commerce segment is boundless, there are many challenges to be met to tap the full potential of the growing sector,such as developing strong business connections for operating both in the domestic and global markets, tackling logistics related problems to ensure smooth product delivery, complicated pricing of the products, complex taxation system (interstate taxation in particular), poor adoption of technology by conventional traders, thin margins etc. The startups are now focusing on vertical categories first, such as electronics and safety products, since these are relatively less complicated.
Implementation of GST will provide a big push to the B2B e-commerce sector. The government of India too has realized the importance of this sector and is taking initiatives to spur its further growth and even give a boost to its mega ‘Make in India’campaign .The space is still at a very nascent stage in India and is just waiting to be tapped, so it can unleash its full potential.