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Key Lessons For B2B Startups

Key Lessons For B2B Startups
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You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Today, the B2B eCommerce websites in India are undergoing a massive transformation. From being non-existent and unknown to forging listing based websites to finally enabling full-fledged transactions for the members, they have faced it all and yet the journey for B2B eCommerce websites has just started. If you recall, the first few B2B websites were simply a directory of suppliers and buyers wherein sites like Indiamart and even Eximdeals promoted suppliers to list their products and details but the actual sales were always done offline.

As the technology and FinTech took bigger leaps towards development, more sophistication and evolution was visible in the working of these websites. These led to increase in trading volumes and values, along with more user-friendly and simple to use customer interfaces. However, the past challenges such as discovery, lack of transparency continue as transactions were still offline.

XSTOK.com was started in the year 2015 to bring discovery and transparency to the $11 billion textile market for ready and surplus products. Working with this diverse portfolio of traders, wholesalers and manufacturers has helped us garner the following key learnings: 

Trust and Reliability are irreplaceable here, be it for the buyer or the supplier: Indian business runs on relationships and trust. There is a lot at stake for producers / suppliers as well as the buyers and hence one messed up transaction would mean that they will never come back to you again.

For e.g for a Supplier/ producer of paper, a consignment returned due to non-payment in a month’s time would not only mean financial loss, it will also increase his inventory count and storage issues. For a Buyer, his forward production planning will fail completely if the product does not match the description as mentioned on the site. As an eCommerce startup you are therefore serving both ends of the spectrum constantly.

Secure, online transactions are one of the key needs of the hour: A significant part of supply chain in India still prefers to deal in cash. Sometimes, the objective is to save tax, but often it is due to lack of easy to use and easy to refer electronic transfers. However, as an eCommerce firm, one of the key learnings is that your buyers could be residing in any part of the country and hence the online transaction system becomes the key need for growth. Lack of a secure system would often mean a slower business cycle, not conducive to growth. While volume of online transactions is important, the overall coverage of the sector in the online transaction system should be the final goal.

Quality matters, more than quantity: When we hear eCommerce, we instantly think of volume business with massive discounts. As such, most of us associate success with the total number of clicks and total number of customers. That may be true perhaps for the B2C sector, that the more people visit your site, higher are the chances that they will sooner or later, make a purchase. However, this is where B2B eCommerce differs. Charting your growth with just numbers of customers may not get you the revenue you are looking at. The strategy should be to work by applying the Pareto principle or the 80-20 principle, where 80 per cent of the business comes from the top 20 per cent of the customers. This 20 per cent customer base should be nurtured and cared for so as to maintain a steady inflow of deals.

Timely delivery backed by a strong logistics support systems: The textile B2B industry works on a 18 month cycle, i.e. a company will start planning its June 2018 portfolio from Jan 2017 itself. In such a scenario, the snow ball effect of a delayed delivery is very high. One of the key factors to build a long lasting marketplace is to create a strong logistics back-end. While most of the times, the logistics back-end will not be owned by the platform, building a strong third party network of service providers covering diverse geographies with requisite quality checks, will determine the success and failure of the venture.

Customer loyalty and Brand Equity are really fragile in this rapidly developing market - determine your USP carefully:  The entry barrier in B2B e-commerce space is as fragile as the B2C market.  Keep a lookout for competition, price points and service promises. The customers are always sensitive to price, but trust and comfort, established by quality customer service, plays a much higher role in a B2B transaction. Hence, with every other player having the same resources as you at hand, build a USP which makes you irreplaceable and keeps your customers coming back for more.

We hope that these learnings gathered over the last year, will not only help you get a clear view of where you would like to work and focus in this fast growing sector but also how to sustain in this rapidly evolving environment.

Edition: December 2016

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