India’s e-commerce activities are increasing rapidly as the industry witnesses a significant growth within a short time span. The model that is most common is a marketplace setup where one company connects buyers and sellers. Experts in India unanimously agree that the business to business model is the next biggest thing for the country.
According to Ecumen, an Ahmedabad based e-commerce consultancy firm, the B2B ecommerce industry is targeting much higher heights. By the year 2020, it is estimated that the B2B sector of the mushrooming e-commerce industry of India will grow by more than double to reach Rs 45 lakh crore. As of the year ending 2015, B2B e-commerce segment was at about 19.13 lakh crore.
One of the potential growth fueling sectors of B2B is ecommerce. A company in search of raw materials can reach directly to another selling those particular raw materials via the online marketplace. As such, both businesses benefit greatly from the transaction.
Leading B2B companies
One of the largest key players in this sector in India is Mjunction, which is privately owned and a joint venture of Steel Authority of India and Tata Steel. Started out in the year 2001, Mjunction has managed B2B transactions worth over Rs3, 500,000 crore.
There are also other players in the B2B Indian sector, though some are foreign owned. Amazon, US based launched a B2B platform for the merchants in India known as AmazonBusiness. This platform was introduced in May last year under an invite-only model. However, by the end of 2015 Amazon opened up to all the businesses in Mangalore and Bangalore. AmazonBusiness has a warehouse of 30,000 square foot in Bangalore.
Even though the B2B e-commerce segment is increasing, a report produced by Ecumen claimed that there might be setbacks. The report noted that the B2B ecommerce in India will need differential marketing. This means that the country needs to develop stronger logistics and business links with the businesses and exporters to facilitate smooth delivery of products.
Another setback is also the tax policies. Interstate taxation has created a bigger problem as SMEs restrict their presence online because of the thin margins online. The complicated tax matters in India is driving away interested foreign investors. Technology is seen as a possible solution to the problem.
As of the future potential of B2B, the report by Ecumen.in stated that the public marketplace is likely to emerge as the leading segment. The report stated that if FDI capital can be allowed fully in B2B ecommerce market, innovations such as ERP integration, solution alignment according business needs and single window buying would be promoted. Additionally, the GST implementation in 2016 can unify the Indian market to help flourish B2B ecommerce.
To sum it up, India’s full ecommerce full potential is yet to be unleashed. Similarly, B2B is a profitable opportunity which has not been able to establish itself well due to the existing hurdles. Ecommerce and B2B segments can work concurrently to benefit each other.