Chennai: India’s e-commerce market was worth around a not too significant $3.9 billion in 2009 compared the present value of around $32 billion.
But the interesting fact that gets overlooked is that the ecommerce trend in India is completely B2C driven, exactly on opposite terms to the rest of the world.
“The fact is in the west, B2B e-commerce has outgrown B2C in terms of show volume of business,” says co-founder of e-procurement company Kobster, R Karthik.
The Chennai headquartered pan-India company was incubated and graduated from PayPal in 2015. Now its one of the largest B2B e-commerce company in the South. Talking to News Today, Karthik sheds light on the global B2B wave that will soon the sweep the e-commerce segment in India.
Excerpts from the interview:
Q: What is Kobster and what do you do?
A: Kobster is a B2B e-commerce company. We are in the space where we help organisations bigger than 100 employees buy anything and everything they would need to run their offices. From TVs, ACs, stationary to cleaning products, we have everything. In the past, organisations depended on offline markets for procuring. With the emergence of e-commerce consumers began to shop online and now businesses have also started online shopping for their needs.
Q: What made you chose the B2B path and not B2C?
A: A decade ago, in 2007/9 many e-commerce companies came to India. We were closely watching the e-commerce space and observed that countries like China, Japan and US first adopted B2C e-commerce and then shifted to B2B e-commerce. In the longer run, B2B e-commerce outgrew B2C in terms of volume. We predicted in 2012 that B2B e-commerce in India would really catch up to the global trend and felt it was a right time to venture into it.
Q: What is your current scale of operation? Also state your future plans.
A: We are present in five cities now – Chennai, Bengaluru, Mumbai, Hyderabad, and Delhi. After graduating from PayPal incubation, we successfully raised funds from Japan’s most successful seed fund network – Incubate Fund, Lets Venture (one of the largest angel platforms in India), and Splice funds. We are looking to expand to more than 10 cities in the next three years. At some point, we want to be the largest player in india in this industry and we are constantly looking for strategic and financial investment partners.
Q: What is the major hurdle in the shift from traditional trade to e-commerce?
A: Primarily the challenge was to convince offline players to come online, just like how when Flipkart and Amazon started in the B2B segment. We initially had to meet customers, educate and convince them on benefits of e-commerce and e-procurement and finally made them switch online. Traditionally businesses worked with many suppliers for their office needs. Now they have a single platform, Kobster, through which they can shop for all their products. Before Kobster, small suppliers did not have the power to sell products to big corporates. Through our platform, we give them the reach to connect with large corporates and through third party association with fin-tech institutions, we provide them the working capital to take large orders.
Q: What are the factors in which the segment needs to grow?
A: Like the CIBIL score for individuals, if there is a CIBIL score for businesses, it would help evaluate credit worthiness of potential clients. The most important support the government can give would be in taxation. In the B2B world, even organised players have to do deal with input credit realted issues. Offline and GST filings have to be made seemless and make transfer of input and output credits efficient online.
Q: State the difference between B2B and B2C in e-commerce
A: When a company sells products via their website directly to individual customers, they’re engaging in B2C e-commerce. B2B, on the other hand, stands for ‘Business to Business’, and is used to refer to transactions between two companies. So, a wholesale manufacturer selling to a retailer is engaging in B2B e-commerce.
|The market share of B2B industry in India is dominated by traditional offline players (upto 98.5 per cent). Kobster expects the market to come online in the next three to five years.
“The B2B e-commerce industry’s growth rate has been high in the last few years. The fastest startup to become a unicorn – Udaan is also from the B2B segment. We expect a lot more startups, industries and niche players to succeed in the segment,” said Karthik.