From a newborn to one of the market leaders - how Industrybuying writes its growth story in 3 yearsTausif Alam
In the list of B2B startups which are quietly writing a growth history, the name of Industrybuying will be difficult to miss.
In 2008, when Rahul Gupta returned from the US after completing his Masters degree and gaining some experience as a trader with Lehman Brothers, he decided to join his father’s business of heavy equipment. He expanded the business to other parts of the country with further expansion in other countries.
During these years, he gained experience in the industrial products market. After spending some five years in his father’s business, he decided to launch a new business in the industrial products category.
Swati Gupta, a computer science graduate from Delhi College of Engineering and an MBA holder from Carnegie Mellon University, was working with Opera Solutions as a principal and country head consultant.
When Swati returned to India, she observed that the country’s e-commerce segment was booming. It was during that time Rahul and Swati decided to amalgamate their expertise and build an e-commerce company.
In India, businesses depended on the traditional/offline channels for contacting multiple vendors to source the item and fulfil their requirement, which was a time-consuming process. They analysed the western market model and thought of building a one-stop solution for all business needs, which would do away with all such inefficiencies.
In 2013, the brother-sister duo launched Industrybuying, a Gurgaon-based e-commerce platform that sells a wide range of business and industrial products to SMEs as well as large businesses. The company claims to be one of the leading players in the B2B e-commerce platform selling industrial products.
Today, the company has a long list of achievements. However, the journey till here wasn’t easy.
Growth: step by step
“Early years of the company were difficult. During those days, the platform wasn’t doing very well,” recalls 37-year-old Rahul, Co-founder of Industrybuying.
He adds that he continued to bootstrap the business for almost one-and-a-half years. He spent around Rs 50 lakh during these years.
According to the company, the business wasn’t very impressive then. With a handful of sellers and registered customers, the platform was processing not more than 10 orders a day, or sometimes even less.
The first funding breakthrough happened when it raised $2 million from SAIF Partners in February last year. “Since then, there’s been no looking back,” says Rahul.
The platform utilised the funding to continue traffic growth, expand product coverage and drive revenue growth.
A few months after the funding, the number of sellers on the platform rose to 1,000. Forty enterprises and 25,000 SMEs became the platform’s customers by May last year.
“Our Series A round led by SAIF Partners really helped to push the business upward. The investor’s advisory came as a boon for the company,” says Rahul.
This time, it aimed to develop its commerce platform, establish nationwide sales force to target businesses throughout India, increase the vendor base and develop a full suite of digital offerings for B2B brands to sell online.
Early January this year, Industrybuying raised $1.8 million from venture-debt provider Trifecta Capital and used the investment for working capital and also to drive growth in the enterprise arm of the platform.
Today, the platform claims to have 5,000 sellers. The customer base further increased to 150 enterprises and 75,000 SMEs. In the 45 product categories, with 3,500 brands and 1.5 million products, it claims to have touched Rs 36 crore in GMV in the first two quarters of this year.
Among the enterprise customers who procure industrial utility products from Industrybuying are Hindustan Unilever, Havells, Bombardier, Motherson Sumi, Escorts, and others.
“We are growing by 25 percent month-on-month. We are expecting to achieve a GMV of Rs 25 crore a month by the last quarter of this year,” says Rahul.
He adds that the platform is selling industrial utility products to SMEs and business customers across the country. More than 60 percent of the transactions come from Tier 2 and Tier 3 cities. The average ticket size is about Rs 5,000 per transaction and the company gets a margin of 12-15 percent per transaction from sellers.
The platform has partnered with Grainger as a registered reseller for the Indian market. It has Weurth, 3M, Honeywell and others as the OEM partners selling products through the e-commerce platform.
According to Rahul, SMEs are the growth factor for the entire e-commerce industry and he aims to get maximum number of reliable SMEs on the platform.
“We are improvising our technology and enhancing our products with lots of new features and customised solutions to tackle challenges and aim get more corporate to transact through our platform. By creating a proper B2B e-commerce ecosystems, we aim to establish Industrybuying as a one-stop shop for all the industrial procurement,” says Rahul.
However, the platform admits that there were many challenges before and there will be more growth hurdles in the future.
No easy way
Initially, the platform identified a few barriers in the B2B e-commerce industry, such as online buying adoption, trust building and supply chain. Creating awareness among the businesses was also a tedious task as most of them were relying on the offline channels.
“Currently, thousands of local, regional, national brands are running, which make the task of an organisation even more difficult. Hence, getting visibility becomes a tough nut to crack. What sells, and what doesn’t sell is another complex issue as categorisation itself is a challenge in B2B e-commerce business,” says Rahul.
Also, the B2B customers have a different buying behaviour and then it required a different set of products and features, such as wide product assortment, better supply chain capability, to provide reliable and quick procurement alternative. To tackle all these challenges, the company is integrating many features in developing necessary technology products.
Considering the enterprise market, Industrybuying has recently developed a cloud-based product called ProcMan. The product eliminates the key hurdles of an enterprise customer that they face while procuring industrial products for their businesses.
Besides, stiff competition from both online and offline players is also an important factor which won’t let the platform stand at ease.
Fierce competitive battle
According to Ecumen, an Ahmedabad-based e-commerce consultant firm, the B2B segment of the burgeoning e-commerce industry in India is set to touch Rs 45 lakh crore by 2020.
Besides, in the MSME, which constitutes around 36 million units, there are e-commerce behemoths which want to capitalise on the available market.
Amazon, IndiaMart’s Tolexo and Power2SME, among others are some of the platforms which are setting a competitive ground in the industrial equipment category.
IndiaMART, which recently raised an undisclosed amount in its Series C funding, plans to infuse more funds into Tolexo. The company claims to have invested Rs 100 crore into Tolexo.com over the last one year.
Power2SME, which raised Series D funding in January this year, claims to break-even in 2017. According to the company, it clocked a GMV of Rs 342 crore last financial year and looks to target around Rs 1200 crore in FY 2016-2017.
These companies surely create a strong competitive environment in this category.