How B2B ecommerce marketplace mjunction has balanced surging business volumes and nonstop growth
Online procurement and sales platform mjunction began in 2001 with transactions worth Rs 95 crore and has maintained a steady growth trajectory. It does business of over Rs 1.5 lakh crore today, and is eyeing new categories to scale further.
When the world is moving online, why should sectors like steel, oil, gas, and food grains not benefit from technology? Kolkata-headquartered mjunction, India’s largest business-to-business (B2B) ecommerce marketplace, is helping companies do just that. Founded as a joint venture between Tata Steel and Steel Authority of India Limited (SAIL) 18 years ago, the company has come a long way. And it’s not done yet!
mjunction, which began with steel as a category in 2001, is an e-auction marketplace that connects suppliers and buyers. Since then, it has expanded into multiple categories such as diamonds, food grains, tea, gas fields, and even cricket.
The beginning wasn’t the best for mjunction as it was a time when the dotcom bubble had burst, leading to a crash. But the new company soon found its bearings.
“It was actually a very good thing to happen and made us do things differently,” says Vinaya Varma, CEO and Managing Director, mjunction, in a conversation with YourStory.
The B2B marketplace decided to start with a pilot-based approach as against a big bang splash, a decision that has stood the test of time.
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The total business conducted on its platform in FY19 was Rs 1,48,294 crore; the company reported business of Rs 94.35 crore in FY02. Vinaya says mjunction has been profitable since the second year of its existence.
Compare this to a top business-to-consumer (B2C) ecommerce marketplace like Flipkart, which reported revenues of Rs 30,164 crore in FY18 and has been loss making.
Building the right connections
So, what exactly does mjunction do? It is an e-auction platform connecting the buyers and suppliers. The platform began with the steel category, given the background of its founding companies. To build this marketplace, the company had one guiding principle: understanding the core requirement of its customers.
The company offers a transparent and efficient electronic marketplace where buyers and sellers can transact in a way that delivers value to both parties. Large sellers offer a diverse range of goods, and the marketplace offers faster conversion of inventory to cash through price discovery and buyer discovery through a transparent electronic bidding process. Buyers, on the other hand, get direct access to large sellers, eliminating middlemen and disintermediating the supply chain.
Vinaya says, “We have close engagement with our customers, iterating from their learnings to fine-tune our auction services.”
Today, mjunction provides services across a dozen categories, including steel, oil and gas fields, coal, minerals, food grains, tea, telecom, diamonds, land, forest produce, idle assets, and even cricket (it conducted the e-auction for media rights).
But Vinaya candidly says there was “never a planned effort” to get into new segments, adding that things just happened along the way. “Our marketplace is now able to deliver results for all participants in the process,” he says.
This success stems from an understanding of the supply-demand scenario, domain expertise, and technology backing.
Developing domain expertise
Understanding steel was easy for mjunction, but it has slowly worked to build domain expertise and knowledge of the auction process in every category.
The B2B marketplace has auctioned over one lakh carat of rough diamonds with a transaction value of Rs 110 crore for National Mineral Development Corporation. It has been awarded a five-year contract from the Director General of Hydrocarbons for e-bidding, e-valuation of bids, and e-allocation of oil and gas fields. Other clients include government entities like Food Corporation of India (FCI), NMDC, RITES, and Tea Board. It has also conducted e-auction of forest produce for the Himachal Pradesh government and of land for the Uttar Pradesh government.
Vinaya proudly says, “We have retained all our clients and today steel accounts for just a small percentage of our business.”
As the marketplace expands its capability, it aims to change and extend functionality. “This includes digitising the entire value chain to include procurement, supply, distribution, and financing,” Vinaya says.
However, this is an asset-light model for mjunction as they are only a facilitator and do not provide any warehouse or financing services. Transparency in the entire process remains the key driving force as the company brings buyers, suppliers, and other enablers on to a single platform.
Growth in the future
New categories where mjunction would like to make its presence felt are in the areas of forest produce, commercial paper, steel scrap, and mining leases.
“In a segment like forest produce, the transaction is done through traditional mechanism and a huge value is not getting monetised. If they move to e-auctions, there will participation from a wider geography and there can be better realisation,” Vinaya says.
Similarly, in the area of steel scrap, the market in India is highly unorganised, resulting in lack of proper connection between buyers and sellers. The segment of mining leases seems promising as well, but Vinaya rues the fact that a government agency has a monopoly in this auction process.
“We have approached the government, seeking our participation so that mining leases can be done transparently. The exchequer can also realise good amount of money if there is competitive bidding,” Vinaya says.
mjunction has been consistently recording over 25 percent growth annually. It is expecting 40 percent growth in the current financial year.
The online marketplace does not have any serious competition, but there are a few new entrants trying to buy market share through deep discounts.
“We are not taking them (the new startups) seriously. If one takes this route, the focus goes away from perfecting our operations. We remain focused on improving ourselves and unlocking more value for our customers,” Vinaya says.
He adds that they see a large opportunity in various government auctions and hope the authorities will be open to the participation of private players in the process.
Over its 18-year journey, mjunction has grown out of the shadow of its promoters. From a team of eight people, it is now a team of 800 people and has found its place in the sun.
“It has been more than 10 years since we stopped mentioning Tata Steel or SAIL on our business cards,” Vinaya says.
(Edited by Teja Lele Desai)