India's B2B Ecommerce Segment is Transforming Online Ordering

B2B ecommerce is accelerating with tremendous pace, with new players in this sector promising a healthy and safe business platform.

India: An increasing number of small and medium enterprises, or SMEs, and a few large ones are choosing online platforms such as Power2SME and Industrybuying for getting access to the required raw material and resources for their own business. Price transparency and clean transactions without businesses having to add up the numbers has brought a lot of convenience for the users of these ecommerce platforms.

However, these platforms have low penetration in the ecommerce sector, which has made it difficult for the retailers to use these platforms for their benefit. Several macro-factors are setting the stage for India’s business-to-business ecommerce companies to make a significant leap, however, their businesses are being overshadowed by the high-profile ecommerce companies such as Flipkart and Snapdeal. One of the primary factors supporting this sector will be the Goods and Services tax which is set to roll out next year, thereby simplifying selling to business across states. Moreover, the B2B sector is set to register immense growth in the coming years. The funds raised from the investors have increased nearly five-folds from the previous year, indicating a strong future for the B2B ecommerce sector.

According to TechSci Research, factors like the Goods and Services Tax, easier access to credit is aiding the growth of the B2B ecommerce sector. The introduction of the GST will help businesses sourcing their raw materials online avoid the intricacies of filing service tax, excise regulations per each state. With a single tax structure, business will be open to online transactions that are traceable. Moreover, improving logistics and warehousing capabilities too are aiding B2B ecommerce firms. On the downside, the profit margins in the business are lower than that for consumer internet companies, averaging 5-15% depending on the category. Other limiting factors like discoverability, logistics, and willingness of SMEs to transact online are also prohibiting the sector’s growth.

According to a report published at TechSci Research, “India E-commerce Market Forecast & Opportunities, 2020”, the country’s e-commerce market is projected to grow at a CAGR of more than 36% during 2015-2020. E-services segment, which comprises online travel, online payments, online classifieds, etc., is expected to continue its domination through 2020. However, the e-tail segment that includes electronics, apparels & accessories, health and personal care, etc., is expected to witness significantly higher market growth compared to e-services segment over the next five years. During 2015-20, the western region is expected to remain the largest e-commerce market in the country. Major players operating in India’s e-tail market include Flipkart, Snapdeal and Amazon.