64706f52e8327f36a7a79cd0

Market

Deconstructing B2B marketplaces

No items found.

Summary

B2B Marketplaces: Simplifying the Supply Chain for Indian Businesses

B2B Marketplaces: Simplifying the Supply Chain for Indian Businesses

India is thriving in an interconnected digital world, but the B2B supply chain in the country is broken. Multiple middlemen make the buying and selling process complicated, resulting in delays and reduced seller margins. B2B marketplaces play an important role in simplifying the transfer of goods between buyers and sellers by directly connecting them and offering technical support and financing.

Pain points for buyers

Buyers face limited options and logistical challenges when dealing with multiple intermediaries for every element of purchase. Conventional marketplaces offer low transparency on pricing, and geographical impediments hinder new seller discovery.

What do B2B marketplaces do?

B2B marketplaces connect buyers and sellers, streamline processes from leads to payment, and eliminate the need for multiple entities. Everything can be done on a single platform, benefiting both parties.

How do buyers and sellers benefit?

Buyers can easily connect with sellers, get quotes, and book orders on a single platform. Sellers can reach a larger customer base and reduce operational burdens, leading to faster and more secure transactions.

What are B2B marketplaces solving for?

B2B marketplaces resolve bottlenecks in the buyer-seller journey by taking off the operational burden from customers. They offer convenience, prompt deliveries, real-time pricing, and quality control.

Key elements for building a successful B2B marketplace

To assess the potential of a marketplace, factors such as a large market with fragmentation, repeatability of purchases, scope to leverage growth vectors, and a technology-led supply chain should be considered. B2B marketplaces eliminate the need for middlemen, ensuring faster and value-for-money transactions for all stakeholders.

India is thriving in an interconnected digital world. Businesses that form the economy’s backbone have moved online too. Sellers can easily connect with end consumers through B2C platforms. But there’s a challenge when it comes to bulk orders. The supply chain is almost a maze. And that’s where more work needs to be done. 

B2B supply chain needs a fix

Let’s face it. The B2B supply chain in India is broken. Multiple middlemen make the buying and selling process complicated. Here is what it looks like: 

Picture this. There is a chikankari fabric seller who wants to sell the products to wholesalers in another state before Diwali. They understand that a market exists but don’t know how to discover this market. They hand it over to intermediaries. A series of price negotiations begin, and each entity tries to undercut the other. This takes several weeks. For seasonal businesses, each day is important. It could mean losses in the millions.

It gets more complicated

Middlemen take a cut of the revenue as a commission. Each sector has multiple such intermediaries. That means the more you produce, the more they collect. Here’s the cut across sectors: 

Seafood/Poultry:

The produce moves from the supplier via ports, auction houses, and multiple aggregators. In this process, 20-30% of the gross merchandise value (GMV) is deducted as the take rate or commission. 

FMCG and pharma:

The products move from the manufacturer through stockists, distributors, multiple wholesalers, to end retailers. By then, 10-15% of the GMV is collected as the take rate in FMCG and 20-30% in pharmaceuticals.

Construction material/MRO:

The raw material supply moves via the distributors and multiple wholesalers. The middlemen take 10-15% of the GMV. For private labels, it could go as high as 30%. 

To simplify, a big chunk of sales is taken by the middlemen. The traditional process flow doesn’t benefit sellers because: 

Delays:

Physical movement of goods is time-consuming. Buyers may not get the products in time if too many middlemen interfere. 

Costs:

The seller’s margin potential is compressed with every new intermediary’s commission involved.

It is kind of decipherable now that the current system is convoluted. A seamless transfer of goods between buyers and sellers is the need for the hour. That’s where B2B marketplaces play an important role.

Pain points for buyers 

Traditionally, buyers face limited options. Discovery of newer sellers is difficult because most buyers will be constrained geographically. In addition, there are logistical challenges, considering that buyers need to contact multiple middlemen for every element of every purchase. Here’s a closer look at the challenges: 

Multiple intermediaries:

Prior to every purchase, buyers need to coordinate with multiple intermediaries for different products. This involves additional time and resources. 

Cost pressures:

Conventional marketplaces offer low transparency on pricing. So, buyers have a very limited line of sight on costs. 

Seller discovery:

Buyers may not have the amenities to locate sellers outside their region. These geographical impediments are a deterrent to new seller discovery. 

Every buyer needs a procurement team, managing multiples upon multiples of suppliers. Managing the headache of this procurement process is the biggest value-addition offered by B2B marketplaces.

What do B2B marketplaces do?

B2B marketplaces are entities that directly connect the end buyer to the supplier.  These platforms also offer technical support and financing to both parties. 

From buyer discovery to the final payment, the marketplace is the one-stop shop for all needs. 

How do buyers and sellers benefit? 

Since the B2B marketplaces help connect to a single entity instead of thousands of different entities, everything from leads to quotes and order bookings can be done on a single platform. Here’s a glimpse: 

India had its B2C marketplace moment. And now, it’s time for businesses to reap the benefits of the internet.

What are B2B marketplaces solving for?

Remember the 2007 era when Flipkart launched? There were dozens of other e-commerce platforms that did similar business. None of the others made it through. The reason? Flipkart built and owned the logistics and supply chain, while the rest didn’t. 

Full-stack B2B marketplaces are something similar. These platforms take off the operational burden from customers. The concerns of B2B businesses are more or less similar to the early days of Indian e-commerce. Here’s how:

It is crucial to take lessons from the mistakes that e-commerce companies make during their launch phase. B2B marketplaces help resolve the bottlenecks at every juncture of the buyer-seller journey. 

What are the key elements for building a successful B2B marketplace? 

Four vital factors can be used to assess the potential of a marketplace. These are:

Large market with fragmentation:

Find out if the market potential is large (>GMV $10 billion). Then check if the supply base is fragmented and if there is low to no loyalty among customers. If the answer is yes, there is a space for a B2B marketplace. 

Repeatability:

Study the buyer-seller data to gain information on whether customers make repeat purchases. A key element to review is whether there is consistency in supply, that is, if the suppliers can meet the customer demand. 

Scope to leverage growth vectors:

Ascertain if there is a possibility to gain wallet share with existing customers. Another factor to look at is whether the customer is willing to consolidate supply from 5+ vendors with one marketplace. Further observe if there is an opportunity to expand into adjacent value pools and expand to buyers internationally.  If these opportunities exist, there is potential to build a B2B marketplace. 

Technology-led supply chain:

Consumers look for convenience. A critical factor to consider while evaluating B2B marketplace opportunities is the potential of technology to enable prompt deliveries, real-time pricing, and quality control and if customers really value that experience. 

Faster, secure, error-free, and value for money. B2B marketplaces eliminate the need for middlemen. It is a win-win for all stakeholders.

Join our exclusive Bharat community

  • Best-in-class Bharat-focused content offering actionable insight for founders and operators
  • Specially curated events and thematic summits
Register Now

Enter Details

Uploading...
fileuploaded.jpg
Upload failed. Max size for files is 10 MB.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

We’re looking for the next generation of successful Indian marketplaces. If you’re an early-stage marketplace founder, apply now here or learn more about the #DecodingMarketplaces Startup Hunt.

We’d love to hear about your experiences with marketplaces. Let us share our learnings and build a better and stronger ecosystem. Write to us at seedtoscale@accel.com to be a part of the Accel family.

Interested in authoring a guest article or narrating your start-up journey for SeedToScale?
Write for us

AI Powered Summary

B2B Marketplaces: Simplifying the Supply Chain for Indian Businesses

B2B Marketplaces: Simplifying the Supply Chain for Indian Businesses

India is thriving in an interconnected digital world, but the B2B supply chain in the country is broken. Multiple middlemen make the buying and selling process complicated, resulting in delays and reduced seller margins. B2B marketplaces play an important role in simplifying the transfer of goods between buyers and sellers by directly connecting them and offering technical support and financing.

Pain points for buyers

Buyers face limited options and logistical challenges when dealing with multiple intermediaries for every element of purchase. Conventional marketplaces offer low transparency on pricing, and geographical impediments hinder new seller discovery.

What do B2B marketplaces do?

B2B marketplaces connect buyers and sellers, streamline processes from leads to payment, and eliminate the need for multiple entities. Everything can be done on a single platform, benefiting both parties.

How do buyers and sellers benefit?

Buyers can easily connect with sellers, get quotes, and book orders on a single platform. Sellers can reach a larger customer base and reduce operational burdens, leading to faster and more secure transactions.

What are B2B marketplaces solving for?

B2B marketplaces resolve bottlenecks in the buyer-seller journey by taking off the operational burden from customers. They offer convenience, prompt deliveries, real-time pricing, and quality control.

Key elements for building a successful B2B marketplace

To assess the potential of a marketplace, factors such as a large market with fragmentation, repeatability of purchases, scope to leverage growth vectors, and a technology-led supply chain should be considered. B2B marketplaces eliminate the need for middlemen, ensuring faster and value-for-money transactions for all stakeholders.

Summarize

Focus Mode

Use this soundscape to help you with knowledge retention or long periods of reading.