India’s online business-to-business (B2B) market size is expected to grow from $287 billion in 2017 to around $700 billion by 2020.
The demand for e-commerce of industrial goods is likely to grow multifold in the coming years that means micro, small and medium enterprises (MSMEs) into manufacturing or dealing in industrial goods will see increased sales and marketing opportunities. India’s online business-to-business (B2B) market size is expected to grow from $287 billion in 2017 to around $700 billion by 2020, according to a CII and Deloitte India study. The growth would not just allow MSMEs to sell products online but also market them on a much larger scale to a wider audience. This is anytime more cost-effective than developing a network of channel partners. However, Indian MSME sector is yet to fully adopt online buying for their procurement needs, which has following benefits, even as 82 per cent of Indian MSMEs have a transaction website for B2B sales, as per a report by US-based e-e-commerce SaaS provider Magento.
Simpler Buying Process
Unlike large enterprises, the business buying behaviour of MSMEs is not very different from the retail consumer behaviour. The owner or manager of an MSME is typically the only decision-maker when it comes to the purchase for business use. “The purchase process usually doesn’t involve multi-stakeholder approval, and that’s why it’s quite similar to a single consumer shopping behaviour,” Ratan Tata-backed B2B e-commerce marketplace Moglix’s Founder and CEO Rahul Garg told Financial Express Online. The platform for procuring industrial goods is hence quite similar to how businesses are procuring currently.
MSMEs typically source their goods from local retailers or wholesalers and due to relatively low volume requirement, they don’t get to enjoy bulk quantity pricing. However, an e-commerce platform can offer the best price for products that are negotiated for bulk purchase. An offline supply network is far less likely to offer competitive pricing.
Online B2B buying also offers a wide range of products along with multiple brands to choose from. MSMEs are typically constrained by stock limitation from their local retailer or dealer. “The requirement specification of most industrial applications is met by multiple alternative products at the same price or lower price,” said Garg as an online platform offers a diverse catalogue and helps in solving this problem of accessibility effectively.
However, due to a wide variety of product catalogue, it is sometimes difficult to manage it with real-time stock updates and with limited resources, this exercise may get cumbersome and challenging, according to Garg. The buyer may see an out of stock item if it is not updated by the seller real-time.
Overcoming Information Asymmetry
Equipped with a detailed product catalogue, wide range assortment and best pricing, the e-commerce platform solves the problem of overall information asymmetry in the industrial goods sector. Product reviews, articles, buying guides, and usage tutorials curated by the e-commerce platform can also benefit the buyers immensely by helping them select the right product for their requirements.
Lastly, e-commerce platform provides the benefit of technology as the process is seamless and provides detailed tracking of the order status with complete transparency along with allows for repeat purchases that are not available while buying offline. “As industrial products are functional in nature and required repeatedly for running a business, MSMEs can benefit immensely with repeat buying without any problem,” said Garg.