Highlights of guest lecture by Mr. Madhup Agarwal- IndiaMART

It's certainly no secret that more and more business is being conducted online each day. Consumers expect products and services to be instantly available, comparable and configurable to meet their needs online. The Web provides consumers with the instant results and fulfilment they demand from their shopping experience. But e-commerce is not strictly for B2C purchases; B2B customers have come to expect the same speed and simplicity associated with buying online.

While B2B e-commerce isn't a new concept, its adoption rate has lagged.

GM, Ford and Chrysler came together and created a B2B platform where car spare parts could be purchased. FedEx started providing online shipping solution to small business users to help them improve their operational efficiencies and transportation cost. Large food and beverage companies like Coca Cola, Nestle and Unilever came together and created an online e-commerce model for procurement and trade. Commodity exchange was also taken to an online platform. But all these ventures have succeeded in foreign markets, especially the US as the users of these platforms come from a Do-It-Yourself culture where they understand the benefits of e-commerce and work towards making it successful.

Many organizations could benefit greatly from adoption of a B2B e-commerce platform in India too. But there are several roadblocks to this.

Firstly, the culture of Indian businesses does not favour e-commerce. India is yet to mature as a DIY nature. In India, the help available for any chores is cheap as compared to the US and Indians would rather call someone to do things for them rather than doing it themselves. The intended users of such a platform would rather like someone else to do these things for them.

Secondly, buyer and supplier protection is questionable. In the US, government facilitates payments. Escrow account is created in a much less time in the US but this is a pain point in India. The banking infrastructure is a major stumbling block. Credit card penetration is very less and very few businessmen have large credit limit and B2B transactions are typically of a ticket size of a few lakhs.

Thirdly, the sellers and buyer behaviour in India is prohibitive of higher rates of adoption of e-commerce. The sellers, esp. wholesalers are resistant to any change in their traditional way of working. They prefer to work from their shops in wholesale markets which have no limited infrastructure and developing an infrastructure to enable them to go online is difficult. Moreover, they do not have time to have an online shop and maintain it. The catalogue of the suppliers is not commerce ready. Minimum order size, delivery time, price points for bulk purchases of different quantities is not defined.

And finally, the ability of matchmaking between the vendors and buyers is a difficult proposition. As the vendor catalogue is not commerce ready, an aggregator who wants to create an online marketplace for them needs to first make a commerce ready catalogue for the vendor which is very time-taking and labour intensive.

These above challenges may be tackled by platforms and applications on mobile phones and most innovations in the coming years for a marketplace of vendors will be in the mobile commerce arena. The support of banking systems is essential for any further innovation in this arena to be successful.

 

Aprajita Aparna Sahay

12DM-034