DINESH AGGARWAL – Customers and employees are the biggest brand ambassadors

Thinking Aloud!,

Founded in 1996, Dinesh is credited with leading IndiaMART.com through a decade and a half with an unblemished record of being profitable from day one. Under Dinesh’s dynamic and visionary leadership, IndiaMART today is a 4500 strong talented pool of human resource with pan-India presence covering over 100 cities. A vigorous advocate of Indian SMEs, he has spearheaded several path breaking ideas to promote Indian SMEs globally. Here he talks about the industry he is in, shares his experience and his vision for IndiaMART.

Customer EmployeesTA: How did the idea of setting up the company come when Internet was not so widespread?

DA: We have been very early users of internet, you know personally me. I was working with C-Dot, HCL Technologies in America and other places. I have been a very early user of internet. I have seen internet thing happening. It was very fascinating and everything was available on the click of a button and so I felt internet could be very useful for a country like India where people are exporting goods and services and the buyers do not know about the service providers. That’s how this idea actually germinated.

TA: You were in one of the most difficult space in internet business, so how do you convince your customers about the value of internet?

DA: Difficult space because it is fragmented SME based and large fragmented SME based and that is why probably you are calling it difficult but at the same time those people are the most benefited by the internet.
So unlike a user who is using a free email or who’s using those SME’s, small businesses are actually generating business leads. The buyers are actually coming to them and they are able to do more business for them. So, it is not about our services that need to be convinced to them, we need to convince what internet can do for the SME’s and so it has been educating cum selling business and we have been happy about it being into a slightly difficult business. It also poses a little difficulty on the mushrooming competition as well. So if you have chosen a little difficult path, not many competitors can come to your turf and give you a competition. So at the same time it just gets balanced out.

TA: But don’t you think you have to face challenges like rural penetration, when you have to reach out to small traders in smaller cities where internet and broadband has not penetrated so far to the extent which was expected earlier on. So do you think that is a hindrance?

DA: Yes it is obviously a hindrance. Not only hindrance for us, it is hindrance for the entire internet industry. If I remember, the first five to 10 years of the internet industry in India from August 1995 to till almost 2004-2005, forget about the speed of the connectivity. The connectivity itself was unreliable and that is precisely the reason probably that during the 1999-2000 boom where so many companies got formed but did not play out well. It is post 2005 at least the internet connectivity was available; at least a reliable connectivity is available.

Now it’s all about how much penetration and how much speed. So I think the challenges have changed from 1995 to 2005 versus 2005 to 2015. Probably by the end of 2015 we will have a better penetration and better speed as well but yes of course it is a challenge and more than the internet connectivity and penetration, the adoption of internet because SME’s today, small businesses face lot of challenges. Not only they have to go to the banks, they have to double up as their management, to do hiring, they have to do their production – so they are just one man army typically. A one man army basically and in that whole process do they find sufficient enough time to devote to internet? That’s also a big challenge.

Not that the challenges are only because of the connectivity and speed but in larger town the challenges are also about time management. But India is full of challenges, full of excitement that way but we will continue to make some inroads. People are getting benefited by our services so they are continuing to use and more and more people are joining.

TA: Also there is this mindset problem in smaller towns about the use of internet. How do you change that mindset?

DA: I guess more and more users are coming today on the internet and are making this whole transition happen. Yes there was a challenge, and we had a very good story to tell. Whether or not people in India were using internet mattered less, if you are in an export business, since the entire US and UK and Europe, are highly penetrated. So that was a very good convincing point then. Today a lot of domestic business is also happening and so I guess people from smaller towns are still able to buy in because they think that should not get left behind technological advancements. The advancement which may happen in the metros may not happen in a small town. In fact it is the other way round where the larger cities have more value for money, has more ways to do business and for them adding internet is another way of doing business and so larger cities have difficulty to adapt but once they adapt, it’s a bigger volume game.

In the smaller cities adoption is not a big issue because top 100, or top 50 small businesses of that city are more than eager. They have sufficient enough time probably because of less travel related hassles or you know less non-metro hassles. They are able to do better adoption. So contrary to the consumer side of the story where the rural consumer or small town consumer has a problem, I don’t think SME’s have a problem in the smaller towns.

TA: After a conservative phase of development you are in a rapid phase of development so how are you dealing with this second phase of development?

DA: First I guess until about 2007-2008, we were largely concentrated as export oriented businesses but from 2004 onwards we saw that the Indian domestic economy has also grown very well and there were lot of domestic suppliers and domestic buyers coming onto our site. So the second phase of growth has actually come because of the domestic consumption story domestic. B2B consumption story too, much like IT happened. Construction and real estate business boomed and such industry actually ends up consuming too many small items, just like automobile industry which has like 5000 different parts and plastic parts, electronic parts electrical parts. So those domestic consumption stories actually unfolded very well and so now we are in the phase of catering to the domestic consumption story and that is why our second phase of growth has happened over last two years. During the last two years, we have opened too many offices added; too many people and it has given us a very good growth in terms of numbers of customers in terms of our topline and everything. Yes obviously in that hunger to get growth we have probably overspent and probably learning how to manage this larger size of operations, cash flows etc but yes we are learning every day.

TA: Do you have a global plan?

DA: We have been a India to global kind of business and now more India to India kind of business. So now we are more a India led business as all our customers are Indian. In the early stages, all our buyers were from outside India but today if you really see large number of buyers and large numbers of suppliers are looking at domestic business. So you know we are continuing to fortify our business in the Indian economy. I mean we are continuing to experiment and if the right kind of experiment works, we may go global.

TA: What does it take to promote a non glamorous internet business that will bring value to people?

DA: I guess our business is more direct sales, direct education business, SME business but I fully believe that for every business, if the value for money and product side is well thought of and continuously improved upon, it will bring you customers, it will bring you brand.

Your customers and your employees are your biggest brand ambassadors. If your intentions are right towards your employees it will bring good brand value or it may take a little longer in certain situation for example in our case but it may it will always pay off. So my advice would always be to keep your customers and employees in mind whenever you decide any strategy.

TA: You have been a player in the B2B space for a long time now. Do you have any plans to move from B2B to B2C or diversify from B2B to B2C?

DA: I don’t think we are diversifying. We do have one of our travel segment which is slightly B2B to B2C kind of a system. This B2B, B2C will not remain for a long time. So Google started as a pure B2C company. Today 50% – 60% of their advertising comes from B2B players. Just Dial started as a pure B2C organization but now a large percentage of their business has started to come from B2B. So I guess these B2B’s, B2C’s matter when you are less than US 10 million dollar company or when you are less than 1000 people company. Ours is a business promotion business and we generate leads for business. Those businesses are largely B2B oriented. Tomorrow we may look at B2C oriented.