Indiamart, which started out as an online directory for businesses in India, is currently backed by Intel Capital with Bennett, Coleman & Company Ltd as one of its investors.
New Delhi: Indiamart.com, one of the largest online listing platforms for small and medium businesses, is launching an online retail marketplace, Tolexo.com, for consumers and businesses to shop on the web. Registered as a separate entity, Tolexo Online Pvt. Ltd is expected to go live in the next five weeks, the company said.
Indiamart, which started out as an online directory for businesses in India, is currently backed by Intel Capital with Bennett, Coleman & Company Ltd as one of its investors. Founded in 1996, Indiamart.com helps 1.5 million registered sellers to connect with global buyers on its platform although the business takes place offline. Tolexo will help the company open its doors to online transactions, not just for businesses but for consumers too. Indiamart currently lists sellers for product categories ranging from clothes and cosmetics to industrial machines, from auto parts to chemicals and pharmaceuticals.
Initially, Tolexo will not stock all the product categories. “We are not going to compete with the Flipkart and Snapdeal(s) of the world. The categories that we are going to come up with will be extremely different,” said Brijesh Agrawal, co-founder and director of Indiamart.com.
According to a person close to the development, the company will launch home, office and industry supplies in the first two years. The products could range from exclusive handicrafts to basic hardware like hammers, and from medical equipment to auto parts. Agrawal declined to comment on product details.
“Everybody is busy serving what is probably the ‘hottest’ category at the moment and the kind of fight these companies are giving each other is making the whole business proposition unviable,” said Agrawal, pointing to electronics and apparels.
The two categories are not on his list for now. He thinks the bigger opportunity lies in categories no one is currently looking at—for instance, home and office supplies ranging from lighting and furnishing to hardware.
However, he does not rule out rolling out the entire catalogue of Indiamart once the marketplace matures.
Indiamart already has a significant merchant base and will not have to spend money and energy on attracting sellers, and the online move is timely, said Subho Ray, president of the Internet and Mobile Association of India. But he added that the consumer-facing segment could prove to be a challenge because there is a “difference between consumer and business buying needs.”
During the last one year, shopping sites such as Myntra and Flipkart have also shifted to an e-commerce marketplace model to survive high burn rate of chasing customers. An online marketplace is a less capital-intensive business and allows easy access to foreign direct investment (FDI), which is banned in direct online retail.
The e-commerce market is anticipated to be worth $22 billion in the next five years, from $3.1 billion, according to a November 2013 report by CLSA. According to Agrawal, Tolexo would look to raise about $100 million over next two to three years. Indiamart, with revenue of Rs200 crore in March 2014, has over 2,600 employees in 40 plus offices in the country. The company generates nearly two million leads every month with a conversion rate of 7-8%.