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IndiaMART was founded in 1996 as India’s first online B2B directory. Within a year we had registered 100 clients on our platform. Today the number stands at more than 1.13 Lakh paid suppliers. We registered a revenue of more than Rs 300 Crore in FY’16. Things have changed dramatically for us in the past 2 decades. BWDisrupt spoke to the founder & CEO of IndiaMART, Dinesh Agarwal.
Excerpts from the conversation-
To be frank, when we began we just didn’t have the money and experience to make something this ‘big’ for the ‘small’. We just had a belief that we were disruptors not just because we brought in newness within the SME space, but also set the tone for an alignment not thought about earlier.
Initially, I aspired to set up an Internet Service Provider but Indian norms did not allow private participation then. Soon, my cousin Brijesh and I, discovered the opportunities that the SME sector offered in terms of exploring greater markets for them in India and abroad. So, we started making websites for them which not only made them look up-to-date but also put the Indian SME on global business map.
We were salesmen during the day and techies at night, shaping the value-added services we sold, creating sites, designing and maintaining them. The fact that we broke-even right in the first year of our operation was a big boost tour confidence in the idea. I remember being approached by the investors and venture capitalists back then. These terms weren’t as glossy then as they are now and thus every time we were approached by an investor we would politely decline the idea thinking it to be a loan and additional business liability.
Soon we realised that our website business could be developed into a marketplace model. Initially, our operations were directed towards global markets, but later on around 2008-09 we realized the opportunities in the burgeoning Indian market and since then we have been focusing on domestic business.
We have been among the firsts to be able to establish a single-window, transparent mode to help businesses happen. Today, IndiaMART has set pace to:
(i) Generate 10 million buying enquiries every month
(ii) Expand customer base over the existing 113,000 paid customers
(iii) Transactions worth over INR 30,000 Cr
(iv) Revenue of Rs 300Cr
How were things when you started up? How and when did you realise that there was a successful business model out there, even though the Internet was still at its infancy then?
You know, what the best part of being an entrepreneur is? You can think of being no one else once the bug’s bitten you. Once an entrepreneur, always an entrepreneur.
I was in the US, working with a software services firm. Although the markets for print publishing, telecommunication, audio-visual, music, television were giving way to Internet-related stuff. Few seemed to be ready to bet their last buck on the Net.
I was pretty sure there was something to take back to India. But what? The business had to be something big, a solution that would succeed in its seamlessness, something with that scored really high in transactional ease and had the ability to address the potential of a population base such as India.
So, did we get it right the first time? Of course not! Easier said than done. The IndiaMART that you see today has been built over 20 years of experimentation. We started as a B2B directory and website developers for SMEs who then forayed into export promotion. We also entered travel domain back in 2000. But, we soon realized our strength and that our business could be converted to a successful marketplace model. And thus, we started focusing on domestic trade and the current IndiaMART InterMESH Ltd. was born.
You were one of those few e-ventures that survived the dotcom bust. Also, I believe the ecosystem was not as conducive then, as it is now, to some extent. What kept you going? What and when was your take-off moment? What are some of the important entrepreneurship/ life lessons that you learnt on the way uptil now?
See, the take-off moment existed for us, anyone for that matter, from the moment we got into the space of trying to make a difference in the way we do business in the market. As I said we were disruptors many times over. The ingredients and the scope were all there – a buoyant SME-driven market; the willingness to look at new avenues and platforms, in our case the Web; a full-stack of fresh services; and, the premium value-added proposition. What also clung to our DNA from Day 1 is that we have scaled as per the demand of the market, and have transparency inbuilt within that only expand your horizon and outreach as a business.
To understand our continuing existence – I would not call it survival — in spite of the dotcom bust, we must take a look at what happened as the new Millennium knocked. In a way it was a problem of plenty. High investments into emerging dotcom companies at the end of 1999, weak foresight and monetization plans, and the bubble burst. 2000 came, re-engineering projects needed re-orientation and rethink, and engineers lost their jobs. As if that was not enough, WTC got hit and the only global concentration point then was the War on Terror. We had begun focusing on the export market by then, even that hurt. I remember we were featured on the cover of BusinessWorld back in 2001, as a dotcom startup which was profitable even during the crisis.
I believe, there’s always the proverbial light at the end of the tunnel. For us it was the Internet back then. Increasing Internet penetration led to a rise in demand for websites, their creation and hosting. Although there were more players in the business by then, thus lower profit margins, the compensatory factor were the higher volumes of work. Moreover, we were working on a generalist model. We catered to multiple industries and thus even if there was a lull in one or two, others would balance it.
We came out stronger of every challenge because we were ready to learn and mould ourselves according to the situation. I believe, we are all born with 20% luck. So, if you try just once you will never succeed but if you try it five times, your chances of succeeding at it become 100%. And this is what we did, we tried it multiple times and we tried it through multiple methods. And we are here!
What are your future plans?
Some of the specific initiatives we are taking currently:
• Strengthening the leadership team: Hired industry veterans to the leadership team
• Identified 10,000 Brands as a part of the Big Buyer initiative
• Around 80% of ET 500, BT 500 and Fortune 1000 companies already source from IndiaMART
• Target – 50% of our revenue will come from big brands by 2020
Growth projections over the next 2 to 3 years:
• Rs 2,000 crore revenue by 2020
How are you trying to keep up with the times? Going forward, tell us something about your latest and upcoming ventures/ features/offerings, etc.
If you look closely at IndiaMART’s lifespan you will notice that at no phase we have moved with jerks and starts. We have moved up the ladder, carefully weighing each step, before going on to the next. We have not been hasty at any point of time, only speedily adapted to customer’s needs, sometimes, where we were convinced, even creating the need.
We launched our mobile website and App because we realized that mobile is going to be big and not because we thought it to be just a trend. Today, more than 60% of our traffic comes from mobile.
We always had our ear to the ground. We have been an entity based on our customers’ needs and we haven’t forgotten. Brijesh and I often have these reality checks with our buyers and sellers, talking to them, listening to them, at times implementing their suggestions. After all they are the beneficiary, and the backbone at the same time, of IndiaMART.com.
Before launching Tolexo, for instance, we had numerous requests to get on to the last-mile delivery bandwagon. But our buyers and sellers were already engaged in offline transactions. Tolexo came into being with full access to the databases generated by IndiaMART over two decades. We reigned in the analytics and Big Data to specifically address B2C, customised features, enhanced detailed product description, price comparison, and incorporated ratings based on buyers’ feedback — all that you’d want in an e-commerce marketplace. Tolexo was basically started to cater to the sub Rs 10,000 category. The transactions which were over Rs 1 Lakh normally prefer NEFT/RTGS. There is an opportunity in Rs 10,000-Rs 1 Lakh category.
What are your Marketing Plans, market size & opportunity?
Indian B2B is expected to be around $700Billion by 2020 which means that there is immense opportunity for various players to operate and grow. Currently, the market size is around $400 Billion. IndiaMART alone accounts for a business of more than $6Billion. Hence, there is no dearth of opportunity in the B2B space.
Tell us about your current funding details?
In early 2009, the firm received Rs 50 crore Series A round funding from Intel Capital. In March 2016, it raised Series C Funding from Amadeus Capital and Quona Capital. It is claimed that these funds will be used to scale up the activities of IndiaMART and Tolexo.