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Covid-induced lockdown has badly hit the B2B e-commerce player’s average revenue per user
B2B e-commerce company IndiaMART is looking at protecting current revenues and customers in the coming year. The company’s average revenue per user has already been “substantially” hit and collections to have come down to “near zero” for at least two months, since the lockdown began.
Collection growth, which stood at 32 per cent in FY18/FY19; came down to 10 per cent in FY20 (₹738 crore) indicating the economic stress on micro, small and medium businesses (MSMEs). For IndiaMART, maintaining similar numbers “will be a miracle” in FY21, with uncertainty around Covid-19 looming large.
According to Dinesh Agarwal, MD and CEO, IndiaMART InterMesh Ltd, its e-commerce platform is not adding any new customers especially because of the lockdown. Moreover, the very few who are coming, are primarily for particular product categories. This in turn will impact subscriber base.
Subscriptions account for 95 per cent of the BSE-listed company’s revenue from operations.
“We are not adding any new customers. Whatever little we have done is in sectors that are working despite the Covid pandemic,” he told BusinessLine.
Impact on subscriptions
Subscriptions (of suppliers who list products on the site) can come down and there may be downgrades too. IndiaMART incidentally has 1,47,000 paying subscribers, and nearly 50 per cent of them had made one-year subscriptions, Agarwal had said in an earnings call.
Market sources say B2B e-commerce players are losing subscribers (suppliers) as many MSMEs are going out of business or changing their business models to adopt the new normal.
“In the next three months, (if) all of this is over, I may lose 20 per cent of my customer base and as things return to normalcy (in) over another six months, we will start to adding say 1,000 customers per quarter and then 2,000 and then 5,000 customers in sometime,” Agarwal had said during the earnings call. But these numbers depend on “how the lockdown is lifted and the economy plays out after that”, he further added.
In order to retain customers, the B2B e-commerce player has already offered discounts, shorter duration renewals, and relaxed payment terms.
Silver lining
Incidentally, an unintended consequence of the lockdown is likely to be increased Internet adoption.
According to Agarwal, with a greater thrust on manufacturing (in India) and this the increased Internet adpoption, the company’s market size could see an expansion. Online and tele-sales could grow; physical meetings may decrease leading to more efficient operations across segments including in the B2B space.
Traffic in April is “50 per cent of what it was”, but there have been buyer inquiries and calls and request for quotes,indicating a pent-up demand in the system. Queries are seen across categories such as sanitisation, safety items, hospital, pharmas and food supplies, chemicals, packaging and so on.
“We are identifying these new categories and are working on increasing our supplier base across India,” he said.
Indicating that the company was open to acquisitions if they were a strategic fit, Agarwal said: “There may be certain opportunities for us to consolidate. We also have a cash balance with us.”