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IndiaMART is India’s largest and the world’s second largest online B2B marketplace. It is a platform that connects buyers and sellers across time-zones and borders through business solutions. However, their journey of reaching this pinnacle is no less of a roller coaster ride with copious ups and downs.
In today’s blog we look at how IndiaMART InterMESH reinvented their business model from time to time, by persistently adapting to the changing environment and understanding the needs of Indian SME businesses.
Let’s begin with the tale of Mr. Dinesh Agarwal, the Founder & CEO of IndiaMART InterMESH Ltd.
Mr. Dinesh Agarwal was born in a traditional business family in Uttar Pradesh’s Napara District, in close proximity to the Nepal border. He attended a Hindi medium government school and went on to graduate from HBTI, Kanpur with a B.Tech. in Computer Science. After working with several prominent companies, in 1992 he landed a job with HCL and relocated to United States.
This was when Mr. Dinesh Agarwal had his eureka moment. He says in an interview –
“I had been using basic internet like email since long but a major turning point in my career was when I saw a webpage opened on a colleague’s computer while I was working in US. That was the first time that I felt that internet is going to be a driving force. I felt as if the whole world is converging on that webpage. It was such a euphoric moment for me to witness that one can access any information with just a click. I call this moment as a turning point in my career because it was then that I realised that I wanted to work in the field of internet.”
To quote Paulo Coelho – “Life was always a matter of waiting for the right moment to act.”
Dinesh’s right moment to act came on 15th August, 1995 when Prime Minister PV Narasimha Rao announced that BSNL would provide internet connectivity in India. Having witnessed the birth and evolution of internet in America, Dinesh’s entrepreneurship bug revived. He left HCL and came back to India to start an internet company – indiamart.com.
Dinesh believed that Indian Small and Medium Enterprises (SMEs) would benefit the most from the forthcoming internet boom. However, in 1996, India had a dearth of computers and lacked imperative internet infrastructure. Thus, instead of creating websites for individual businesses, IndiaMART developed one website for connecting Indian suppliers with the international buyers in a simple, cost-effective manner.
Inorder to establish a sustainable business model, IndiaMART created an online version of Yellow Pages for India – an online directory of Indian exporters. Their first tagline was: ‘The Global Gateway To Indian Marketplace’.
As Mr. Dinesh Agarwal states in an interview with Forbes India –
“Understanding that exports were very important for the Indian economy, we realised that there for a price opacity and limited information about Indian products for the American importer. We started with that opportunity. Back then, we got online enquiries from the US and every night, we printed them, faxed them overnight and then sent them by post the next day. This went on for five years. The internet really only took off when the dot com boom happened in 1999-2000. The focus shifted to computers, e-mail, content-building, more suppliers, and more exporters online.”
The dotcom bubble burst and 9/11 attacks put a damper on IndiaMART’s aggressive growth spurt. Their revenues almost halved in a short stretch of time, employee salaries were delayed and things took a turn for the worse. Nevertheless, Mr. Dinesh Agarwal was tenacious and refused to throw in the towel. He navigated the company through these choppy waters and soon enough business was back on track.
In 2007-09, the Global Financial Crisis led to a recession in the US, and Indian exports flattened out. IndiaMART once again found itself behind the eight balls. Here is when Dinesh Agarwal made up his mind to pivot towards the India-focused B2B market and raised $10 million in Series-A funding round from Intel Capital. With the passage of time, they introduced various value-added features to their marketplace platform like – catalog creation and premium number service.
With a new model and fresh capital, IndiaMART was firing on all cylinders. They spread their wings and opened 52 offices in 52 weeks. As a result, their sales grew 10 times in a year.
In 2012, IndiaMART experienced yet another setback as our economy slowed down. They reported a loss for the first time since inception. They truly hit rock bottom. They lost their stakeholder’s trust and Dinesh Agarwal admits he was scared to even leave home.
This adversity became their stepping stone to success. Dinesh Agarwal and his team went back to the drawing board and revamped their entire business model. They made some big changes, scaled back and stopped hiring. They switched from their earlier lead generation model to a Buy-Lead model, thereby finding a new product-market fit.
IndiaMART launched their mobile application and streamlined their website, thereby leveraging technology for better product and price discovery. They also started providing digital and telephonic assistance to convert buyer enquiries into sales.
Promptly, IndiaMART metamorphosed from a traditional classified platform to a completely buyer-centric transaction completion platform. In the process, their core principles and values have stood steady as a rock. Even today, IndiaMART do not charge a penny in any commission or transaction fee from their buyers. They operate a subscription-based model for suppliers.
With the burgeoning B2B e-commerce in the country, IndiaMART launched Tolexo.com in 2014 – the online shopping store for business and industrial goods.
Over the course of time, scaling up Tolexo was proving to be an uphill task and profitability was elusive. Maybe they bit on more than they could chew. Hence, Dinesh Agarwal called the shots and merged the IndiaMART platform with Tolexo. Surprisingly, it worked like a charm and they’ve stuck to it since then. This is the reason why IndiaMART doesn’t look like a boring classifieds website; it’s like Amazon for B2B products.
An advocate for simplifying the internet experience, Mr. Dinesh Agarwal expresses in an interview –
“While we are a technology company, users should see us as a functional company—not a technology company. My mantra is—let the user get his job done without being exposed to the jargons of technology or the technology hurdles.”
In their pursuit of making product-matchmaking easier for businesses, they’ve successfully on boarded umpteen SMEs from rural India. As a matter of, around 33% of the traffic on their platform stems from tier 3 and 4 cities, smaller tehsils, and villages of India.
As of December 2020, IndiaMART has more than 119 million buyers, 6.4 million suppliers, and a whopping 71 million+ products & services. With 60% market share of the online B2B Classified space in India, their channel focuses on providing a platform to SMEs, Large Enterprises as well as individuals.
The management team at IndiaMART has thoroughly embraced the methodology of Learn-Unlearn-Relearn. They’ve had the courage to bite the bullet, by reinventing their business model from time to time and persistently adapting to the fickle environment.
While perusing through several interviews of Mr. Dinesh Agarwal, we came across something that candidly struck a chord with us. We are sure it will inspire you as well –
“One of the things that I have learned is to ‘never give up and I keep telling my team that it’s better to try and fail than to sit and regret. I believe that everyone has a 100% chance of succeeding in life. Everyone I think is born with at least 20% of luck. But you will have multiple failures in life. So, if you try only once, the chance of success becomes zero. But if you try it five times, your luck at succeeding at it becomes 100%.”