NEW DELHI – When Dinesh Agarwal, founder and chief executive officer of IndiaMART InterMESH Ltd, returned to India from the US 26 years ago, the global e-commerce industry was in its infancy, with giants such as Amazon yet to get a foothold.
As others focused on evangelising the new manner of commerce to individual consumers, Agarwal took a different route, creating an online marketplace where businesses could sell their products such as machinery and electric equipment to other businesses.
During this journey, IndiaMART’s focus on small and medium businesses has been a constant despite the subdued growth and uncertain business nature in this segment.
Encouraged by the steady adoption of digital technologies by small and medium enterprises, Agarwal continues to be bullish on the long-term growth prospects of this segment, despite the impact of the pandemic.
“I came back for SMEs, and we stand by SMEs,” he tells Informist in an interview. The company’s growth, however, depends on both SMEs and large businesses, he adds.
Following are edited excerpts from the interview:
Q. Since IndiaMART’s business revolves around SMEs, don’t you think the surge in inflation after the Russia-Ukraine war is affecting business and demand on the platform?
A. I don’t think that has had any short-term impact on IndiaMART. Short-term impact on our business happens only when SMEs are immediately affected with something, and they stop paying us. In the longer term, if internet adoption continues well and the economy does well, we as a product will do well.
As a marketplace, we have never been concerned about the demand side, as that has always been there because of internet adoption. We always focus on building supply.
I came back for SMEs, and we stand by SMEs.
Q. How do you evaluate business growth in the September quarter compared to previous quarters?
A. The Apr-Jun quarter has been affected for the last two years as subscriptions were hit and not renewed. There has been some recovery in July and August. I am sure Jul-Sep will be a bit better. A full recovery will most probably be seen after Jul-Sep, that is, in the second half of the current financial year. However, you might see less growth in the second half because of a higher base from the previous year.
Q. Do you think Open Network for Digital Commerce will create competition for the company? Do you plan to onboard IndiaMART?
A. No, it should help the company. I mean, let it come up, because initially it will come up for consumer goods such as mobiles, clothes and groceries. But I think once the basic consumer adoption happens, if that works well, it should help everybody in the system, just like Unified Payment Interface.
If it is built well, in the next one-two years, it should help even business-to-business big time. We keep on reading about it, and we will onboard ourselves once it comes up for business-to-business marketplaces.
Q. How long will ONDC take to penetrate the market?
A. I have no idea how the ONDC timeline will happen, whether it will succeed, how much it will succeed, in which categories it will succeed, because there are too many items there — such as logistics, payment, supply, demand, search, and aggregation. Given that we (as a country) have had some success around Aadhaar, some successes around UPI, I am very hopeful that it should succeed as people need low-cost solutions.
Q. Currently, IndiaMART is more popular in the North. Do you think it has to improve supply penetration in the South?
A. From a supply penetration point of view, we are not that successful in Bengaluru and Hyderabad compared to Ahmedabad, Pune or Delhi. Markets in the West and North are very good in terms of penetration, followed by the South and East. We are well penetrated in Tamil Nadu, but not in other parts of south India. We are working on it. Our focus continues to be on tier-II (cities and towns).
Q. The company’s app has a 4.7 rating on Google Play Store, but there are a lot of complaints on fake leads, price mismatches, etc. How is the company trying to improve customer experience?
A. First, we ensure there are enough supplies. Second, we try to make sure the categorisation, product specification, and pricing are right.
Price mismatches mostly happen, for instance, when a supplier has written a quantity of 1,000 and the customer wants only two pieces. The supplier would then quote a high price as we are meant for wholesalers.
Many people open a small factory and ask us to get customer leads for their products. You have to build a brand for yourself. We don’t build brands, we build categories here.
Having said that, we are continuously exploring how to use better technologies in search. We need to do a lot of matchmaking wherein we can list different specifications of a product and give options to compare different products.