The head of the e-commerce platform, Dinesh Agarwal, is described as the Indian “Jack Ma”. At 49, he sees the future in pink, hoping that the purchasing power of the Indian population increases significantly in the coming years
Sitting on a chair in a hallway of the Palais des Nations in Geneva, where he is attending Unctad’s week on e-commerce, Dinesh Agarwal, 49, seems almost oblivious. Born in a Uttar Pradesh city into a modest family, he is however what many describe as the Indian “Jack Ma”. He is the boss of the IndiaMart e-commerce platform he created in 1996 in Noida, when the country had some 500 Internet users. Today, this platform, on which a million buyers and suppliers meet every day, is growing at a staggering 30 to 35% a year.
In 2017, the company earned net revenues of $ 60 million. “We work with five million small and medium-sized businesses. We have 55 million registered buyers. “The platform, he says, is 80% for B2B (business to business) and 20% B2C (business to consumers). 60 million products and services are sold and sold in 60,000 categories. These range from electronics and medical and pharmaceutical products to textiles and agriculture, to machinery, office supplies and financial services.
It’s only a beginning
The numbers are already impressive, but this is just the beginning. “We have tripled platform traffic in the last two years.” India has 450 million internet users (mostly via smartphones) and web-based commerce is worth $ 10 billion dollars a year, a figure still far from what is done in the United States and China.
“But the future is ahead. We may be ranked 100th in terms of GDP per capita, but we are more open than China. In India, the boss of IndiaMart prides itself, we remain open to the outside. “IndiaMart currently has no competitors worthy of the name. The Chinese giant Alibaba has only 2% market share in India. Amazon is not a competitor, its business is primarily towards consumers.
This Indian success story, Dinesh Agarwal, whose mother tongue is Hindi, is attributed in part to Rajiv Gandhi, prime minister in the 1980s who spoke of the need to study computer science. He became a computer engineer. Having started his career with CMC Company, a subsidiary of Tata, he spent a few years in the United States with HCL. But when he heard the Prime Minister’s speech on August 15, 1995, on Independence Day, he realized that his destiny was in India. When he creates IndiaMart, India “is a black box,” he explains. That’s where I wanted to show the real India to the West. ”
The challenges in India remain multiple. The first affects purchasing power, which varies considerably between the poorest and the richest. It is therefore difficult to find the right product lines. But Dinesh Agarwal is optimistic. The purchasing power of the population, he predicts, will increase by 2030. This will have a considerable impact. The other challenge is the infrastructure whose deficit is glaring. “In terms of airports, roads, electricity, we are not competitive. And we do not modernize such infrastructure overnight. ”
The language factor is also a stumbling block. “30 to 40% of Indians speak Hindi, 20% English, but we have between 20 and 30 other languages,” says the entrepreneur. In terms of distribution, IndiaMart provides services to suppliers through its 95 offices and 2000 employees across the country. It provides them with software and training to use the platform at best.
Several factors played in IndiaMart’s favor. Since e-commerce is highly dependent on trust, Dinesh Agarwal welcomes the implementation in India of the Aadhaar Biometric Identity Program, which benefited 90% of the population. This facilitates online commerce. In terms of payment, India has also made great progress with a local interbank system that allows money to be transferred at any time.
“The system is even more efficient than in Europe or the United States. Payments are immediate. We must not wait three days, “quipped the young millionaire. In India, the platform serves as a “deposit bank”. The buyer will see his payment made at the time of delivery and the supplier has the guarantee that his client has already paid. IndiaMart has also benefited from a recent law passed in Delhi in 2017 standardizing tax rates between different states of the country.
Finally, in the area of e-commerce, it is difficult to conceal the question of data. “We have a huge advantage over Eta
India is one of the fastest growing e-commerce markets in recent years. According to an eMarketer report, the projection for 2018 is a 23.5% increase in online sales. Much of this comes from the B2B sector, with its 1.6 million businesses, responsible for $ 800 million per year.
Despite the good numbers, according to Brijesh and Dinesh Agarwal – founders of Indiamart, India’s largest B2B marketplace – the service segment still has a lot to grow in a market that has similarities with Brazil. Both were presented on Wednesday (18) in panel at the E-commerce Week, organized by the UN.
Among the main challenges, according to them, is the standardization of services. “Unlike the purchase of products, it is very different for consumers to compare services in B2B,” said Brijesh Agarwal. “Each provider has a different specification,” he explained.
According to the businessman, the lack of an “identity of his own” makes the services offered in an unorganized way – one of the other problems that the sector needs to fight in India. “Customer expectations need to beat the quality of service offered.”
Other points cited by the founders, and who need special attention, are the lack of skilled labor, improvements in the quality of service delivery and better understanding of consumer behavior. “It’s a sector still under development, with much to discover,” concluded Brijesh.
For them, who founded an international marketplace, cross-border has become a reality. Today, services seem to gain more and more relevance in the digital world.
“[We’re talking about] downloading music, videos on demand and software,” said Dinesh Agarwal. “The software industry is the second most important in this segment. This is a great opportunity, “he said, citing Freshdesk, a support company, as a successful example.
According to Giles Derrington, head of Politics at techUK, who also participated in the panel, this recent change is a reflection of the advancement of technology.
“In the past, you bought a computer program in the box and installed it. It is not the type of product that creates connections. Today, there are those same services in the cloud, “he concluded.
As IndiaMART enters the 23rd year, I would like to thank you all for your constant support. When we started IndiaMART in 1996, it was a small set up with a 5 member team. Today, we are a large family of more than 3500 members and the best part is that our strength is not someone or somebody, but we ourselves – the family of IndiaMART.
When IndiaMART was started, Brijesh and I, we were salesmen by the day and developers by the night. We were the admin, we were the marketing, finance, HR and every function that you can think of. In the last 22 years, we have changed our business models and processes multiple times. So believe me, I still share that childlike excitement you feel for that every sale that you close, I still feel the pain of every ticket that has to be resolved, I still feel the pat on my back when you get a big brand on-board, I still know the effort that goes in creating a new product, I am also under pressure when your decision can make or break a situation.
What I also know is if we have to scale and become larger than what we already are, the largest online marketplace in India, then it’s not the 50 year old me who will take it forward but the young and creative you. It’s going to be your energy and ideas.
I firmly believe that an organisation is defined by its values and culture. And, our close knit relationships and our culture to take care have made it easier for us to achieve our goals, always. We have a habit to take care of our buyers, sellers and of each other. When 10 team members stand to donate one unit of blood and when we don’t think before helping one of our members in times of even their personal needs; it is this culture of ours that has made IndiaMART what it is today and what would help us make IndiaMART the company of our dreams.
And, dreams are made of smaller goals. In 1996 our goal was to somehow get that first client, then it was 1,000 customers then 10,000 then 1Lakh and now it’s creating a Rs 1,000 Crore company. Believe me, we are going to achieve it. My confidence doubles when I see this video. I feel the same excitement and craze in you as I had when I left my job in America and came back to India. After all, not everyone can think of replacing their CEO in the next 2 years. 🙂 That’s only the spirit of IndiaMART.
I am thankful to you all because just like family – you came, you saw my dreams and you made them your mission. And, I feel so proud that today you are creating your own missions.
Thanks for everything and believe me this is just the beginning. Our greatest achievements are yet to come.
So congratulations on this one and let’s brace ourselves for the future.
Founder & CEO
IndiaMART, India’s largest online marketplace, recently organized the annual SME Conclave 2018 in association with TiE Delhi-NCR at the Welcome Hotel Sheraton in Saket. The conclave featured several leaders from the industry sharing their views on the initiatives taken during Budget 2017, the impact of 180 days of GST on Indian SMEs, and the innovative financing options available for the sector. SME expectations from Budget 2018 were also discussed at the IndiaMART event, as was the future course of action for the industry.
The event brought together TiE’s extensive mentor base and IndiaMART’s vast buyer and seller network to create a strong support system which provides a platform for doing business easily, as well as for sharing business-related advice with the SME sector. Amongst those in attendance were prominent names including Rakesh Rewari, (Ex Deputy Managing Director & Member of the Board of Directors of SIDBI), Raman Roy, (CMD, Quatrro & Board Member, TiE Delhi –NCR), R Muralidharan, (Senior Director – Indirect Taxes, Deloitte Haskins & Sells LLP), Ranjit Oak (Chief Business Officer – Corporate Travel, MakeMyTrip), and Anshuman Khanna (Principal, IvyCap Ventures).
Commenting on the conclave, Dinesh Agarwal, Founder & CEO, IndiaMART, said, “2017 was a crucial year for the Indian economy. Large-scale tax reforms like GST and progressive digitally-led business policies enabled the country to move up to the rank of 100 in the Ease of Doing Business index. Despite GST being a great step towards a unified tax structure, the past one year, however, has been challenging for Indian SMEs. I recommend to set up an empowered committee which can represent the Indian SMEs and their interest as a whole. Through this conclave, we want to reach out to these SME owners and help them in understanding the new tax regime better, as well as to assist them in accelerating their access to technology. Our aim is to help SMEs make the digital transition and fulfill the dream of nurturing tech-enabled, world-class enterprises within the country.”
Raman Roy, Quatrro & Board Member – TiE Delhi-NCR, said, “FinTech will grow in a big way in the country. I am amazed to hear that a service like ‘Pay with IndiaMART’ exists, which provides instant payments to businesses. There is no such service available globally. Such is the power of innovation in India. These are the kind of products and services that we need and would change the eco-system.”
Rajiv Chawla, Chairman – IamSMEofIndia, said, “In this budget, the government must focus on easing business operations for the MSME sector by providing subsidies on raw material procurement. Doing so will not only help in bringing down the cost of day-to-day operations for MSMEs, but will also enable them to sustainably scale their production output and drive greater growth.”
Rakesh Rewari, Ex-Deputy MD & Member of the Board of Directors – SIDBI, added, “The global business community is looking at India as an emergent business hub because it has the largest and most diverse domestic market in the world. The time is right for aspiring Indian entrepreneurs to take calculated risks and venture into the market with their own business ideas. But for them to be successful, it is important to create a thriving ecosystem that provides the requisite support needed to drive growth and scale. Entrepreneurs also need to understand the importance of perfecting their business plans before they pitch to prospective investors. India needs more businesses which generate lucrative employment opportunities for its burgeoning workforce. The MSME sector, with the right support, can give the Indian job market a major boost.”
While GST was aimed at enhancing the Indian economy, the transition from being an informal economy to a formal one has given rise to significant challenges. Addressing them requires the government to initiate substantial modifications in the upcoming Union Budget, so that Indian industries and SMEs can reap the maximum benefits from the initiative. IndiaMART’s latest endeavor ties-in with its long-term commitment to empower Indian SMEs in collectively understanding and preparing themselves for the future, and to power India’s economy to new heights.
E-commerce firm Indiamart is planning to launch its initial public offer for which it will start the process next fiscal, a top official of the company today said.
“We will go for IPO soon. Basically, we are not in need to raise external money but we want to give an exit route to existing investors. Most of the equity sale will happen in secondary market,” Indiamart founder and CEO Dinesh Agarwal told at TiEcon Delhi NCR.
Existing investors of Indiamart include Intel Capital, Amadeus Capital, WestBridge Capital and Quona Capital.
“As a promoter I am looking for dilution of some stake and some investors like Intel Capital may look for partial sale of stake. That is the basic reason (for the IPO),” Agarwal said.
Indiamart started bringing small and medium enterprises (SMEs) on its platform to help them generate sales.
He said the company started making profits in last fiscal after continuous focus on expansion.
“Now we have also brought big brands like Tata, Mahindra & Mahindra, Godrej and others on our platform. We earned average revenue of Rs 30,000-40,000 per SME annually. From big players, our average revenue is Rs 3-4 lakh,” Agarwal said.
The company claims to have 40 lakh SMEs and over 100 big brands on its platform. It does not sell any product directly but provides business leads to companies.
“Our revenue has been growing in the range of 30-40 per cent annually. With big brands coming and launch of some new services, we expect our margins to increase by around 10 per cent,” Agarwal said.
As India completes 1 year of demonetisation, it is time to check how have the industries performed and managed business. IndiaMART, India’s largest online marketplace which showcases more than 40 Lakh SMEs across 50 industries and is thus a fair reflection of the B2B market. After witnessing a 13% slump in demand post demonetisation during Dec 2016, the platform has now grown by Y-O-Y 100%.
This data shows that most business sectors are now back on track with growth visible across agricultural, consumer, industrial products and services.
“There is no doubt that there were lingering effects of last year’s demonetisation across small & large businesses and a lot of us had hoped that it would be short term pain for long term gains. Our data is showing clear revival in demand in most of the industries especially Automobiles & industrial supplies that have grown by around 200%. A 100% y-o-y growth in our buyer traffic reflects a positive momentum among businesses across the country,” said Sumit Bedi, VP – Marketing, IndiaMART.
Industries like telcom, building & construction and agriculture have witnessed the growth rates of approx. 170%. These industries have witnessed high traction in the demand for products like light vehicle, tractors, auto-rickshaws, mini harvesters, power tillers etc. Some other popular products are Floor tiles, cement, building supplies, sewing machines, automatic paper plate making machines and printing machines.
The CEO Magaine
They say, “Books can never teach you what life does” and it fits perfectly in Dinesh Agarwal’s case. He believed in taking risks and didn’t shy away from living on the edge. He was courageous to take a bare-foot walk on the path of entrepreneurship and eventually found wheels beneath. Life rewarded Dinesh for taking some wrong and right decisions alike. Call it the first mover’s advantage or fruits of his hard work, today, Indiamart stands synonymous with Small Medium Enterprises (SMEs) in India. Dinesh was #InTheLounge and thanks to his storytelling talent, I realized our conversation turned out to be as interesting as to continue for an hour. Conversation excerpts straight from his personal cabin at Indiamart:
You were a System Analyst at HCL in the States when you decided to return to India to try entrepreneurship. Tell me that exact moment when the idea struck you and you decided to take the plunge.
I was always an internet-savvy person. At that time, Windows was newly introduced to the world. I was sitting in the computer lab where I noticed my colleague was using Mosaic, it was the first ever internet browser. I could imagine the convergence of everything in and around internet at that point of time. I was imagining some software that was sucking the world into it. I was almost hallucinating. I could see the future of internet that day. I knew it will eat up everything one day. I wanted to come back then anyway. On August 15, 1995, internet was launched in India and I decided to come back that very day itself.
And you quit in a day?
Yes the very next day I told my manager that I’m going back to India. I came here and realized that Government was the only authority that could provide internet. I thought of sticking around and explored. At that time, people were not ready to give anything above Rs 13,000 to engineers and I wasn’t convinced of that price. I was adamant to do business. One day, I was sitting at the United Coffee House with my friends and one of them, Vikas Mishra, informed me about the trend of website making. I liked the idea and researched on it.
What were the initial few years like at Indiamart?
My idea was simple enough – creating websites for exporters. I saw a demand for Indian products in the US but the availability & relative information was an issue. My business had a revenue model from the first day itself. We used to charge Rs 50,000 to make a website and we charge the same price even today. 50% of SME websites in India have been done by us. This was the business model for the first five years and we were profitable. In fact, in the year 1998-99, people started to offer Venture Capital to us but I used to tell them, “Bhaiya humein loan nahi chahiye…”(we don’t want loan) since we were a service-based company and didn’t have to burn money.
Indiamart is the largest e-commerce portal for SMEs in India. What triggered the thought of building a marketplace for SMEs?
We realized that personal websites of the exporters aren’t search-friendly. People used to refer to Yellow Pages then. We decided to do the online version of it and list everyone there. The website-creation business was a hit in the initial years but eventually, over a period of time the listings have taken centrestage and now it has become our core business.
How have you helped SMEs flourish in India?
Initially, people didn’t understand the purpose of a website. They perceived it as an online advertisement and didn’t know that it could generate business for them. We had a focussed approach to create websites for generation of leads & business. We helped SMEs to generate additional business across the globe. People used to think that Indiamart is a service started by Indian Government to promote SMEs. Indiamart and Internet had become synonymous to each other.
You are an entrepreneur of 90s. You didn’t have the privilege of being globally connected the way startups today are. How tough was it then?
Launching a business was doable but finding help in those days was tough. I remember a specific day when I slept in the office to download a desired software. I had set alarms for regular intervals only to check the connectivity and proper downloading. It was crazy! Also, we wanted to shift to Noida before 2001 but couldn’t as the internet connectivity was a big problem in NCR region. Due to this, we were forced to operate from Delhi for five years and paid heavy rentals.
What was that moment in your journey of Indiamart that you want to forget?
In 2001, we bought land for office in Sector 8, Noida and had an initiation ceremony on September 10. The infamous 9/11 terror attack on the US did us in too. Our business tanked by 50% overnight since exports were affected. All of a sudden, everything turned around for us. Our orders & advertising deals got cancelled. We had taken a loan of Rs 50 lakhs and I had enrolled into an MBA program which I had to give up on. We had to sell our house. For next nine months there was no work. We had to delay salaries but thankfully nobody left us. It was the toughest time for us!
Do you like to read books?
(In a casual tone) Not even in school! I only read business magazines. I like to watch all Hindi movies, though.
You’re a fan of Mukesh you told me…
Yes, since childhood. I still have a collection of cassettes with me. I tried hard to somehow digitalize those songs in vain. So, I have now subscribed to one of the music apps to listen to my favourite ones.
One moment with investors that changed the course of Indiamart…
We raised money from Intel but didn’t know how and where to spend it as we hadn’t done it before. It took us over one year to learn how to spend our investor’s money. Nachiket Mor (ICICI) and Deep Kalra (MakeMyTrip) were on our board. They scolded us and questioned, “When you had to keep the money in bank, why did you raise it, why did you call us?” Those words hit me and I decided that we must spend and grow. From January to December 2010, we opened 52 offices across India in 52 weeks and increased our strength from 1,100 to 4,400.
One moment when your critic ate back his words…
People used to mock us for making websites. Once my friend criticized us for free listings but today whatever we are it is because of that decision to continue with it.
One decision that changed your life…
In 2011, an investor offered us Rs 100 crores. I rejected it and conveyed our priority to first fill up the developing cracks in the business. Had I accepted it that day, we would’ve been doomed today for sure. If that investor didn’t walk away, Indiamart wouldn’t have been where it is.
What makes SME sector a good career prospect for youngsters?
SME sector might be dirtier and demanding in terms of efforts but it is certainly a bright space to be in the longer run. It is challenging yet fulfilling. It might be difficult to succeed in it but it prepares you for the world. The corporate life might look lucrative but is certainly full of politics and I don’t see people happy there. There may be good money but there are definitely not happy. If you’ve dealt with SMEs, you can do anything in your life