IndiaMART
Dinesh Agarwal Came, Saw, Conquered, And Paved The Way For Millions
Prior to founding the well acclaimed website, IndiaMART; one of India’s first web based marketplace for businesses, Dinesh Agarwal was working with HCL Technologies in the US. The concept of the internet had made a huge impression on him while he was still in HCL, and after the government announced the launch of the internet to the public in 1995, he realized the potential it had and immediately flew back to India. Energized to rekindle his entrepreneurial instincts, Dinesh wasted no time in using the internet to bring small and medium sized enterprises (SMEs) together by creating IndiaMART.
Failure is the stepping stone to success
Although a pioneer in India to establish an online marketplace for SMEs, the web giant did go through some hardships before being the flawless brand that it is today. As the new millennium approached, emerging online companies were heavily getting funded, clubbed with weak foresight and monetization; burst the bubble that IndiaMART was sitting on. Having to cope with the hit on their sales, Dinesh had to relearn everything and had to start from square one yet again. Back on their feet once again, the entrepreneur had bought a new office and had planned to scale their operations. The rehabilitation however, took a hit yet again after the 9/11 attacks. More that 40% of IndiaMART’s revenue came from the travel division, and because of the impacts of the world trade attack, their operations almost came to a standstill.
Light at the end of the tunnel
Hard work and perseverance is what helped Dinesh overcome these obstacles that were thrown at him. Looking and the positives and fighting through the adversity is what helped him regain control of his business. He simply says, “There’s always the proverbial light at the end of the tunnel.” Although the internet was widely being used by now, resulting in
lower profit margins for IndiaMART, Dinesh coped with the competition through higher volumes of work. This fiery and aggressive entrepreneurial attitude eventually led IndiaMART to overcome the obstacles that were thrown at them and emerged profitable as well.
A fresh perspective towards life
Running a lucrative business as a successful entrepreneur has given Dinesh a new outlook towards life. IndiaMART had started from the bottom and sheer determination and belief is what made the business what it is today. The struggle one goes through to create a business helps recreate one’s character too. He says that he sees opportunity in everything that surrounds him and entrepreneurship has made him more adaptable towards change. He goes on to say, “Rome wasn’t built in a day, likewise we kept laying bricks every hour and waited for the good times to come.”
Passing on wisdom
As a role model for many budding entrepreneurs, Dinesh has some vital information to pass on to the coming generations. Starting a company is not a cake walk, and one must not start-up just because it’s cool, he says. There is a lot of responsibility an entrepreneur must undertake and if the reason to start a company is not strong enough, the barriers and hardships can break an entrepreneur. Dinesh himself had to go through several failures before becoming successful, but he feels that an entrepreneur has a 100% chance of succeeding. He says, “Everyone is born with at least 20% of luck. So if you try only once, the chance of success is minimal. But if you try it five times, your chance at succeeding becomes 100%.” Since Dinesh has achieved the pinnacle of success in business by making wise, bold decisions, it would only benefit to take his advice seriously.
IndiaMart led by Dinesh Agarwal – real pioneer of B2B in India
Though many people consider B2B business model a new trend which has emerged only in the past few years, very few know that IndiaMart had captured the segment long before it caught the attention of the 20s entrepreneurs of today. We caught up with the founder and CEO of the company, Dinesh Agarwal to know more about his company and its future plans.
IndiaMart entered the B2B market in 1996, long before Internet became a common term in India. Things were much different back then. Mr. Agarwal explains, “When we started IndiaMART it was a very different scenario. Change was yet to become a constant with technology infusion. The virtual world was still to disrupt our lives as inclusively as it does today. It was still up for aspirations and experiments, far drawn away from the essentials we know now — speed, accuracy and relevance. Search was yet to become an engine of our lives. Back in 1996, a customer just wanted his needs to be fulfilled but today a customer expects much more.”
While today’s companies have a lot of aid to start their business, including government support and venture capitalists, back in the 1990s, the scenario was not the same. The LPG reforms of 1991 gave a major push to IndiaMart. He reveals the hard times the company had in the beginning,
“IndiaMART was started out of nothing in the mid-Nineties. Nothing but the belief that the Economic Liberalisation in 1991 had a long way to go for nobodies like us, then, to get on board, realise the opportunities, innovate and deliver. When we began, we just didn’t have the money to match up to the ‘big’ requirements of the Indian market. At the same time, at the core of our idea was the belief that we needed to start something for the ‘small’. That was our opportunity!”
Believe it or not, Dinesh Agarwal had different ideas than launching a B2B business. “When I began,I wanted to set up an Internet Service Provider but Indian norms did not allow private participation,” tells Agarwal. But soon, he changed his plans. He shares with us, “But, with the money we could gather and the need within the SME sector to explore bigger buyer bases in India as well as abroad, we began making websites for them. Despite low internet penetration, we broke even in the first year of operation. This bore testimony to steps in the right direction.”
The initial years saw Dinesh and his cousin Brijesh working double shift as techies and salesmen to launch their business. Dinesh opened up about his initial days of setting up IndiaMart, “We, my cousin Brijesh and I, were salesmen during the day and techies at night, shaping the value-added services we sold, creating sites, designing and maintaining them. 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.”
Almost all businesses today are based upon the kind of angel investment they manage to get from the investors. This glamorised business cycle has attracted thousands of youngsters and led to them trying their hands entrepreneurship. However, raising funds wasn’t as easy as today in 1996 when the idea of IndiaMart was first mooted. Even when the offers came, the founders were too sceptical to accept them. Hence, most of the investment came only from the earning of the founders.
Mr. Agarwal lets us in on the initial financial model of IndiaMart, “IndiaMART is built on pillars of self-sustenance and convictions. Initially, we began with what we had and then pumped in a major portion of what we earned. At the core of our idea was the opportunity to work for the small-scale industry and help them identify bigger buyer bases in India as well as abroad. Initially, we used to make websites for them.
Not only did a website enhance an SME’s presence beyond geographical barriers, but was slick, smart and a ‘now’ proposition. This was a revenue generation model and served us well to return the earnings to the business. Perhaps we are the only company in the Indian business horizon that bootstrapped for more than a decade, from 1996 till 2008. And survived, be it the Y2K, dotcom bust or global meltdown. I remember being approached by numerous investors and venture capitalists during my early days and we would politely decline considering this to be a loan.
Funding wasn’t so common as it is now. I believe investments are made only after the cheques come in. Once we were on solid ground with a sound business proposition, entities such as Bennett, Coleman & Co Ltd and Intel Capital reposed faith in us, then came others including Amadeus Capital, WestBridge Capital and Quona Capital to lend their support to us in terms of funding.”
After making it big all alone, Dinesh Agarwal wants to help other companies realize their true potential and has been looking for investment opportunities and has even invested in a few firms. We asked about what he sees in a firm before investing. He replied, “We have had history of enabling the eco-system. IndiaMART has been working with small and medium enterprises and some large businesses. We like to work focused companies, howsoever niche its products, segments or services be. It makes sense to partner with companies who are niche driven and still evolving.
What we look with much interest are the inherent values of any funding experience, how it will help evolve the ecosystem. A financial investor may not be very keen on funding a niche product or niche services, but larger companies will find a business proposition as Google invested in Uber cabs. Even IndiaMART is looking at companies in the B2B or SME space.
The pure financial investor may not look upon it as an opportunity. One benefit of partnering with established companies is access to their network. For a startup, a partnership with an established player like us gives it access to an enhanced network, experience and technology platform. We are backed by experience of the industry and know the nuts and bolts. We have the ability to provide a sense of a real-life situation and ground reality.”
One of the things that IndiaMart is best known for is the concept of trust seal and its application in the SME. We wanted to know a bit more about this concept and he obliged. “We have a pioneering role in establishing a single-window, transparent mode for businesses to happen. IndiaMART has a unique score card, based on the availability of a company’s documents, such as the registration certificate, partnership deed, PAN (Permanent Account Number), Import Export Code (IEC), Registration with Shops and Establishment Act, PF/ESI Registration and many such similar documents. If a business scored the minimum qualifying score on this formula, it is eligible for IndiaMART TrustSEAL,” we were told.
Though it is over 3 decades old, IndiaMart has ensured that it remains up to date with the latest technology. The company has adopted SMAC technology rather well for its use. Mr. Agarwal tells us,
“We have always been excited about mobile as the technology because we get location, access to the user’s address book and photo gallery. That’s how the IndiaMART experience is seamless and platform agnostic. Our strategy has been to cater to users as per their preferences – be it the desktop, WAP or App. All these users have different requirements too and completely co-exist with IndiaMART.
SMAC has been at the core of business innovation – a crucible for social, mobile, analytics and cloud technologies, together. For IndiaMART, growth is driven by an ecosystem that continuously improves and innovates upon operations in order to bring the customer closer to our offerings, without additional scale-up cost. Data – structured or unstructured – is the key. IndiaMART thrives on the synergy therein, created by social, mobile, analytics and cloud working. Together, the synergy gives IndiaMART the pioneering spirit and a definite edge. Our growth is the result of the convergence, a disruptive force.”
His new venture, Tolexo.com has gained as much limelight as IndiaMart, if not more. We requested him to tell us a bit more about that. He obliged by saying, “IndiaMART has been ostensibly focused on helping in the growth, development, networking and integration of small and medium-sized enterprises. The IndiaMART platform is essentially a platform for connecting buyers and suppliers. The buyers then shortlist the entities of their choice, do business with the sellers they want to.
We felt we can further the SME buyers and sellers’ interests and growth if we had the wherewithal to not only provide the connectivity but also help in order placement and product purchase. Thus, Tolexo was born, They are often not able to invest in people or brands. Tolexo Helps build their brands as it functions as a review platform too. Sellers list their products on Tolexo for users to compare prices and reviews, and buy online. The business model does not have a listing fee, just a percentage of the actual sales made. Tolexo also takes care of the user experience after the sales until the product is delivered.”
Before we concluded our insightful conversation, we requested him to share his views about Brainbuxa. Here is what he had to say – “We have had online businesses and services till now. With its ability to integrate the social and the educational, BrainBuxa provide at-a-glance real-time advantage on blogs, forums and updates. BrainBuxa has the ability to develop into a go-to information portal that not only brings together Wikipedia, Quora, Reddit, Newsvine, Digg Etc, but also go beyond. The portal must set a course to be disruptive to dominate the space.”
With just 4% contribution to Adex in 2016, have ecommerce lavish spends been cut to size?
According to the recently released Pitch Madison Ad Report, in 2016, the advertising industry grew by 12.5%. As per the finding of the report, 2017 promises to be the year of remonetisation, with the market expected to grow 13.5%, adding Rs 6,672 crore to Adex to reach a total size of Rs 56,152 crore.
The categories that have contributed most to the overall growth in 2016 are the FMCG players followed by Telecom and Auto. FMCG continues to be the most dominant sector with a 32% share of the total Indian advertising industry, followed by Auto at 10% and Telecom at 8%.
Ecommerce Adex 2016
Surprisingly, ecommerce that had taken the media market by storm in 2015 contributed only 4% to the total pie in 2016. In fact, investment by e-commerce category decreased by more than Rs 500 crore across TV, Print and Radio in 2016. It must be mentioned that in 2015 ecommerce companies spent heavily on advertising to target wider customer base and for brand building. The advertising amount was spent across channels – TV, Print and Digital, with TV ad spends getting the maximum pie. According to experts in the advertising and e-commerce business, the top 15 e-commerce brands spent close to Rs.2,100 crore on ads in 2015.
However 2016 has been a different story. Firstly, the major ecommerce players such as Snapdeal, Amazon and Flipkart have largely focused on profitable growth, and secondly and most importantly, with decreasing investor sentiment, the ecommerce player, especially Snapdeal and Flipkart, are finding it hard to raise fresh round of capital, which has impacted ad spends and also resulted in instances of downsizing and closing existing operations in certain verticals. Moreover, Flipkart, Amazon and Snapdeal collectively reported losses to the tune of Rs 11,754 crore in 2015-16. Flipkart posted loss of Rs 5,223 crore, Amazon loss stood at Rs 3,571 crore loss while Snapdeal’s loss was estimated at Rs 2,960 crore.
Demonetisation, downsizing and new competition
Though chasing profits has always been a big challenge for the ecommerce players, the impact of demonetisation has further complicated the situation. With more than 80 per cent of ecommerce transactions dependent on Cash on Delivery (COD) mode, the ecommerce players are still battling the adverse dip in sales that demonetisation has resulted in. Some companies like Snapdeal and Flipkart are resorting to extreme measures like downsizing to tide over the situation. With fresh round of funds nowhere in sight, this has forced them to converse cash. The combined pull of factors like demonetisation, lack of fresh funds and increasing competition has compelled ecommerce players to cut down their ad spends considerably and hence explains their low contribution to Adex in 2016.
According to Harish Bijoor, Brand Expert & Founder, Harish Bijoor Consults Inc, ecommerce players are increasingly focussing on customer management processes, logistics and channel-management issues, “Yes, the days of irrational exuberance and indeed irrational expenditure by ecommerce companies in India is over. The early days of ecommerce in India were typified by a gung-ho feel that burnt VC moneys on advertising more than anything else. Today, the very same monies are being channelled on customer management processes, logistics and channel-management issues. The next phase of advertising expenditure will be with the Alibaba entry and of course the repartee from those at the other end of the competitive spectrum. Even here, there will be efforts to woo and retain old customers with much more than advertising alone. Therefore, I do not expect the ad-pie to balloon in the terrain of ecommerce,” says Bijoor.
Speaking about how the ecommerce players are now in a self-correction mode and adopting the wait and watch policy like other small and large corporates, Sumit Bedi, VP, Marketing, IndiaMART, said, “In my view, there are two main reasons for the reduction in ad expenditure by e-commerce players. First, as funding dried up, the overall number of players that were advertising went down and hence 2016 saw lesser start-ups and e-commerce companies adopting mass marketing. Secondly, post demonetisation the marketing budgets fell heavily. And this trend isn’t specific to only e-commerce. Both, small and large corporates are now in a self-correction and wait and watch mode. 2016 has been the year of execution for the Indian e-commerce industry where there has been more focus on return of investment and performance driven marketing.”
Pointing out that ecommerce players need to adopt a sustainable model for growth, Himanshu Arya, Founder & CEO, Grapes Digital, commented, “Ecommerce found favour with the masses majorly due to discounts. Convenience was a factor but not the driving reason and there have been innumerable instances where people prefer making the purchase online vis-a-vis offline simply because they are getting a better deal. Who is funding these discounts; is an interesting question. It’s not the brands, but the investors who have been making this trend rise. Year on year, online brands today have grown on the top line revenue metric but the profits were minimal. This is not a sustainable model and the investors realise this.”
Explaining how ecommerce investors are increasingly looking for maximum bang for their buck and why there is need for long term vision on returns and not on the customer database, Arya further added, “Last year was a clear example of investors asking smart questions on ROI till the last rupee spent. The result is a decline in ecommerce ad spends. So today all small and mid players are shutting or pacing down, giants like Alibaba and Amazon who are coming with global spend pockets will be the one who will survive. The ad spends in these cases will increase but yes with a long term vision on returns and not on the customer database.”
Colors Fireside Interview with Dinesh Agarwal
As a brand that was among the pioneers of being an internet based Indian business, how did you come up with the idea of your business model?
It was a different ball game then altogether. Not just in how you did business, but also what the consumer demands were. At best, compared to today, the consumer was happy limited in his needs. Most importantly, the virtual world was still to disrupt our lives as inclusively as it does today. It was still up for aspirations and experiments, far drawn away from the essentials we know now — speed, accuracy and relevance. Search was yet to become an engine of our lives.
The current business model of IndiaMART has evolved through various phases. When we began, we just didn’t have the money to match up to the ‘big’ requirements of the Indian market. At the same time, at the core of our idea was the belief that we needed to start something for the ‘small’. That was our opportunity. If you look at the growth trajectory of the 1990s, post Liberalisation, it was steady but slow for the small scale industries. Slow because of several reasons, including throwback of the License Raj, lack of intent as a market and economy, middlemen, low global market understanding and access, and, undue financial burdens and risks involved. Nonetheless, SMEs were north bound.
First, I wanted to set up an Internet Service Provider but Indian norms did not allow private participation then. Given the circumstances, the money we could muster, and the need within the SME sector to explore bigger buyer bases in India as well as abroad, we began making websites for them. Not only did a website enhance an SME’s presence beyond geographical barriers, but was slick, smart and a ‘now’ proposition. It made him look up-to-date and efficient. Although Internet and computer penetration were low, a business could look to access buyers in international markets. The fact that we broke even in the first year of operation bore testimony to steps in the right direction.
We, my cousin Brijesh and I, were salesmen during the day and techies at night, shaping the value-added services we sold, creating sites, designing and maintaining them. 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.
With more of deep India getting connected to the web, and with majority of the partners on your platform relatively newer to the digital economy, what advice do you have for them?
Most of our audience is the MSME sector who might not have the resources and skill sets to adopt the digital economy. But, we have witnessed that this is not the case with only MSMEs but also with many large corporates. Many of the large corporates have made their first online presence only through IndiaMART. My advice to any business who is considering the idea of going digital would be to do it now. This is the best time to go digital. The kind of eco-system that the Government is creating will surely make technology more usable, accessible and affordable in the future.
What would you consider as the current challenges in your category, considering that demonetisation would have badly hit many buyer and suppliers across small India?
I believe that the impact of demonetization is temporary. What happened for most e-commerce companies was, cash-on-delivery – took the maximum hit during demonetization – but it made the room for cashless transactions, across consumer business, be it individuals or businesses. Of course, in the short-term there were challenges, but IndiaMART has recovered fast because we had already created a robust online payment system. At IndiaMART, we have witnessed a growth of 9000% in the demand of PoS and Card Swipe machines during November 2016. This speaks volumes about how the country’s small businesses are adapting themselves towards a Digital India. Moreover, the recent budget announcements will further bolster business in the long run. Some of the initiatives like imposing cash limit of Rs 3 lakh are even better than demonetization and will bring in more transparency.
How would you see and define your competition?
We have been the pioneers of B2B marketplaces in India. But now I am optimistic as many new players are entering the B2B market. More than competition I see it as growth for the entire eco-system. Fresh funds are getting infused in the B2B e-commerce space which is opening many avenues of growth and technological advancements. As businesses move online and with the latest push towards a cashless economy, B2B ecommerce is likely to see an upsurge after the current hiccups that tantamount to slowdown. I think business buyers too will move to the consumer space big time. Indian B2B e-commerce is expected to be around $700Bn by 2020, which means there is immense business opportunity for multiple players to enter the segment and grow.
How do you keep inspiring your teams to deliver to your vision for the company, and how do you translate that to the external businesses that work with you to bolster your brand and business?
IndiaMART has a vision ‘to make doing business easy’ and our team is solely dedicated to this vision. Whatever technology upgradation, process changes or business model modification we do are directed towards this goal of ours. As IndiaMART, we make sure that the team is passionate towards the work they are doing and also translate the same energy to our audience. We give utmost importance to trust whether it is for the team towards the company or for our customers towards the brand. And trust is not built in a day. If more than 29 Lakh suppliers and 3Crore buyers trust IndiaMART today with their businesses then it is because of our efforts in the past 20 years. We didn’t build it overnight.
Union Budget 2017: Taking ease of doing business from India to a ‘digitally healthy Bharat’, says Dinesh Agarwal, Founder and CEO, IndiaMART.com
Dinesh Agarwal, Founder and CEO of IndiaMART.com praised the union Budget 2017 by saying that it has laid the foundation of an enterprise and business pro India which according to him are the important factors to boost GDP. “The budget 2017 has laid a foundation of an enterprise and business pro India. Important factors to boost GDP are thought of the Union Budget 2017, he said.”
“Most important elements such as young demographic dividend, skill development, women employability, digital education, transport have been well accounted for. Also, it is reflected that the burden of taxation is more evenly split with all demographies of the society,” he added.
He also welcomed the announcements made for small-medium enterprises. He said, “It is a good year for SMEs, India’s backbone given the direct and indirect reforms announced for them. 5 special tourism zones will enhance MSME development and bolster schemes for employment in textile, transport, agriculture, leather and hospitality sector. The SMEs in pharmaceuticals and logistics are bound to experience accelerated growth as Healthcare hold high on Arun Jaitley’s agenda in the Budget 2017. Ease of Doing Business for SMEs will thrive with push for infra in digital economy, Aadhaar-enabled payment systems, m-wallets and digital payments.”
“A lower borrowing cost and increased access to credit is on the anvil as a result of the government policy on currency and Banks being well nourished. With FIPB being abolished and maximum FDI coming from the automatic route it will aid diversified business. MSMEs with annual turnover upto Rs. 50 crore will have to pay only 25% tax. Tax exemptions will be a relief to our working class and promote digital economy and affordable housing,” Mr. Agarwal added.
He also praised the move to increase digital payments or capital expenditure to Rs. 10,000. “To increase digital payments acceptance cash purchase and payments for revenue and capital expenditure limited to Rs 10000 for businesses, is a very good move. Even for individual or personal consumption a limit of Rs 3 lakh has been imposed on cash. Both will help generate more transparency and thus more revenue in times to come. I would call this move to be even better than demonetization,” he said.
Mr. Agarwal believed that better infrastructure will also help the companies and improve the business. He said, “For many micro sized businesses the Presumptive tax rate has been reduced from 8% to 6% for non-cash receipts of upto Rs 2 Crore is also very good and would lead to less cash and transparency as well as help in broad basing the tax base. 25% higher budgetary allocation for spending on infrastructure will also be a big boon to job creation and economic revival.”
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Dainik Bhaskar
I was always inspired by technology: Dinesh Agarwal
Impact Magazine
I have always been inspired by technology. During my days in the US, I was motivated by innovations such as the World Wide Web. I remember the first time I saw a colleague searching something online and I was wonder-struck by the possibility of having such vast information at just a click. It was like a Eureka moment for me and changed the course of my life.
It was then that I decided that I would do something in the same space and that was the reason we started IndiaMART.
Since then, I have always felt enthusiastic for anything inspired by technology. Whether it is the recent driverless Uber or a small SME promoting his or her products globally through online mediums like IndiaMART, I have always been eager to explore and expand the horizons of technology.
The dynamism that comes with technology is what excites me the most. With technology, there is always a scope of learning from the success and failures of the past to innovate in the future. And thus, there is always something new to get inspired from if you are inspired by technology.
– Dinesh Agarwal, CEO, IndiaMART
Exploring new markets vital for SMEs’ growth: IndiaMART Emerging Business Forum
Mumbai, November 25, 2016: The Mumbai Chapter of the 6th IndiaMART Emerging Business Forum 2016, held here on Nov 25, highlighted the possibility of growth of Indian SMEs in new markets by means of innovative technology and increasing visibility in online marketplaces. The event included talks on the imperatives of exploring new markets and how it is vital for growth of SMEs in India.
In addition, the Mumbai Chapter also highlighted some important factors like introduction of better trade policies, economic reforms, and effective implementation of the same to ensure better growth of small-scale units across the nation.
According to Parag Agarawal – Sr. Vice President, IndiaMART, “SMEs operate within a limited network and market. For entrepreneurs who are new in the market, gaining visibility has become a major challenge. However, technology and the advent of online marketplaces have equipped SMEs with easy and affordable access to new markets both nationally and globally. We have also witnessed that SMEs who have access to technology and ecommerce have a higher growth rate and profit margins.”
Moreover, the advent of E-commerce offers all SMEs with an opportunity to expand their business online, giving them access to new buyers, suppliers, and the latest in business technology. By gaining virtual presence, SMEs are now able to explore latest trends in the market, acquire more buyers & suppliers, and are finally making everyone realize their importance in the corporate landscape.
The Mumbai edition of IndiaMART’s on-going Emerging Business Forum ended on a promising note, with most participants coming to a mutual conclusion that technology upgradation and E-commerce play a key role in promoting the growth of SMEs in new market segments.
Other speakers included Ganesh Kumar Gupta, VP, FIEO; KV Srinivasan, CEO, Reliance Commercial Finance; Rajiv Chawla, Chairman, IamSMEofIndia.
