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Alibaba dominates B2B in India

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B2B trade platforms have been around for some time. TradeIndia and IndiaMart took advantage of the internet to cater to this segment of users when few really understood how to even approach the internet. Later still, companies like WYDR came around that tried to simplify B2B trade even further.

The following graph provides an overview of how reach by application installs has evolved for B2B apps over the 10 months.

Unlike other industries, incumbents in B2B have a huge advantage over new comers in this space. They have data – knowledge of transaction patterns, trading volumes and an established customer relationship.  So it’s surprising to see IndiaMart struggling to maintain their lead. They were not just leaders but pioneers in their field but seem to cede ground to domestic and international entrants.

How does this impact market share by App installs? Take a look below:

In the B2B space, a large number of customers will also prefer to use the desktop over a mobile app. Reach simply represents the % of users that have a certain app installed on their phones. So this doesn’t necessarily mean that revenues will fall in line, it is, however, an important indicator of ‘traction’.

In fact, if you look at the same companies in terms of Net Promoter Scores (NPS), you’ll find that IndiaMart is doing far better than its competitors.

Why is Alibaba growing as fast as it is?  Indian businesses need to remain competitive which means they will need suppliers who can provide the same goods cheaper and customers who may be willing to pay higher prices/ offer better terms etc. Alibaba’s global reach gives them these things.

For example, if I was a carpet manufacturer – why would I want to restrict myself to India? I would want to use these platforms to expand my target set of customers & suppliers.

In today’s market – it’s relatively cheap to start an online business – the cost of building an app/ website etc is falling every year. You can even get off the ground & show some ‘GMV’. God knows there are enough potential customers out there. But the odds are that you’re just teaching your customers to use your global competitor (the old Flipkart taught customers how to use Amazon argument).

So can these companies continue to think India first? Don’t they need to have a global reach to remain relevant even to their own customers? I would reckon that we all do.

[This story originally appeared on the KalaGato blog.]

Ashish Kapoor is chief analyst at market intelligence group KalaGato.

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