Your Business, is Our Business.
By Vishesh Subhanker
Scope:
While the Indian market has proven itself to be a goldmine in the B2C e-commerce segment, the B2B segment is also growing at an unprecedented rate, and is expected to hit 45 lakh crore by 2020. With 100% FDI allowed in the B2B e-commerce space, it is almost inevitable that these projections will come true. Globally too we observe a similar pattern — the market for B2B e-commerce dwarfs the size of the B2C market.
The opportunity:
Indian businesses suffer from gross inefficiencies — they are highly unorganized with inventory often being uncatalogued and unaccounted for. When we look at buying behavior of businesses — the story is no different, buying decisions are often misinformed due to information asymmetry. Buyers are mostly unaware of the availability of better prices or higher quality products. There happens to be a huge gap that needs to be bridged between customers’ buying requirements and their purchasing decisions.
The B2B e-commerce market is not only extremely challenging but also fundamentally different from the B2C market. The major differentiators between the two can be summarized in the non-exhaustive list below:
- B2C purchases are often hasty and impulsive ones, while B2B purchasing is more deliberate and need based. This simple differentiating factor would also play into the statistics associated with a B2B marketplace. For instance, the number of orders are comparatively higher in B2C than in B2B. On the flipside, the ticket sizes of B2B purchases are much higher than their B2C counterparts.
- Another important metric that informs the marketing decisions made by B2C and B2B marketplaces is customer acquisition cost. In a B2C marketplace, the CACs are quite high and the average lifetime value (LTV) of a customer is relatively low when compared to B2B. The recent e-commerce turmoil in the B2C space reeks of uncontrolled CACs and indiscreet spending.
- The B2B buying cycle is more elaborate when contrasted with B2C. This can be attributed to a longer three stage buying cycle comprising the awareness, consideration and purchase phases.
- The marketing and advertising strategies employed to target B2B customers should closely complement the B2B buying behavior. Promotions, discounts and flash sales are less likely to influence B2B purchasing decisions when compared to B2C.
There are also other problems associated with B2B e-commerce such as logistics, infrastructure, technology integration, taxation (the possibility of a GST bill being passed will definitely solve some pitfalls to drive commerce), focused marketing, traditional procurement mechanisms, etc.
Solutions:
Each of these B2B issues are complex in their own regard, and solving them would require a thorough understanding of the industry. In order to come up with robust solutions to the different pain points, ShakeDeal’s team has spent countless hours researching the manner in which business is practiced in different industry verticals.
The companies that ShakeDeal interviewed included those from the safety industry, the tooling and machining industry, the testing and electricals industry, and the steel industry to name a few. Through several such case studies, we were able to identify patterns and isolate problem statements that we were excited to solve.
Case in Point:
Company X, a tool maker with an established distribution network and a market presence that spans more than two decades, is facing issues in expanding its business due to the traditional nature of the open account business being conducted throughout X’s entire supply chain network. Company X is forced to provide its network of dealers a 60-day credit period to stay competitive in the market on the basis of payment terms. A lot of the capital thus gets stuck up with debtors as receivables and when coupled with high finance costs, puts Company X at a disadvantage, bearing the onus of heavier working capital needs.
ShakeDeal has analyzed Company X’s model and has pledged to work with it to expand their business reach and improve their cash flows. ShakeDeal has proposed to increase Company X’s cashflows by providing them a platform to sell in bulk directly and realize their sales by getting paid upfront. ShakeDeal and Company X have come to a consensus that such an online presence will be instrumental in introducing such a brand to retailers in regions that were previously inaccessible logistically and operationally.
Like the case above, ShakeDeal has interviewed many subject matter experts. The learnings have helped us to continuously iterate our product offering, achieving a better product-market fit that provides an impetus to market adoption.
Deduction:
We at ShakeDeal are trying to solve these problems one step at a time. A fragmented system of conducting business has allowed a multitude of inefficiencies to creep in, and these inefficiencies are what ShakeDeal is aiming to drive out by piggy backing on technology. All being said, ShakeDeal is a platform to make bulk sourcing of industrial goods, supplies, and raw materials easy for businesses and we at ShakeDeal understand the problems plaguing the B2B space in this regard. Tackling such deep seated pain points will be an elaborate and drawn out process and we at ShakeDeal will keep working day and night to help new and existing businesses grow (like never before).
