As per the report, a confluence of factors including rising internet penetration, growth of digital infrastructure, favourable regulatory policies and a conducive cross-border environment are together set to drive this exponential growth in India’s B2B online marketplaces.
Key contributors for the growth will include instant payments through a Unified Payments Interface (UPI), the formalisation of businesses through Goods and Services Tax (GST), increased manufacturing activities through Production Linked Incentive (PLI) schemes, and the global de-risking of supply chains with companies adopting a China +1 strategy.
Anant Vidur Puri, Partner at Bessemer Venture Partners, said in a statement, “We are still in early days of the B2B opportunity in India. B2B marketplace startups have the opportunity to emulate in the next 5-10 years the same growth trajectory that B2C internet companies saw in the last decade. To fully leverage this opportunity B2B marketplaces must play a larger role than traditional distributors and focus on providing end-to-end management of transactions, with a deep technology and software layer while ensuring strong control over supply, quality, and service levels. ”
Bessemer highlights that full-stack managed marketplaces in fragmented verticals, supported by software and requiring minimal working capital are more promising as they enable deeper supply building, standardised workflows, and a seamless transacting experience, leading to higher margins and retention. The report further emphasises that while working capital is integral to a B2B business, companies must factor all costs related to lending including cost of capital, cost of collections, and cost of defaults into their unit-economics.
On this, Puri adds that “The true cost of working capital must be considered while evaluating a B2B businesses – the balance sheet cannot be ignored. The best B2B companies will differentiate by demonstrating high ROCEs upto 30% over the long term.”Bessemer believes that 3 kinds of B2B marketplace businesses will continue to grow in India i.e. B2B Product marketplaces, B2B Service marketplaces, and B2B marketplace enablers. “In a country of 1.4/1.5 B of people, one cannot scale GDP without significant advancements in our services industry. B2B service markeplaces, aided by the double booster of internet and AI can be the catalyst to transform India into a $6-$7 Trillion economy in this decade” Puri said in a statement.Bessemer Venture Partners estimates a $200 Billion Opportunity in India’s B2B Online Marketplaces by 2030
