Investments into B2B e-commerce see a multifold surge

Investments into B2B e-commerce have seen a multi-fold increase from $4.10 million in FY19 to $2.9 billion in FY22, according to data from investment tracking firm Tracxn. Ofbusiness, Udaan, and Zetwerk have been the biggest gainers from these funding in the past four fiscal years. 

According to industry experts, investments in this area could skyrocket in the next few fiscals.

Heavy funding

Tracxn’s data assessed by BusinessLine shows that in FY23 too, there have already been 24 rounds of funding, with the amount totaling $254.9 million. In August 2022 alone, e-B2B companies raised a total of $7.6 million through six rounds. 

In the past four fiscals, Udaan has raised the highest amount at $1.3 billion, followed by OfBusiness, who raised $876.1 million, and Zetwerk, which raised $553.6 million. 

The top ten investors in the e-b2b segments are Accel, Trifecta Capital, AngelList, Kalaari Capital, LetsVenture, Matrix Partners India, Innoven Capital, Elevation, International Finance Corporation, and Beenext.

But why has the investment in this segment increased in the past four fiscals? 

The Indian retail segment has over 13 million general trade (GT) stores and remains highly fragmented and inefficient. However, the consulting firm Redseer believes that the GT will continue to drive it in the next 10 years. This will be driven by easy accessibility in the remotest areas in the country.

It pointed out that the $5 billion e-B2B market in 2021 could potentially grow to $90-100 billion by CY30 on the back of penetration-led growth.

Given that for the past several decades, small retailers, especially in tier-3 and beyond, have relied on offline wholesalers, start-ups have seen a loophole, and thus, an opportunity to develop this segment. 

Just like China, the penetration of digitisation happened in phases, starting with metros, followed by tier-1, -2, and beyond. India too is on the same path.

According to Arvind Singhal, the Founder and Chairman of Technopak Advisors, it is this opportunity that investors are noticing. He explained, “Earlier the investments were in the B2C segment, then came the investments in the D2C segments. Now to boost these two segments,” He added that the investments are just scrapping the tip of the iceberg and more are likely to follow in the years to come.

However, according to Rachit Mathur, Managing Director and Partner at BCG, the investments will be calibrated and players with proven unit economics, consistent service offerings and networks, along with a loyal, targeted and dense customer base will be the beneficiaries of these investments.

COMMENT NOW