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Online-first, tech-enabled business-to-business (B2B) marketplaces are expected to present a $200-billion market opportunity by 2030, as against the $20-billion opportunity in 2022, said a report by venture capital firm Bessemer Venture Partners.
The online B2B gross merchandise value (GMV) will account for 5 per cent of the overall B2B sales in India by 2030, as against the current market share of 1 per cent, per the report titled, ‘The Emergence of B2B Marketplaces in India.’
According to the report, the share of online B2B sales in China stood at 25 per cent, followed by 20 per cent in the UK, and 18 per cent in the US markets. India’s share is less compared with other geographies, where B2B e-commerce commands a significant share of overall sales.
The report identifies three key opportunities in the B2B marketplace space, including product, services, and infrastructure marketplaces.
As of 2022, India has over 60 million MSMEs, and two out of three MSMEs have adopted tech in some form, said the report. Of these, while only 10 per cent of MSMEs (six million) currently engage in buying and selling online, 25 per cent (15 million) are expected to transact on online marketplaces over the next four years.
Growth drivers
The key drivers for B2B marketplace growth in India are online penetration, developed digital infrastructure, amenable regulatory policies, and a conducive cross-border environment, the report highlighted.
While the 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.
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.
“We are still in early days of the B2B opportunity in India. B2B marketplace start-ups 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,” said Anant Vidur Puri, Partner at Bessemer Venture Partners.
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