Moglix, the Ratan Tata-backed B2B e-commerce start-up, is looking to expand to more towns and set up warehouses to tap into the ‘growth spurt’ in online procurement of industrial products.

The company plans to add five-to-seven warehouses and increase its penetration by entering at least 7-8 industrial manufacturing towns over the next 12-18 months. Moglix currently has 10 own warehouses spread across eight cities, including Delhi NCR, Kolkata, Chennai, Pune, Ahmedabad, Mumbai, Aurangabad and Pantanagar.

Growth prospects

“We have been recording close to 15,000 orders on a monthly basis. We expect this to grow four-fold to over 60,000 orders a month in the next one year,” Rahul Garg, founder and CEO, Moglix, told BusinessLine .

The growth in procurement of industrial products would be driven by the improving momentum in the manufacturing sector aided by initiatives such as ‘Make in India’, he said.

The Asia-based B2B commerce marketplace specialises in procurement of industrial products such as MRO (manufacture, repair and operating supplies), fasteners, electrical, hardware, pneumatics and safety items among others.

Moglix, which has raised close to $18 million from International Financial Corporation (IFC), Accel Partners, Jungle Ventures, Venture Highway, SeedPlus and till date, is reasonably ‘well capitalised’ to fund its growth needs, he said.

According to Garg, the B2B market for industrial procurement is close to $20-25 billion (approximately ₹138,000 crore) at present and is expected to touch $50 billion (approximately ₹345,000 crore) by 2025. However, organised players providing online platform account for less than one per cent of the total market at around $200 million (approx ₹1,380 crore).

“Procurement and distribution in manufacturing sector in India has been fairly old school and offline in the past several decades. However, things started changing in the last five years and consumers have started looking at technology in a big way to ensure full trackability and cost optimization,” he said.

Online advantage

The rollout of GST has also helped streamline the entire distribution channel and is aiding the growth of the organised market in a big way.

The biggest advantage of online platforms such as Moglix, Garg said, is the consistent and transparent pricing, he said and added that the share of organised players could increase to 10 per cent of the total market in the next three-to-five years.