Talking about profitability of ecommerce players, IndiaMART CEO Agarwal said that irrespective of the segment in which a company operates, the objective is always to become profitable
Speaking at Inc42’s The Makers Summit, Agarwal also said that customer acquisition cost is higher for B2B ecommerce players
IndiaMART, which operates in the B2B ecommerce space, reported a 61% year-on-year increase in its consolidated net profit to INR 113 Cr in Q3 FY23
Over the past few years, B2B ecommerce has emerged as one of the fastest growing segments in the eretail segment. However, while B2C ecommerce brands often resort to aggressive marketing strategies, B2B players are conservative. Explaining this contrast, Dinesh Agarwal, CEO and founder of IndiaMART, said that the B2B ecommerce business is less about brand and more about functionality.
Besides, the B2B business is based on trust and relationships, Agarwal said at Inc42’s The Maker Summit 2023.
Talking about the profitability of ecommerce players, Agarwal said that irrespective of the segment in which a company operates, the objective is always to become profitable.
“Profitability is the mindset of a company, irrespective of the fact whether it is B2B or B2C. You will see a few companies even in the B2C segment that are building profitably, EaseMyTrip for example,” Agarwal said.
IndiaMART, which operates in the B2B ecommerce space, reported a 61% year-on-year increase in its consolidated net profit to INR 113 Cr in the December quarter of the financial year 2022-23.
Talking about the company, Agarwal said IndiaMART also has an advertising vertical.
Advertising platforms in the ecommerce space typically thrive on a premium business model, unlike the transaction platforms, he said. While a lot of B2C companies have premium business models, the value being driven by consumers is very small for them.
For B2B businesses, he said there are only two propositions – either they can provide enough value for customers to stick around or provide no value. Besides, customer acquisition cost (CAC) is also higher in the segment. Hence, B2B businesses have to eye higher average revenue per user and higher margins, he added.
Started 26 years ago by Dinesh Agarwal and Brijesh Agarwal, IndiaMART connects enterprise buyers with suppliers. It got listed on the exchanges in 2019.
Talking about the changes post the company’s IPO, the IndiaMART CEO said that as the platform has been profitable for most part of its journey, the public listing didn’t make much of a difference in the way it operates.
However, he mentioned that a public company is always measured in terms of its growth and profitability.
At $1.47 Bn, the B2B ecommerce segment raised the second highest funding among the ecommerce subsectors in 2022. Overall, Indian ecommerce startups raised $4.01 Bn of funding in 2022.
