Ecommerce giants Flipkart and Amazon are involved in a fierce battle to gain an upper hand in India’s online B2B market
Despite the B2B vertical of both companies recording losses, the etailers are fast expanding to onboard MSMEs on their platforms
In an interview with Inc42, Amazon Business’ Director talked about the B2B business, increasing digitisation, challenges due to pandemic, future growth plans, and more
Ecommerce giants like Amazon and Flipkart are not only battling it out in the consumer-facing online retail commerce space in India but also fast expanding in the B2B segment (wholesale online purchases by businesses).
With increasing internet penetration and digitisation, the likes of Amazon, Flipkart and Udaan are expanding aggressively in the online B2B sales space, catering to millions of Indian micro, small, and medium enterprises (MSMEs).
Flipkart strengthened its presence in the space with the acquisition of Walmart’s B2B business in India in 2020 and is targeting an omnichannel approach, thanks to the Best Price stores earlier owned by Walmart. On the other hand, Amazon, which forayed into the space earlier, is focusing on propositions like GST-enabled products, helping MSMEs in saving money, among others.
While the B2B arms of both Amazon and Flipkart are loss-making, the companies are expanding to scale up their businesses as the rising digitisation presents a big opportunity to onboard millions of small businesses in the country.
According to the company filings with MCA, the revenue from operations of the B2B arm of Amazon, Amazon Business (Amazon Wholesale Private Limited), increased to INR 4,592 Cr in the financial year 2021-22 (FY22) from INR 3,131 Cr in FY21, while it reported a loss of INR 480 Cr in FY22 as against a profit of INR 43 Cr in FY21.
Flipkart India Private Limited’s (Flipkart Wholesale) revenue jumped to INR 42,942 Cr in FY21 from INR 34,170 Cr in FY20, whereas its loss declined to INR 2,444 Cr in FY21 from INR 3,150 Cr in the previous year.
Inc42 caught up with Amazon Business’s Director Suchit Subhas to discuss Amazon’s B2B business. In the exclusive interview, Subhas talked about the growth and scope of the business, challenges due to the pandemic, and more.
Despite the growing competition and capital infusion in the online B2B space in India, Amazon is focused on its customers and not on competitors, Subhas said. Here are the edited excerpts from the interview.
Inc42: Can you provide some statistics and details on how much has Amazon’s wholesale business in India grown? And what are the growth projections?
Suchit Subhas: As we look back on our five-year journey, we cannot explicate it without taking a brief look at the trajectory of the MSME sector as a whole. In the past couple of years, the MSME space has grown to be a crucial part of India’s economy, producing various products and services for domestic and global markets.
At Amazon Business, we are humbled to be able to contribute to this space by launching innovative procurement solutions for MSMEs. Since its launch in 2017, Amazon Business has aimed to empower MSMEs as a one-stop destination with over 16 Cr GST-enabled products across top categories to cater to their distinct business needs. It has become a one-stop shop for all business needs owing to the vast selection available to MSMEs, competitive pricing, and vast delivery network.
With a presence in 99.5% pin codes pan-India, businesses from the remotest parts of the country can rely on Amazon Business for their purchase needs.
We are India’s largest GST store and in the last five years, we have added a host of features through which businesses can avail GST invoice with ease and sophisticated business analytics tools through which they can calculate extra savings with a GST invoice every time they make a business purchase.
Inc42: How many sellers have been onboarded on the Amazon business platform till now and what has the growth been like?
Suchit Subhas: We launched Amazon Business in India in 2017 with about 14,000 sellers on our platform and currently stand at approximately 6.5 Lakh sellers. The growth trajectory can be seen through these factual details and is a testament to our commitment to providing the best of services to our customers.
We aim to remain laser-focused and continue to develop our robust services/ products that can cater to the growing needs of our customers.
Inc42: What are the benefits being offered to sellers onboarding the Amazon Business app? Are there any prioritisation made available to them with respect to the consumer-facing Amazon app or Amazon global marketplace?
Suchit Subhas: For our seller partners, Amazon Business provides an additional opportunity for Amazon.in to scale their B2B business by catering to requirements from lakhs of business customers and growing their revenues.
In addition to catering to requirements from MSME customers, our sellers have catered to orders from businesses from across the country, including the likes of large enterprises such as Mahindra, GE, Tata Group. Through features such as ‘Request for Quantity Discount’, our sellers have catered to lakhs of bulk orders from businesses across the country.
Our latest launch of the mobile application is one step to ensure ease of doing business for our customers, which is specifically designed to improve the procurement experience of business customers. Prior to this, business customers were required to log out from their personal account from the Amazon app and log in with their Amazon Business account for business purchasing from a mobile.
The new app has removed this hassle, allowing business account-only login, one-click access to Business Settings, managing GSTIN details, setting up shared payments and approving orders directly from mobile. The app further improves efficiency and helps customers complete actions through push notification alerts that drive attention to pending actions and critical announcements on a timely basis.
Business customers can now conveniently access business exclusive features on the go with ease instead of waiting to access a computer to order supplies needed to run their businesses.
Inc42: Have you seen any decline in procurements by Indian MSMEs due to the rise in inflation globally as well as in India? MSMEs were also hit by capital crunch during Covid and post that. Has there been any trickle-down effect of the same on Amazon’s business?
Suchit Subhas: The last couple of years have been a rollercoaster ride with Covid-19 pandemic bringing in unprecedented changes in our lives and businesses. The challenges made it imperative to innovate and bring about operational changes to make the transition easy for customers, sellers, and MSMEs, including micro-entrepreneurs, women sellers, artisans and weavers, and many more.
In March 2020, when the pandemic hit and offline movement of goods and services came to halt, we continued to support MSMEs in such challenging times and catered to the increased demands of business supplies and supported them to get back on their feet. During the initial months of Covid-19, we saw a 46% spike in average monthly order volume and a 45% jump in average monthly registrations.
Over the past year, we have been closely working with our selling partners to help businesses cater to their work-from-home (WFH) needs by adding thousands of products across categories such as WFH furniture, electronic essentials like routers, headphones, keyboards, and office stationery.
In order to help our customers save more, we launched ‘Business Value Days’, a monthly sale event on the last week of the month through which our customers have availed more than INR 7.5 Cr additional savings on business exclusive deals and promotions.
In line with our commitment, we will continue to remain customer-obsessed to build the right customer experience. Our customers, no matter which segment they are from, will choose us as long as we are the best option to serve their needs. We will continue to provide convenient and innovative technology-led purchasing solutions to our business customers and strive to be a one-stop shop for businesses for their needs.
Additionally, the aim is to serve the demands by connecting sellers in a seamless manner. Amazon Business will continue to build on our three strategic pillars of growth – selection, pricing, and convenience.
Inc42: Many rival ecommerce platforms are now expanding their wholesale (B2B) business in India as businesses undergo digital transformation. For instance, rival Flipkart has global retail giant Walmart’s support. Similarly, Reliance has a huge retail presence in India. How can Amazon beat such rivals?
Suchit Subhas: We are always encouraged at Amazon to be customer focused and never competitor focused. We do observe competition, but our strategy is consumer focused. We rigorously follow a customer backwards approach and innovate on behalf of our customers, with a deeper understanding of the evolving space.
We introduced features and services such as Business PAN, Bill to Ship, and Business Days that cater to the specific challenges faced by our customers and help them avail the maximum benefit, thus giving us positive leverage. We will continue to add to this ecosystem with a customer backwards approach.
Inc42: What is the future growth strategy of Amazon when it comes to online B2B business in India?
Suchit Subhas: Amazon Business currently houses India’s largest GST-enabled selection. We serve 99.5% of pin codes across the country and have businesses from some of the remotest parts of the country buying from us. More than 30% of our customers come from Tier-II, III markets.
In terms of sellers, Amazon has digitised 2.5 Mn MSMEs across the country. 90% of sellers on Amazon.in use Amazon’s logistics and warehousing services, out of which over 50%of our sellers are from Tier-II and below cities. We plan to sustain this momentum in the near future by catering to our existing and potential customers through our services.