eB2B share of $1.2 trn B2B general trade mkt to be $100 bn by 2030: Redseer

Among eB2B players, Udaan is emerging as the clear leader, followed by Reliance's JioMart

The unorganised General Trade (GT) channel that is driving India's retail market will continue to grow, doubling in size from $0.7 trillion to $1.4 trillion by 2030, finds a report by Redseer Strategy Consultants. It is further projected that the B2B GT (business-to-business general trade) opportunity in India will reach about $1.2 trillion by 2030, with eB2B (B2B e-commerce) coming up as a promising digital procurement solution. 

India's B2B e-commerce market is one of the fastest growing in the world and international benchmarks indicate that it will reach $90-100 billion GMV (gross merchandise value) by 2030, due to multiple favourable factors. 

“India’s eB2B market has scope for multiple models but multi-category play with wide category coverage and national coverage is likely to win,” said Mrigank Gutgutia, Partner at Redseer. “eB2B is projected to reach $90-100 billion GMV by 2030 owing to a humongous opportunity.”

India holds a much larger share in general trade than developed nations, including the US and UK. The country has over 8,000 towns and 665,000 villages, where the bulk of the population resides, and where there are multiple barriers to organised brick-and-mortar adoption.

The report observes that while it is at an early stage right now, given low adoption in lower tier cities and small towns, eB2B is emerging as a strong digital procurement solution. The report also sheds light on how eB2B platforms have been able to effectively resolve some of the pressing pain points, such as higher prices, no credit option, untimely delivery, and low quality of products, among others. Credit, efficient and high supply quality of products are some of the critical offerings of eB2B platforms for Indian retailers. eB2B players are solving these challenges via a more streamlined supply chain.

“Retailers, brands and manufacturers have realised the eB2B market’s potential and are betting on it to shape the way they do business,” said Gutgutia. “While manufacturers have limited competitive threat, the eB2B channel is also helping retailers and brands solve multiple problems in their day-to-day business.”

eB2B has already captured a fair wallet share of the offline market and retailers are confident about increasing their spending soon. The report further suggests that approximately 50 per cent of the non-users are willing to shift to eB2B platforms in the coming year. 

India's eB2B market has multiple players that differ in terms of their city presence and the range of retail categories they cover. While the regional market is generally restricted to metros and top Tier 1 cities, the national market implies a presence across the country. Owing to higher opportunity size, adoption and engagement, multi-category national players are best placed to win in this market. 

“With these advantages, among eB2B players, Udaan is emerging as the clear leader, followed by JioMart,” said the report.

In order to access underserved markets, brands are turning increasingly to eB2B. This is as an addition to their current distribution network or as a replacement for ineffective traditional distributors. 

Even established brands with their own eB2B initiatives do not consider 3P (Third party) eB2B a threat, given the difference in scale and significant value add of 3P eB2B. For manufacturers, traders, dealers, wholesalers, and retailers, implementing a digitised and automated supply chain ecosystem using platform-driven techniques has become essential for business growth. With better retailer-serving capabilities at a wide scale, the eB2B platforms could assist both established and emerging brands in achieving the needed scale.

At scale, eB2B platforms are likely to have an ROI (return on investment) of over 50 per cent, much superior to offline retail as well as cash and carry formats. In particular, the ones with multicategory revenue have a better margin. While the EBITDA margin post VAS (value added service) revenue stands at 3-5 per cent for the eB2B grocery vertical and 5-7 per cent for the discretionary vertical, under multi-category it stands at 6-8 per cent. However, getting the category mix is critical to boosting margin profiles.

The Redseer report said that the future will see a shift from unorganised trade to organised digital trade while rallying for emerging brands to scale in India. It said this would make eB2B a de-facto channel for brand marketing and ad spend, and a key source for retailer insights. All this and more will enable stable growth for eB2B at scale.

Key highlights of Redseer report:

. $1.2 tn B2B retail opportunity to serve GT by 2030 within which eB2B to take up 8% share.

. $5 bn eB2B market in 2021 could potentially grow to $90-100 bn by CY30.

. In India, the unorganised general trade (GT) channel drives the bulk of retail.

. This will continue to drive it in the next 10 years.

. A large pool of 13 mn retailers drives this GT opportunity.

. Most of them are small-scale retailers and concentrated in the tier 2+ markets.

. Among eB2B players, Udaan is emerging as the clear leader, followed by JioMart.

. Udaan and JioMart are the most preferred platforms among the retailers for future eB2B purchases.