When Dinesh Agarwal
started off his Internet venture in 1996, he couldn’t have
anticipated the overwhelming success that awaited him. Seven years
on, as one of the first profit making dotcom ventures in the
country, IndiaMART’s journey is a lesson in enterprise.
Dinesh Agarwal, a software professional based in the US, saw the
Internet grow in the country in the early- and mid-nineties. That
was when his entrepreneurial instinct began to raise its head,
goading him on to start an online marketplace where traders back
home in his country could reach clients overseas. This indeed was a
risky affair; chucking up a well-paying job in the US to sink money
in a nascent industry where the future was unknown is not something
one did every day. But as Agarwal says, “I had nothing to lose
except for the few years of seniority and, may be, a couple of
salary hikes.”
The Big Idea
How did the idea of starting an online business-to-business (B2B)
marketplace come to his mind? Agarwal says that being an IT
professional he always wanted to be part of the industry or a
business that was related to his field of experience. While he was
working in the US, major economic reforms were taking place in that
country. There was great demand for Indian products – like
garments and handicrafts – in that country as in many other
overseas markets.
Alongside, there were also those small time manufactures, traders
and exporters in India who were looking to expand their businesses
overseas, but did not know how to go about it. That is where Agarwal
decided to step in and provide a platform to such marketers for whom
accessing the overseas markets seemed an elusive dream.
Down to brass tacks
When Agarwal started his online venture, he didn’t have a
clear business model before him. “I can't say that I planned a
B2B model because, at that time, I really didn’t know what is a
B2B model is,” confesses Agarwal. “I just called it a
marketplace. That's the reason our baseline reads, ‘The global
gateway to the Indian marketplace’.”
As it happens with any new business, it wasn’t easy for
Agarwal to convince clients. In fact, it was more difficult for
Agarwal’s team as it was selling a concept to customers who had
very little to do with information technology, leave alone the
Internet.
This is why IndiaMART started off with a free listing of exporters
and manufacturers on the site. The company also had a ‘queries
forwarding service’ where the site forwarded queries to
relevant users free of charge. It was when the listed buyers and
traders started getting responses through this online marketplace
that IndiaMART began to see new doors opening before it.
The first taste of success came with Nirula’s, a chain of
restaurants in Delhi. The Nirula’s website, developed by
IndiaMART, was India's first e-commerce enabled site accepting
online orders for cakes.
Services and revenues
Today IndiaMART.com plays host to over 1.2 lakh member suppliers
and exporters and more than 2 million global buyers who visit the
marketplace every month.
IndiaMART generates its revenues through multiple sources including
the development of online business catalogs, B2B auctions, web-based
advertising, co-branded promotions and marketing campaigns and from
the development of e-business and e-commerce solutions for its
clients.
Apart from these paid services, IndiaMART also has several free
services like an online business directory, which caters to more
than 450 categories of products and services. Today almost 1.5 lakh
companies are listed in this directory.
Among the different paid services that IndiaMART offers, business
catalogues is the main source of revenue. It contributes nearly 70
per cent to the company’s total revenue.
Vital statistics
With over12 million page views, the marketplace at IndiaMART
generates more than one lakh business queries every month through
which its members are estimated to have conducted business in the
region of Rs 600 crore. Visitors to IndiaMART.com can browse through
over 1,200 business catalogues and can interact online with member
businesses. The marketplace also offers a lot of useful business
information on key Indian industries, interactive community tools
and business support services to facilitate online trade between its
visitors and member businesses. The company’s web development
centre happens to be the largest in India and is among the best in
the world.
IndiaMART has been successful in attracting pageviews from global
B2B visitors, thus making it an attractive and focused advertising
medium for Indian companies looking for global buyers.
Surviving the dotcom meltdown
In the financial year 1999-2000, three years after starting out,
IndiaMART had a turnover of Rs 135.5 lakh, and profits of Rs 13.7
lakh. The fourth year (2000-01) was break-even year. That year was a
watershed for IndiaMART because it turned in a 128 per cent rise in
profits and 112 per cent growth in revenues. In the last financial
year (2002-03), the company’s revenue projection was Rs 4.3
crore.
The trust factor
An important factor in any online business transaction is trust
between the buyer and the seller. Especially global B2B buyers.
While dealing with distant, unknown companies they are often unsure
of the credibility and even the existence of businesses overseas.
Playing the trust card, IndiaMART has launched TrustSEAL – an
indicator of the trustworthiness of a company displayed on its
website, based on its verified documents pertaining to existence,
legal status, statutory approvals, affiliations and quality
certifications.
“The trust factor plays a crucial role in the growth of online
trading, more so in the B2B segment where the value and volume of
transactions are high,” explains Dinesh Agarwal, founder and
CEO, IndiaMART.com. “How does one ensure the credibility of a
company by merely having a look at its website, or worse still,
merely looking at a listing in an online directory with a brief
description and contact information? IndiaMART, being a trusted and
established online marketplace, is in a position to offer its
business visitors a set of companies across industries that it has
verified for existence, legal status, performance and credibility,”
he adds.
Companies participating at IndiaMART.com can apply to obtain the
TrustSEAL, which will be granted if the documents presented by the
company comply with the minimum requirements laid down by IndiaMART.
Key to success
While many Internet ventures were wiped out during the dotcom
meltdown, IndiaMART is still making profits. So what has been the
key to its success? “The basic principle has been the
identification of practical, multiple revenue streams and matching
costs with revenues,” says Agarwal. “We stuck to the basic
principle that makes for a successful B2B market place – that
is, buyers and sellers in abundance. Doing our work sincerely to
maximise value for the client, and staying away from unnecessary
hype has been the two key factors behind our success.”
