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The onset of GST, the government’s continued thrust on infrastructure development and the companies’ renewed confidence on streamlining supply chain bottlenecks are all giving rise to B2B marketplace in the country. Yes, the initial glitches remain, but the new age entrepreneurs’ risk-taking appetite and logistics companies rejig towards more organized operations would greatly aid in the success of B2B marketplaces in Indian supply chain domain.

India's B2B e-commerce market potential was valued at $300 billion in 2014, and is expected to reach $700 billion by 2020, according to a joint report by the Confederation of Indian Industry and Deloitte. B2B e-commerce is also lucrative, partly because marketplaces do not necessarily have to give heavy discounts to increase transactions. About 259 start-ups have been founded in this sector since 2015, according to data from Tracxn, a startup tracker. These firms have raised $103 million in funding so far. Recognizing the large potential, a number of global e-commerce firms which sell to consumers have stepped up their focus on the B2B commerce space in India. The government has allowed 100% FDI in B2B e-commerce, which has also helped these firms enter India.

Currently, the market for logistics is exploding. The more the world of e-commerce grows, the more logistics companies find growth. According to Logistics Market in India 2015-2020, a study conducted by market researcher Novonous, the country’s logistics industry is worth $300 billion and expected to grow at a CAGR of 12.17 percent by 2020. Comparing yesteryear activities to today’s tech-enabled horizons, Srishti Lakhotia, Co-founder, Logistics Junction, quips that with technology at its heart, e-commerce has seen nerve-breaking growth in this age, no one could have ever imagined to get grocery delivered at the click of a button. “I have experienced how the logistics industry is one of the most unorganized sectors in today’s modern times. India as a nation is revolutionizing, so logistics being the heart of all industries is bound to join the race in digitalization.” Logistics companies in India are moving from traditional setups towards integration of IT and technology and this is expected to reduce the costs incurred and meet service demands.

GAINING MOMENTUM

B2B e-commerce has been gaining steam on the back of the success of B2C marketplaces such as Amazon & Flipkart. Sachin Agrawal, COO & Cofounder, Bizongo, informs that B2B e-commerce segment has helped a lot of businessmen to operate with big and organized players which was not really possible otherwise. Initially, these businesses were operational in their territories and unable to tap the larger Indian market due to lack of technology. But since e-commerce players have entered the B2B segment, there is a lot of scope for learning on how to use the right technology and tap potential markets anywhere in the country. But, yes, a huge credit goes to players like Amazon & Flipkart who broke the much needed, proverbial ‘ice’ when it came to online purchasing.

Anand Agarwal, CEO & Founder, EZMove also states that B2B e-commerce has grown exponentially. However, India’s rising consumer demand – both online and offl ine can only succeed with logistics infrastructure support in terms of rails, roads, airports, ports and warehouses. Despite all these shortcomings, companies like Amazon and Flipkart are helping to change the logistics landscape. More focus has to be given on building road networks, integrated rail corridors and creation of logistics parks much like Special Economic Zones or SEZs, to ensure continued growth. Talking about the growing B2B marketplace landscape, Chitransh Sahai, Director for Corporate Relations, GoComet, remarks that this is certainly great for the logistics sector, since we would perhaps need some more vertically distinct logistics solutions for rising e commerce.

Giving a perspective into the changing market dynamics, Anjani Mandal, CEO & Co-founder, Fortigo Network, said that rapid changes in the environment necessitate the need for every successful and forward-looking organization to have an integrated demand and supply chain that is characterized, on one side, by seamless flow of information from the customer through the sales and distribution channel to the supply chain and, on the other, a responsive supply chain that provides complete supply chain visibility and minimized cycle of response to changing demand in order to maximize organization cash flow and profitability. Deployment of technology facilitates: (a) rapid and near instantaneous flow of information on demand quantum and customer feedback through the demand and supply chains; (b) Assessment of changes in trends of demand – in terms of quantity and characteristics; and (c) Supply chain visibility to assess potential risks to servicing customer orders and requirement and undertake pro-active actions.

Surmounting challenges

Realizing the full benefits of today’s global B2B marketplace demands flexibility, responsiveness, and innovation. Yet most organizations struggle to achieve the core technical infrastructure, operational expertise, and foresight necessary to truly maximize their B2B e-commerce potential. B2B practices in India are supremely traditional unfortunately, and a transition towards digital age is a slow process. B2B marketplace is all about adaptability. The concept of one product fits all will definitely result in failure in this segment, warns Sachin Agarwal. Every business has a different style, aspiration and requirements, the fulfillment of which cannot be compromised on. For any B2B marketplace, this is expected to be focus. 

Stepping into the B2B marketplace, one has to be readily accept the challenge of solving industry’s or customer’s problem, one after another, day after day. Lot of B2B players who stop thinking this way, are eventually left with limited business. Sahai also feels that marketplaces are in general extremely difficult to create initially since there is a network effect on both supply and demand ends, and it is further difficult to marry them both. Now, with B2B the business development, servicing and discovery become further complicated due to the presence of a corporate, which has a complicated organizational structure.

Supply chain is increasingly getting digitalised, which is driving the foray of many innovative companies into the market. Sahai avers, “Digitization initiatives are focussing on Information Symmetry across the entire supply chain. Using ERPs and other tech tools, people are able to build these symmetries at the Enterprise Level. However, there is a very large portion of stakeholders in a supply chain, which are fragmented and not owned directly by the enterprise (eg 3PL players) and as a result non-digitised. So, the aggregation and empowerment of these players still remains a weak link yet to be solved.”

Talking about the weak links in supply chain, Lakhotia, highlights that the weak links are lack of a global network; especially in on-road logistics, there is no organized medium to help connect companies with a trucker to provide a vehicle & additionally no source to track the whereabouts of their material. The second one is route optimization, there is no better tool then technology to create a planned movement of these trucks and ensure that the clients load is loaded & executed timely. The third major issue is driver management. “We have created a database for the same and are launching an app soon to help drivers map their location easily. Also, we provide pit stops in remote areas to ensure the drivers can experience a safe & comfortable resting place.”

According to Anand Agarwal, ERP and SCM have been contributing to make the logistics sector somewhat manageable. However, the transportation industry is India is highly fragmented and unorganized with huge number of players operating independently with regional or national permits. They carry freight with small fleet sizes of one or two trucks. Poor infrastructure, archaic trade regulations, poor warehousing and lack of R&D in this industry are preventing the logistics sector from growing exponentially. Moreover, entry barriers in B2B are also high. Firms need to integrate technology, put in place complex logistics fulfilment processes and, most importantly, convince businesses to go online.

Lakhotia believes that in this day and age of technology, the logistics industry in India needs to undergo fundamental changes in order to be more efficient and more advanced in every context. But merely addressing the operational and structural flaws will be of little avail until and unless we also improve the mindset towards drivers and service providers. Besides a latent lack of respect towards them, the community also suffers from challenges like delayed payments and difficult working conditions.

Marrying technology with supply chain

Traditionally erratic power outages and use of cheap and untrained labor has resulted in low dependence on technology and more manual outlook to operation. Use of increased IT, at lower or well as at higher strategic levels will go a long way to changing the logistics dynamics in India, according to Anand Agarwal. The growth of logistics as a sector is deeply intertwined with the use of technology. “Technology in logistics is slowly, but surely being upgraded and that is where we come in – bringing better visibility on customer off -takes. The introduction of more efficient transport technology and mobile communication has the potential of changing the logistics practices in the industry,” quips Anand Agarwal.

Logistics Junction envisions the entire on road truck transportation to be organized through technology and bring more effi ciency & respect to the industry. For GoComet, international trade is one of the major drivers of GDP for a country. “We are focussing on international logistics, which still remains largely opaque and in efficient, and is a major challenge in making international trade simpler,” informs Sahai. While Mandal feels that the deployment of technology in India across a supply chain that is dominated by a fragmented road transport industry is minimal. However, the rapid proliferation of low-cost mobile computing now presents us the Logistics market in India is sized at US$300 to US$320 billion and is opportunity to create an integrated supply chain that provides complete transparency and visibility and moves information across the layers and links of the chain of retail, distributor, C&F agent, warehouses and factories seamlessly and in both direction. Going ahead, IoT and Big Data will herald in a new supply chain management innovation system much like a SCM 2.0. IoT will bring greater visibility into customer plans, accurate forecasting, shortened order-to-delivery cycle times. Together improved cost to serve are some ways that technological solutions are going to boost logistics as a sector.

Land of promising possibilities

Logistics market in India is sized at US$300 to US$320 billion and is developing at a very rapid rate to the tune of 10 to 12%. However, logistics costs including inventory holding, transportation, warehousing, packaging and such administration costs have been estimated at 13-14% of Indian GDP, which is higher than the 8% of USA’s – almost double. IT ventures like Ezmove are aiming to reduce the logistics costs in India, while at the same time trying to capture a slice of this very lucrative market.

According to Fortigo, the combination of (a) size – rapidly heading to $300 Bill; (b) growth rate – at an average of 12-15% annually; (c) the rapidly changing demand that necessitates market responsiveness and hence a supply chain that provides complete visibility and a platform for responsiveness; and (d) the availability of low-cost mobile computing technology across the country present a uniquely promising opportunity to facilitate change in the Indian supply chain. This would create substantial value for the customers as well as those serving the cause of facilitating such a transformation. Digitalization will allow seamless logistics by connecting people, processes, data, and things via devices and sensors much more intelligently. It will enhance in-transit visibility, which is currently missing. The logistics ecosystem has many players, and thus, many parts which can be brought together well to prevent leakages and reduce costs with deployment of technology.