B2B ecomm firms see the goods in kirana solutions

Bengaluru: In August, Nandan Nilekani-backed B2B ecommerce startup ShopX was approached by Marico to stock and distribute the consumer goods giant’s new range of deodorants at local stores in small towns and cities. ShopX chief executive Amit Sharma decided to approach the opportunity through in-house innovation, developing low-cost samplers to boost sales of the deodorant.

"We decided to change the economics of sampling," said Sharma. ShopX, which works with at least 50 consumer brands, including Procter & Gamble and Hindustan Unilever, assembled an R&D team that came up with a small sampler box of foam that would retain the deodorant’s scent for about 10 days. It cost less than Rs 5. Marico is now looking at a national rollout, said Sharma.

ShopX, founded by Sharma and Apoorva Jois, is among several B2B ecommerce companies in India that have not only cracked the code to profitability but are also innovating in supply chain and distribution.


Currently, there are around 48 million offline retailers in India, according to RedSeer Consulting. On the other hand, the tally of B2B ecommerce companies adds up to a little over 550, spread across consumer goods, industrial goods, home and construction, agriculture, among other sectors, as per data-tracking platform Tracxn.

Jumbotail, an online food and grocery distributor serving neighbourhood, or kirana, stores and food services businesses, has created a platform through which it can introduce a brand’s new product to thousands of their customers by a mere click of a button. Jumbotail’s mobile appworks on low-end devices and low bandwidth, ensuring that orders can be placed any time.

"We don’t spend a single dime in taking orders and we don’t make any extra effort in communicating about new products to customers," said cofounder Ashish Jhina. "Even companies with significant distribution coverage have been able to reach out to customers and provide 24x7x365 access to a wider range of their products."

The company also manages and controls its logistics and supply chain. "We have an in-house supply chain because food and grocery require a specific supply chain capability to manage expirations, different MRPs, etc.," said Jhina.

The staples and consumer goods sector in India is a $400-billion annual market, with 90% of its goods distributed among kirana stores and general trade shops and less than 1% being online, according to industry estimates. The consumer goods market is expected to grow three times in 10 years and companies like ShopX, Kalaari Capitalbacked Jumbotail, and Lightspeed India-backed Udaan are focused on bringing kirana store owners online.

Udaan, founded by former Flipkart executives Amod Malviya, Sujeet Kumar and Vaibhav Gupta, operates in the food, clothing and electronics sectors to make online trading easy for wholesalers, retailers and manufacturers. Companies in the B2B ecommerce space have been garnering a lot of investor attention and received nearly $200 million across 22 funding rounds this year, as per Tracxn data. That compares with about $115 million invested in B2B ecommerce startups across 40 funding rounds in 2016, and about $30 million invested across 26 rounds in the year before.

"Now is probably the right time to get into the B2B ecommerce space. As entrepreneurs figure how to bring other sectors on to their platforms, this space will only grow further," said Harsha Kumar, associate partner, Lightspeed India Partners.

"Furthermore, once B2B transactions become scalable and accessible, B2C costs will automatically drop."

A few companies, though, are looking to buck the trend. Shotang, currently an edistributor of mobile handsets in seven cities, is looking to add four categories over the next five years. Shotang has about 16,000 retailers on its platform. The company’s USP lies in its logistics solution that ensures delivery in under 24 hours after an order is placed.