How a startup revolutionized Indian B2B commerce in the manufacturing sector

Accelerating the use of digital technologies is crucial to increasing productivity and accelerating economic growth.

In India, the number of e-commerce transacting users is estimated to be over 200 million and the number of users has increased by over 100 million in the last three years due to the emergence of various Business-to-Consumer (B2C) applications. in the last 10-15 years such as Flipkart, Zomato, Swiggy, Ola, Big Basket, etc. Further developments, expanding enterprise digitalization and business-to-business (B2B) transactions would be crucial in the country’s efforts to grow the digital economy to the expected size of 1 trillion US dollars before the end of this decade.

Until the mid-2010s, B2B trade in industrial goods in India was mainly offline, with transactions taking place through newspaper advertisements. This is in stark contrast to B2C commerce, where various e-commerce startups have successfully moved markets online. This offline model had supply issues, including high costs and poor service, which lowered productivity.

Recognizing the need for change, Rahul Garg, former head of AdX at Google Asia, founded Moglix in 2015. Moglix initially started as a third-party seller, a B2B e-commerce platform for industrial tools and maintenance, repair and operations (MRO). public procurement, focusing on serving small and medium-sized enterprises (SMEs).

Over time, the company moved its activities towards larger enterprises. It has also expanded its offering beyond connecting buyers and sellers through the marketplace to become a comprehensive digital solution for industrial companies, offering a wide range of services such as procurement and production optimization, sales support, supply chain financing and digital transformation services, among others. . others.

The journey to $1 billion

As the largest B2B e-commerce marketplace for industrial goods in India, Moglix influences 1,000 large enterprises and 500,000 SME customers and over 20,000 suppliers. The company’s gross merchandise value in 2023 was $680 million, serving renowned companies such as ITC, Unilever and Hero MotoCorp.

In May 2021, Moglix achieved unicorn status – a private company valued at over $1.0 billion. It was the 13th unicorn in India and the fifth B2B company to achieve this milestone. So far, it has raised a total of $472.5 million, and the company’s valuation is estimated at $2.6 billion.

IFC supported the development of Moglix with a total investment of USD 7.2 million. In addition, he also supported the company indirectly through the Jungle SeedPlus fund, the IFC investment fund, which was previously an equity investor in the company.

Shift to a more productive manufacturing industry

India’s manufacturing sector is key to the ongoing structural transformation of the economy and an opportunity for better jobs. As the country seeks to expand the sector’s production capacity and increase its share of global manufacturing demand, investing in productivity improvements is crucial.

In this context, Moglix is working on digitizing procurement processes, optimizing production, increasing sales and much more, helping industrial companies in India increase their productivity. Moglix customers report significant cost reductions and increased efficiency: a leading chemical manufacturer reduced its supplier reject rate by 64% and achieved up to 7% savings in direct costs; in another case, a leading cement manufacturer was able to process 20% more requisitions (in purchase orders) per working hour, resulting in over 5% savings.

By eliminating search and contracting inefficiencies, the Moglix platform also enables MRO providers to access a broader customer base, also supporting their growth and productivity.

Disturbing and inspiring

Moglix’s successful scale in a segment that was often plagued by failure and scaling issues transformed the market. In the following years, other key players emerged, while the incumbents experienced greater growth and improved investor sentiment. Overall, the B2B segment has grown in importance: the B2B market is now twice the size of the B2C market, and the share of B2B startups has almost doubled over the last 10 years.

Lessons for investors

Finding a scalable business model is the key to creating lasting economic impact and market disruption. For Moglix, this meant escaping the razor-thin margin fight that traps many business models in the market by introducing value-added solutions that went beyond connecting buyers and sellers. The creation of new business lines, including supply chain financing, packaging solutions, contract digitization and more, has proven to be crucial to Moglix’s sustainable growth.