Business Standard: September 28, 2017
Bengaluru: Amazon has launched a marketplace for small and medium enterprises to buy products from its online platform, taking on German retail giant Metro AG, which has a cash-and-carry business in India, and Nandan Nilekani-backed Power2SME.
Amazon Business, which was launched in the US in 2015, has now made its way to India and will allow any business with a GST number to register itself as a buyer. All products sold on the platform will come with GST compliant invoices, allowing buyers to easily claim input tax credit.
"One of the biggest opportunities in the online selling space is actually in the B2B segment. The industry is fragmented and the importance of SMB as a contributor to the overall output in the country is huge," said Manish Tiwary, Vice President for Category Management at Amazon India.
Tiwary says the company has received numerous requests from customers and sellers over the past four years to enable them to buy in bulk and get the paperwork done correctly. With the new business marketplace, several consumers buying from Amazon's platform will now get a much better experience.
Launched on Wednesday, Amazon's business marketplace already has 100 million products on and 15,000 sellers had registered themselves in a span of 18 hours to sell to other businesses. The company is expecting its huge seller base, with nearly a quarter of a million sellers, to become customers on the B2B platform.
"There are millions of SMBs and retailers in this country and now their procurement needs can be taken care of in a seamless, transparent and compliant manner. Adding to this, we will offer them analytics and customer support that we're already very well known for," added Tiwary.
Apart from getting GST invoices, customers on Amazon's B2B marketplace will also be able to get higher discounts when ordering in bulk. The experience for businesses shopping on the platform will remain much the same as any consumer, with Amazon offering cash on delivery payment as well.
For eligible buyers, Amazon has even tied up with ICICI bank to offer a credit card that will offer them interest-free credit for a period of 45 days.
While Amazon's move to tap India's large B2B retail market will give it some much-needed firepower to take on its rival Flipkart. The latest move puts it head-to-head with Metro- India's largest organised wholesaler. Metro currently has 23 operational centres across India and while it offers customers home delivery, it doesn't allow customers to order products online yet.
Power2SME, which was founded in 2012, has emerged as one of the largest online B2B marketplace platforms for SMBs. The company recently raised $36 million from Inventus Capital, Accel Partners, Kalaari Capital and Nandan Nilekani.
The B2B market will also allow Amazon to map end consumer demand a lot better. This could potentially have upsides for its retail business as it could target consumers up to a PIN code level, helping the firm make massive savings on logistics- one of the biggest costs for e-commerce firms today.
Increasing smartphone penetration has given even small businesses access to the web and Amazon says its B2B marketplace will allow them to get quality products at best prices. When it comes to consumer retail, e-commerce players including Amazon, have burnt billions of dollars undercutting the cost of products in order to get customers to shop with them. A similar move in selling to businesses could gain huge traction.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.