The evolution of the internet & technology is one of the greatest blessings that mankind received! Sounds too philosophical… Isn’t it? Well, just look at the evolution of the digital world in the past decade. Not only can you buy/sell commodities ranging from electronics to groceries. But also make payments through the magical electronic device in your hand. Who would have thought that numerous services can be given/received through a smartphone? IndiaMART did! Do you know it is the first Indian B2B marketplace to become publicly listed? How does it work and make money? How did it become successful? Due to its efficient business model. In this article, we will delve into IndiaMART business model, and explain its secret to success.
IndiaMART: A Brief Overview
IndiaMart is an Indian B2B online marketplace that connects buyers with suppliers. It has a very interesting history. Can you guess when it was launched? Back in 1996! Many of us weren’t even born at that time. It was launched as a website directory for customers in the National Capital Region (Delhi). At that time only a handful of people (approx. 15,000) know about the internet. But still, the business boomed and also tackled numerous hurdles like the 2008-09 recession. It launched its IPO in 2019 and became the first B2B marketplace to become publicly listed. Numerous Indian startups dream of the kind of success that IndiaMART achieved. As per KPMG, IndiaMART is one of the largest Indian e-commerce platforms and holds 60% of the market share.
Before diving deep into IndiaMART business model, let’s have a brief overview of the company.
|Parent Company||IndiaMART InterMesh Limited|
|Type of Company||e-Commerce Company|
|Founders||Dinesh Agarwal (CEO) & Brijesh Agarwal|
|Headquarters||Noida (Uttar Pradesh, India)|
|Public listing||Publicly listed in BSE and NSE|
|Operating Space||B2B (Business-to-Business)|
|Market Capitalization (June 2023)||Rs.17,262 crore|
|Revenue (Q4 FY22-23)||Rs.985 crore|
|Expenses (Q4 FY22-23)||Rs.757 crore|
|Net Profit/Loss (FY22-23)||Profit of Rs.283.3 crore|
|Competitors||Tradeindia.com, alibaba.com, amazon.in, flipkart.com|
In the upcoming sections, we will explore the IndiaMART business model in detail.
Working Strategy: How Does IndiaMART Work?
As you have read above, IndiaMART is a B2B online marketplace that provides services through its web portal. You can say that IndiaMART acts as a mediator, facilitating communication between buyers and suppliers. Its working strategy involves the following elements-
1. IndiaMART Website
Here, you can buy or sell the products even if you don’t own a company. Most of the sellers and customers of IndiaMART are wholesalers, traders, and retailers. The website of IndiaMART possesses the following features-
1.1) Registration and Profile Creation
This is the first step that every seller and buyer needs to follow to sell or purchase a product in IndiaMART. In B2C e-commerce services like Amazon, Myntra, or Flipkart, you make a profile. Right? Here also you need to make a profile while purchasing commodities in bulk. Suppliers interested in selling their products or services on IndiaMART, register on the platform by creating a profile. They provide relevant information about their company, products, services, contact details, and other necessary details. This helps in creating an authentic and comprehensive online presence.
1.2) Listing of Products
After registration, suppliers can list their products or services on IndiaMART. In case you are a supplier, you can list your products or services on the website seamlessly. You can upload product details, images, pricing information, and other relevant information. Detailed information about your product will help potential buyers to make a perfect purchase. IndiaMART website categorizes and organizes product listings to make them easily searchable for buyers.
1.3) Search Portal
The search portal helps buyers to find the products they need. In case you are a buyer looking for specific products or services. You can visit IndiaMART’s website or use its mobile app to search for suppliers. Just put the keywords or browse through different categories, and you will find the desired products. You will also find various filters that will help you to narrow down the search results.
1.4) Inquiry Portal
Upon finding a supplier of interest, buyers can view the supplier’s profile, product details, pricing, and contact information. Being an interested buyer, you can also send inquiries directly to the suppliers to seek more information or to initiate a business transaction.
1.5) Post a Buying Requirement
When you look to purchase a product in IndiaMART and don’t find a suitable one in the categories. Then the website provides a solution for it too! What you need to do is-
- Login to Indiamart.com
- Enter the name and specifications of the product that you wish to buy.
- Get quotes from the seller
It means that if a seller has the product you want to buy, then he/she will approach you directly. This is the most appreciated feature of this website.
2. Lead Generation
It refers to the process of identifying and reaching potent customers for the products/services of a business to increase sales. IndiaMART is capable of driving sales of the sellers by generating leads for its suppliers through its website. This is the eye-catching feature of this company. Let me give you an example of IndiaMART’s lead generation working strategy. When buyers express their interest through inquiries or messages, IndiaMART provides the suppliers with the necessary contact details and inquiries received. Suppliers can then follow up with potential buyers and convert inquiries into business deals.
3. Freemium Business Model & Subscription Plans
IndiaMART operates on a freemium model, offering free and paid subscription plans to suppliers. The free plan allows suppliers to create a basic profile and list a limited number of products. It also includes Subscription plans for which you need to pay a fee. These paid plans provide additional features and benefits, such as priority listing, increased visibility, and access to advanced tools. Suppliers can choose the subscription plan that suits their requirements.
The subscriptions are available in various packages. We will discuss them later in the section on “Revenue Sources.”
4. Business Segment
The products and service directory covered by IndiaMART includes-
- Machine Parts
- Tech products
- Food & beverages
- Electronics goods
- Chemicals, Dyes, and Solvents
- Packaging goods
- Agricultural products
- Cosmetics and Personal Care
- Textiles, Yarns, and Fabrics
- Gems and Jewellery
- Stationary and Accessories
Look at the registration process given in the section of the “IndiaMART website.” Here, every supplier is verified during the registration process. In this way, IndiaMART strives to build trust and credibility in its marketplace. It employs a verification process to ensure that registered suppliers are legitimate businesses. It also encourages buyers to provide ratings and reviews for suppliers, helping in the transparency and reliability of transactions.
Revenue Sources: How IndiaMART Makes Money?
Now, let’s come to the most anticipated part of the article i.e. Revenue Sources of IndiaMART business model. IndiaMART makes money through its diverse revenue sources. Some of the major ones are-
1. Subscription Plans
As you have read above, IndiaMART offers subscription plans with diverse packages to its suppliers. It is beneficial for those who want to access additional features and benefits beyond the free basic profile. These plans come with enhanced visibility, priority listing, advanced tools, and other advantages. Suppliers pay a recurring subscription fee to avail themselves of these premium services. There are three types of packages available in the subscription plans-
- Monthly Plan: Rs.3000 + 18% Tax
- Annual Plan: Rs.28,500 + 18% Tax
- Multi-Year Plan: Rs.75,000 + 18% Tax
These subscription plants contribute to a significant amount of revenue for IndiaMART.
2. Advertising Services
Ads play a crucial role to generate revenue in e-commerce services. Being a mediator in the B2B operating space, IndiaMart offers advertising opportunities to suppliers who want to increase their visibility and reach on the platform. Suppliers can opt for various advertising options such as-
- Featured Listings
- Banner ads
- Sponsored content
- Targeted promotions
Suppliers pay fees for these ads, which in turn produce revenue for IndiaMART.
3. Commissions through Transactions
This is similar to other fintech platforms. When a successful transaction takes place between a buyer and a supplier through IndiaMART’s platform. IndiaMART charges a commission based on the total value of the transaction. This commission is a percentage of the transaction value and acts as a transaction facilitation fee for IndiaMART. This acts as a potent revenue source for the company.
This is an integral part of IndiaMART business model. Because without marketing your brand won’t be visible to your target audience in this competitive world. Some of the key marketing strategies of IndiaMART are-
1. Television Advertisements
IndiaMART is a 27-year-old company. You would rarely find a household in India without a television. On realizing this fact, IndiaMART launched the “Kaam Uahin Banta Hai ” campaign on television screens. At that time, the brand ambassador of IndiaMART was Bollywood actor Irfan Khan. The TV ads popularized the company in Indian households. Therefore, TV ads have been the most efficient strategy for IndiaMART to reach potent consumers.
2. Social Media Marketing
In the current digital era, social media is an effective source to reach the target audience. Also, the company has a remarkable presence on social media platforms like Twitter, Instagram, etc. It launched the following campaigns to educate the audience about its brand-
- #AramKiTune Campaign
- #IndiaKiKhoj Campaign
3. Referral Programs
IndiaMART incentivizes its existing users, both buyers, and suppliers, to refer new users to the platform. It offers referral programs, rewards, and discounts for successful referrals. This strategy helps expand its user base through word-of-mouth marketing. For example- It offers referral programs like #BadaAaasaanHai i.e. helping your friend grow their business. “Invite & Earn”- Here you get Rs.200 on every referral.
IndiaMART forms strategic partnerships and alliances with other companies, associations, and industry bodies. These partnerships help amplify its marketing reach and access new customer segments. Collaborations may involve joint marketing campaigns, co-branded initiatives, or cross-promotion opportunities. The businessmen of the following categories can undergo partnership with IndiaMART-
- Telecom DSA
- BFSI/NBFC DSA
- FMCG/FMCD Distributors
- Domestic BPOs
- Companies providing merchant acquisition services
- Manpower/Sales outsourcing firm
Note: Full forms of the acronyms used above-
- DSA: Direct Selling Agents
- BFSI: Banking, Financial Services, and Insurance
- NBFC: Non-Banking Financial Company
- FMCG: Fast-Moving Consumer Goods
- FMCD: Fast-Moving Consumer Durables
- BPO: Business Process Outsourcing
IndiaMART business model was a huge success. Also, after becoming public, it invested in over a dozen startups. Also, it acquired many of them like Shipway, SuperProcure, Legistify, Vyapar, Zimyo, etc. Most of them belong to the logistics and SaaS (Software as a Service) segment. The onboarding and seamless interaction of buyers and sellers is the key to building a robust marketplace in the B2B operating space. Thus, IndiaMART is a successful company!