India’s online B2B marketplace has a $200 billion opportunity
Highlights from a report by Bessemer Venture Partners states that the next phase of growth in India’s digital economy will come from B2B marketplaces.
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As India’s $3.75 trillion economy grows to $6 trillion within the next decade, Bessemer Venture Partners anticipates a significant portion of this growth to be driven by the digital economy, which is expected to grow from $100 billion to $1 trillion. While most of the first $100 billion of India’s digital economy has come from consumer digitization, a large portion of the digital economy’s next 10X growth will come from business digitization and online transactions, or broadly business-to-business (B2B) online marketplaces, estimates Bessemer Venture Partners.
In 2022, B2B e-commerce accounted for a mere one percent of the overall B2B market in India, a stark contrast to its negligible presence in 2019. However, the trajectory of B2B e-commerce adoption indicates a significant upswing, with projections indicating its share will rise to just under five percent of the overall market by 2030, stated the report titled The Emergence of B2B Marketplaces in India released by the company.
By 2030, Bessemer Venture Partners anticipates that online-first, tech enabled B2B marketplaces has a $200 billion market opportunity. However, the online B2B gross merchandise value (GMV) would still account for only five percent of overall B2B business in India, which is significantly lower than the penetration in other countries.
As per the report, factors like rising internet penetration, growth of digital infrastructure, favourable regulatory policies and a conducive cross-border environment will drive the exponential growth in India's B2B online marketplaces.
According to by Bessemer Venture Partners, accessibility of online payments and availability of government-backed ecommerce such as ONDC and rails for credit through OCEN will accelerate the growth of online B2B transactions.
It also states the key hypotheses determining the performance of B2B marketplaces in India are, including a vertical approach to building deeper supply lines, addressing fragmented markets, and implementing software solutions to eliminate inefficiencies to rise above the role of a distributor. Other factors needed for success of B2B marketplaces are building a full-stack, transactional model, and offering working capital to buyers.
