Back in 2001, Dinesh Agarwal received a call from one of the leading business magazines in Delhi, which was conducting a survey on the internet business in India, after the dot com bubble burst.
The reporter on the call asked a straight question – whether Agarwal’s five-year-old internet business was alive. And Agarwal equipped, “We’re alive and kicking and profitable.”
The publication verified the claim with the company’s registrar of filings and changed the cover story overnight. The new edition had Agarwal on the cover page and ran a story on IndiaMart, a profitable internet business entity, recounts the founder.
On 14th August 1995, state-owned Videsh Sanchar Nigam Limited (VSNL) announced the launch of the first publicly available internet service in India. The announcement was a harbinger of a flood of opportunity in India.
Meanwhile, in far-off US, a 25-year-old software engineer was observing the development in India. The young man decided to return to his country to leverage the opportunity via the internet.
Within two months, he was in India; within a year’s time he founded a company for exporters and other businesses.
Launched in 1996, IndiaMart created an online B2B directory, along with websites building platforms for exporters and SMEs.
“It had been a few years since the Indian economy was opened to the world. The other major economies like the US wanted to trade with Indian businesses, but there was little scope of business reach between the two countries. I decided to build a business directory and websites for these exporters/ businesses to introduce them to other parts of the world,” said Dinesh Agarwal, CEO and Founder, IndiaMart.
When the ball set rolling
The launch of IndiaMart was successfully able to stir the market as the company’s portal witnessed an influx of enquiries relating to various businesses from different parts of the world, especially the US, Agarwal explained.
“We would note down all the enquiries and send them to various related businesses through posts. This gradually brought some business for exporters; they eventually saw some relevance in their association with us,” he said.
For the first two years, the company was listing the business for free and building the directory.
In 1998, IndiaMart got the first paid listing. And in the same year, it expanded its reach beyond Delhi and launched its second office in Mumbai (then-Bombay).
The company’s B2B directory and website building business were a major hit and continued to remain so till 2001, when the company bore the heat of the melting twin towers (caused by a terrorist attack) in America.
How 9/11 affected business
Two events – the war in Afghanistan and protectionist policy of the US – made a huge dent in the export market of India. As export dwindled so did the business of the Delhi-based company.
Besides, expansion of the internet had already started, as many players had begun offering website building services in the country.
“Those were the tough days as the company was grappling with the havoc in the market. However, we utilized the time to build strategies and found methods to evolve our business,” added Agarwal.
IndiaMart’s B2B listing was the unique model on which it had built a huge directory of business on its platform. There was nobody around who could give the company competition. It adopted a new slogan ‘more buyers, more suppliers and more business’, which stands true for the company’s business as well as businesses registered on the platform.
Building trust among users
Within a year’s time, its premier listing business took off. Now, Agarwal wanted to build a more trustworthy platform where buyers and sellers could trust each other and conduct business smoothly.
A year later in 2003, it launched TrustSEAL, a B2B business verification service that checks a company’s proof of existence, credibility and trustworthiness.
Under TrustSEAL, the company has to submit a copy of documents along with a subscription application and specified fees. IndiaMART and its authorized verification agency verifies the documents and authenticates the data and accordingly assigns a TrustSEAL to the company.
Meanwhile, the company observed that users also needed a mode of transaction on the platform via which they can settle payment on the trust of the company.
In 2005, Agarwal launched a payment platform, which he shut down in 2009.
The year 2007 was another dramatic period when IndiaMart made another big pivot — it changed its focus from international to the domestic market.
“The shift in focus was a deliberate attempt as per the demand of the market. During 2007-2008, the rupee was getting stronger against the US dollar. Besides, the Chinese export market was swiftly capturing the world, including India. Amidst this, another development was taking place in India – domestic business was rising in an unprecedented way. We saw a lot more opportunity within the country and hence, decided to shift our focus,” said Agarwal.
Giving a push to the new growth plan, the company decided to raise funds. In 2009, it raised an undisclosed amount of funding from Intel Capital.
Following the move, the listing company observed a boom. A year later, in 2010, continuing the growth momentum, it launched 52 offices in 52 weeks.
In 2011, the platform enhanced the use of technology and introduced many other services for users — auto generated requests for quotation (RFQs), finding right sellers and buyers using computer algorithms, etc.
This year, IndiaMART has forayed into the payments space to help the over 3 million sellers on its platform. The company has launched its buyer and seller protection programme to address the bottleneck of trust deficit for SMEs.
“For any marketplace, effective payment facilitation is the most aligned service as it facilitates the purchase cycle,” says Agarwal.
When Agarwal burnt his hands in B2C
In 2014, IndiaMART.com had launched Tolexo, an e-commerce marketplace for businesses to list their entities and consumers to buy various items through the platform.
Agarwal said the aim was to create a niche for SMEs and sell focussed products for them.
In 2016, it raised an undisclosed amount in Series C funding led by Amadeus Capital and also spent a large sum on Tolexo.
In the same year, Tolexo launched Seller Panel. The aim of launching the panel was to offer enhanced visibility to sellers and enable them to manage their business-related tasks seamlessly.
The company did everything to support the new B2C entity. However, Tolexo couldn’t take off as expected by the founder.
In February this year, according to media reports, Tolexo was planning to lay off 300 employees, or 85% of its workforce. The move was reportedly part of the company’s plans to wind up its online business to launch a completely new offline initiative.
When asked what went wrong in the business, Agarwal equipped, “Our aim was to provide solutions in the B2C segment as well, however, we failed to crack the business. We’re still wondering what went wrong and why we couldn’t take off.”
Company has come a long way
It’s been more than 20 years of IndiaMart and there is no looking back. The company which was started as a listing platform has now the largest directory of business where, as claimed, over 35 million buyers have access to 3 Million suppliers for over 4.3 Crore products listed on the the platform.
The online platform had closed the financial Year 2015-16 with revenue of Rs 300 crore and is expected to register a growth of 30 per cent for the year 2016-17.
When asked about the existing competition likes of Alibaba, Agarwal reclined on the chair — expressing his relaxed state of mind — smiled and said: He is little bothered by it. Alibaba can rather work with us instead of thinking about creating a competition.
Today, Agarwal is not only an entrepreneur but an investor, who has invested many firms and acquired some as well.
He has invested in more than 40 companies, including the likes of Procmart, Wishberry, SilverPush, Ozonetel, Little Eye Labs, WeAreHolidays and PlayCez, among others.
Besides, the company has been planning to hit IPO. Agarwal said: We aim to roll out IPO. We have been talking to our investors for quite some time, however, we are yet to settle on many important plans and decisions. I believe we will soon reach the conclusion.