B2B E-Commerce co.s To Scale Back Market Penetration After Becoming Profitable
Chennai: The funding winter in the start-up space had made B2B e-commerce companies to focus on profitability and this in turn has led to scale back in their penetration. Market penetration of eB2B companies have halved in the past two years.
The 2019-2021 period, known as the 'Goldilocks Years,' heralded an era of rapid, exponential growth, propelled by a surge in private capital investment and Covid-induced disruptions of supply chains, finds RedSeer Consultancy.
Post-2021, the focus shifted to sustainable growth as private investments receded, prompting eB2B platforms to prioritize profitability. This change led to major eB2B firms either scaling back operations in unprofitable pin codes or ceasing operations altogether, resulting in a drop in buyer penetration from about 25 per cent in 2021 to 12-15 per cent in 2023. As such, the past two years have catalysed a secular shift towards resilient and profitable growth. eB2B firms are now focusing on customer value proposition and operating density to build profitable growth.
Looking forward, buyer penetration can potentially triple from 12-15 per cent currently to 35-45 per cent by 2030. Between 2024 and 2030, the sector would see a steady growth in penetration facilitated by cost rationalization and prudent investments, making a shift from the earlier phase of unrestrained growth.
According to Redseer, eB2B companies like Udaan have deepened their understanding of customer needs at a granular level to increase adoption among buyers, and increase their wallet share. This has decreased supply chain costs through improved buyer density and higher purchase volumes.
