Why Indian Distributors are looking at strategic partnerships with online B2B Marketplaces?
In ever changing retail landscape many Indian distributors are working on models to build strategic partnerships with online B2B marketplace. Here are some of the compelling reasons to do so
- Recent reports indicate India’s online B2B marketplace will grow to 90-100 billion USD in
GMV (Gross Merchandise Value) from 50 billion USD today by 2030.
2. Retail general trade in B2B segment will be approx. 1.2 Trillion USD by 2030 and online B2B will command nearly 8% market share.
3. In next 4-5 years 50% new users will shift to online B2B marketplace from offline trade.
Beside above many international manufacturers and brand owners (franchisors) are revamping their Indian distribution model. They are building strategic partnerships with online B2B marketplace to access underserved Indian markets.
Yes, it is debatable whether B2B marketplace are pushing small distributors out of market or helping them to solve multiple problems. Nevertheless both manufacturers and distributors have realised its potential and how it can shape existing distribution models in Indian market.
Current Indian Distribution Model
Currently unorganised retailers or general merchants are driving majority of retail transactions. This is expected to continue over coming decade. The unorganised segment represents more than 13 million retailers especially in B class cities. Governments are careful in bringing any regulations to upset this formidable vote bank.
Realising this many online B2B portals are looking to build strategic partnerships with these retailers. Thereby giving rise to new digital procurement and distribution models which eases bottlenecks for these small stores. It resolves major issues like delivery delays, unsecured credit and higher input costs to name a few.
Why Strategic Partnership?
It makes sense for small distributors in India to explore strategic partnerships with online B2B portals. The most compelling reason being Indian online B2B marketplace have wider territory coverage and can offer multiple retail categories. It also provides easy adoption and engagement. Online B2B marketplaces are more concerned about maximizing product listings, discount offers or digital process to build user base. The small distributors can concentrate on inventory management and streamlining the SKU they sell.
This strategic partnership creates a win- win scenario for both B2B marketplace and small distributors.
It is understandable that today many Indian distributor’s feel short charged as generally big portals dictates the pricing and terms of trade. However let’s not forget that B2B portals are only aggregators. The real power lies with the manufacturer and stockists. Distributors in India have unique advantage of being nimble and offer differentiation to customers. The manufacturer or brand owners are still reliant on distributors and franchisee for B2C sales.
The distributors are eyes and ears for manufacturers as they are first to spot changing trends and customer tastes.
How Indian Distributors can Leverage their Small Size
The flexibility on offers and ability to respond quickly to serve customers is forte of a distributor.
Large online B2B marketplace offers one size fits all strategy to maintain certain level of service. Smaller distributors have advantage of creating strong long-term relationships by being closer to their customers. The combination of these two is what manufacturers are looking to build scales and resolve inventory issues at production level.
All stakeholder need each other to bring in productivity and reduce profit leakages in each step.
Online B2B Portals are creating tailored windows for Wholesalers
Today the customer can compare the products, features and reviews online itself before making buying decision. Many online B2B portals are creating specific windows within their marketplace; wherein retailer can customize their offerings. It is like running your store virtually from anywhere in the world. This surely is a fascinating feature and picking up fast among major retailers especially having exclusivity with manufacturers or suppliers.
Some examples of online B2B portals creating this specific functionality for distributors globally are
TradeWheel.com: Very popular with wholesalers and especially distributors looking to create inquiry forms.
GlobalSources.com: This is Hongkong based prominent website for bulk trading since late 1990s.
Amazon: USA based trading portal which has imprints of both B2B as well as B2C.
Selloverseas.com has a team of professionals who are constantly working with manufacturers and distributors. The sole objective of this team is to create media kits and get preferential listing for our registered users.
For majority of B2B purchases, it is generally the customer who finds the distributor. Therefore, it is extremely important for both online B2B portals and Indian distributors to work collectively and cohesively.
Whether it is SEO or PPC; the content needs to appeal to visitor. The advertising strategy needs to be inclusive and represent the right intent. Finally, it boils down to commercial aspects such as pricing, terms of delivery and credit options. .
Only differentiation and projecting the right unique selling propositions (USPs) can create the right position in customer’s mind. All of this requires a holistic approach by both retailers and online B2B marketplace, which Indian distributors have understood well leading to strategic partnerships.