Indian B2B marketplaces are expected to drive the next leg of tech-led growth, at a CAGR of 45 per cent over the next five years, and address a $125 billion market by 2027, according to a report by investment banking franchise Avendus Capital.
The report added that B2B marketplaces have the potential to become multibillion-dollar vertical outcomes across categories, addressing the huge whitespaces in the value chain with no large traditional incumbents or horizontal ecosystems, unlike in the US and China.
Commenting on the report findings, Varun Gupta, Managing Director, Digital and Technology Investment Banking, Avendus Capital, said, “India is the seventh largest manufacturing hub and fifth largest retail distribution market globally, presenting a $2-trillion-plus B2B opportunity that is yet to see meaningful disruption with less than 1 per cent tech penetration. Traditional supply chains still operate in a highly inefficient, fragmented, and localised manner through multiple intermediaries. We expect B2B marketplaces to drive exceptional growth, driving tangible benefits for all stakeholders across the value chain and potentially benefiting 10 million-plus SMEs. We anticipate strong value creation in the sector leading to 6-7 IPOs over the next five years.”
According to Ekta, Vice-President, Digital and Technology Investment Banking, Avendus Capital, “B2B marketplaces saw a baseline shift in growth post Covid with structural tailwinds supporting the tech disruption. Since then, the market has grown over 5x with two-third of the total funding coming in and creation of nearly all unicorns in the segment. The models have evolved from pure-play discovery to full-stack integrated marketplaces with category leaders displaying sustainable economics at scale. Going forward, we expect to see continued private interest along with public market debut of leading players.”
As per the report, global supply chain de-risking, China+1 policy and government PLI schemes are pushing the expansion of the domestic and exports opportunity. Leveraging the favourable macro backdrop, vertical marketplaces are scaling up across categories such as industrial materials, contract manufacturing, medical supplies, FMCG, and so on and solving for challenges unique to the individual supply chains, from discovery to delivery.