“One should enter market early but not first” – Indiamart.com
In 1994 at the age of 18, Brijesh came to know about the ‘Internet’. This happened when Brijesh was looking for information about some British company with respect to shareholding, for some relative who had passed away. Brijesh called his brother, Dinesh in the USA to ask about the company at 100 rs per minute (call rate), Dinesh sent in all the information of the company, the directors and more. Finding so much data, Brijesh was surprised and asked his brother how he collected so much information about the company. That was when his brother told him about ‘The Internet’.
In 1995, Dinesh bought a computer for Brijesh from the USA. At the time there was little information about Indian traders on the net. People used to search for services and product in the good old - Yellow pages. At Indiamart, they had to scan government data & directory of Federation of India Exporters and get names of businesses from categories like spices, gems and jewellery, garments etc. Forms had to be made out and sent to respective companies, asking for product information, contact details etc. This required sending out thousands of envelopes and a mere 2% replied. Indiamart did the ground work and listed whatever information they got on the official website. With mere 2% response rate. Brijesh thought that they had begun too soon when the market was not ready yet.
According to Brijesh, nearly half of the companies that go first fail. One should enter market early but not first. Brijesh discussed this concern with his grandfather and told him that they were losing money because customers were suspicious about their services. His grandfather asked him whether he himself was convinced with the model in the first place? Brijesh knew well- He explained that exporters were spending in lakhs of rupees on organizing trade shows for advertisement. Wherein, Indiamart was making their information available 24 by 7, 365 days a year globally. He knew that even though they as a company were early in the market, eventually the world would catch on as people got more acquainted with the use of internet. The duo agreed on keeping at it. However, they redefined their strategy and started building website for exporters and charging for the same. This way they started receiving database.
In 1997, Indiamart got revenue of Rs 6 lakh INR. In 1999, it went to Rs 52 lakhs INR. Although the website building business was profitable it was a commodity business. Brijesh & team ploughed back money for business information platform directory from website business. By 2006, they clocked revenue of 18 cr INR. During the 2008 crisis when the rupee appreciated, exporters were badly hit. Brijesh & Dinesh agreed on molding business model as per turning situation. For that they needed capital but the market was in a bad phase. Indiamart finally raised $10 mn (1 cr INR) in Jan 2009 from Intel capital. Rather than being export oriented they started to focus on domestic businesses. Brijesh soon realized the importance of Board of Directors. Their experience in strategic decision making, looking at the big picture, resource allocation etc was vital and required. So a Board was appointed which reshaped Indiamart’s working.
By 2014, Indiamart grew into a business of 350 cr INR, listing 26 lakh suppliers, 2.6 cr products. From B-B business model, Indiamart decided to go to ecommerce B-C model wherein, they wanted to bring all suppliers products online and sell. From product discovery platform to transaction and fulfilment centers for any number of buyers and sellers was the idea. Indiamart launched a platform called Tolexo. Tolexo reported a net loss of 73 cr INR with a sale of 4.7 cr INR. This made them realise that B-C is a long haul game which required lot of cash burning. Like Amazon and Flipkart one will require more capital for the same. They knew Amazon or Alibaba will come with loads of money and will invade the space. So they pulled off. Back to basics in 2018, the company posted revenue of Rs. 410 cr INR and turned profitable at cash flow level with Rs 182 cr INR.