- India and Africa offer promising opportunities for B2B e-commerce
- Rapid economic growth, and the modularity of supply chains and fragmented markets create a fertile ground
- Funding challenges and VC’s focus to optimize unit economics are potential barriers for growth
- The potential remains significant, requiring carefully consider the balance between integration and modularity
In today’s interconnected world, businesses cannot afford to overlook emerging markets and the immense growth potential they offer. When it comes to B2B marketing, keeping a keen eye on developments in India and Africa is crucial, particularly for those involved in B2B e-commerce and platform businesses.
In this article, we will explore why every progressive B2B marketer should pay attention to these regions. We also delve into concrete examples of successful businesses that have capitalized on the opportunities presented by India and Africa. Finally, we dive deeper into a possible sharp investment U-turn.
The expanding B2B e-commerce powerhouses
India and Africa are witnessing rapid economic growth, making them attractive markets for B2B marketers. India, with its large population and expanding middle class, has emerged as a thriving economy, attracting significant investments across various industries.
Similarly, Africa’s diverse and resource-rich economies are experiencing increased urbanization, technological advancements, and a burgeoning middle class. These factors create fertile ground to tap into untapped market potential.
Especially B2B e-commerce is rapidly gaining momentum in India and Africa. Driven by technological advancements and the increasing digital adoption. Businesses in these regions are recognizing the convenience and efficiency of online platforms for procuring goods and services.
Modularity as characteristics feature for B2B business
In various B2B industries, a typical value chain is at play, encompassing the transformation of raw materials or components into finished goods. In most cases, these components are produced by different suppliers instead of manufacturing themselves.
The business at the center who sell the end-products to clients act as central orchestrators in this value chain. They manage aspects such as demand and supply planning, pricing, and more. In other words, it is a process of modularization and transforming raw materials into finished products.
It’s worth noting that this level of modularity already exists for years, with factories providing manufacturing services and distributors supporting businesses in demand network planning. What’s truly transformative today is the technological disruption that is set to reshape these existing, often fragmented, and potentially inefficient businesses.
Acceleration of B2B e-commerce platforms
This modularity presents significant B2B opportunities. For instance, B2B businesses can offer manufacturing capabilities, serving as an upstream modularization example. Similarly, there are B2B enterprises focused on optimizing distribution operations, exemplifying downstream modularization.
Highly fragmented supply sides present intriguing opportunities for B2B businesses. In this context, this becomes even more compelling as Indian and African SMEs contribute to approximately 50% of annual manufacturing exports and around 27% of GDP.
The prevalence of smaller businesses also contributes to the fragmentation. Combined with the favorable conditions of modularity mentioned earlier, this creates an exciting environment for building a B2B platform in India or Africa.
The flipside: integration is a risky business
B2B e-commerce startups have disrupted traditional supply chains by enabling informal vendors to restock via mobile apps and messaging platforms. Udaan, OfBusiness, Moglix, Zetwerk, and InfraMarket are revolutionizing India’s fragmented B2B demand and supply chains, reshaping the enterprise commerce landscape as unicorns in the industry.
To keep-up with their promise B2B startups, especially in Africa, have invested heavily in their own warehouses and delivery systems to ensure consistent, timely deliveries. This approach has proven to be asset-heavy and capital-intensive.
The price war and VC investors now prioritize unit economics, making it harder for B2B startups. Especially those in the fast-moving consumer goods sector, to secure funding.
Despite the current setbacks, the potential of B2B e-commerce remains significant. Startups, investors and intrapreneurs will need to find innovative ways to address funding challenges, optimize unit economics, and leverage existing infrastructure to overcome the hurdles they face in the market.