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Amazon India Adds Muscle To B2B Segment

NEW DELHI, INDIA: The India arm of global e-commerce company Amazon is strengthening its business-to-business (B2B) segment and adding categories such as furniture to its marketplace in a bid to boost the value of goods sold and edge past homegrown rivals Flipkart and Snapdeal.

According to a report by MINT, Amazon, which launched its invite-only businessto- business platform AmazonBusiness (Amazon Wholesale India Pvt. Ltd) in May, has opened the offering to all merchants, and launched furniture as a category on its marketplace (Amazon Seller Services Pvt. Ltd), the company said. India is the only country outside the US where Amazon has set up its B2B operations.

The move comes at a time when the company is locked in a three-pronged fight with Flipkart (Flipkart Ltd) and Snapdeal (Jasper Infotech Pvt. Ltd), in a market driven by deep discounts for customer acquisition.

Incidentally, neither Flipkart nor Snapdeal has a B2B business. Shopclues, run by Clues Network Pvt. Ltd, is the only other e-commerce marketplace to have launched a B2B segment. Amazon entered the B2B segment with the launch of Amazon Supply in April 2012. The company rolled back Amazon Supply and launched AmazonBusiness in April this year. The B2B segment, focused on the small and medium businesses, is operational in Bengaluru and Mangaluru.

The company has a dedicated 30,000 sq.ft warehouse in Bengaluru to cater to this segment and claims to have more than 200 brands across eight categories, including health and personal care, food and beverages, kitchen and dining, office stationery and computers.

“The number of buying members has increased five times since launch and we have thousands of buyers across Bengaluru and Mangalore,” said Kaveesh Chawla, general manager at AmazonBusiness.

Unlike the marketplace, where Amazon connects consumers with merchants, the company buys products directly from the manufacturers for the B2B venture.

India’s foreign direct investment (FDI) laws bar foreign investment in e-commerce websites that sell directly to consumers but allows in marketplaces that link sellers and buyers.

According to experts, the scope of the B2B segment is way bigger than the business-to-consumer sector, especially because the order values are higher. According to a report by Frost and Sullivan, the global B2B e-commerce market will reach $6.7 trillion by 2020.

According to a report by American retailer Wal-Mart Stores Inc., the B2B e-commerce industry in India is poised to become a $700 billion segment by 2020. Wal-Mart operates a B2B e-commerce portal BestPrice that allows shopkeepers and institutional buyers to register and shop online.

Amazon’s online B2B business will be pitched against businesses such as, Tolexo, Power2SME and Bizongo among others.

Meanwhile, Amazon also followed the footsteps of homegrown marketplaces such as Flipkart and Snapdeal with the launch of furniture. Furniture and home decor is a lucrative category for online retailers.

According to industry estimates, it is a $25-billion category which is largely unorganized, giving online retailers a huge opportunity to consolidate supply from thousands of sellers and offer products to a large customer base that physical stores can’t reach. Besides, higher value items also helps e-tailers boost their topline. Investors have pumped cash into online home stores since April this year.

Reported MINT, Urban Ladder Home Decor Solutions Pvt. Ltd. secured $50 million from Sequoia Capital and TR Capital and others in April; Pepperfry (Trendsutra Platform Services Pvt. Ltd) raised $100 million in a round led by Goldman Sachs and Zodius Technology Fund in July; and Livspace (Home Interior Design E-commerce Pvt. Ltd) mopped up $8 million from Helion Ventures, Jungle Ventres and Bessemer Venture Partners in August.