Chawri Bazar in Delhi is almost a clichéd Western idea of India: narrow streets lined with shops displaying brightly coloured stationery and knick-knacks, the smell of hot oil as savouries and sweets are fried by the roadside, handcarts crammed with cheap plastic ware jostling with large cars for space on crowded roads, the clamour of people shouting over the blaring horns as impatient drivers try to navigate through Old Delhi... It’s difficult to an outsider to see the wealth behind all this. But, as I constantly remind myself as I gingerly step past tangled wires that have fallen off rusting electricity poles, this is a significant part of the country’s business-to-business (B2B) market estimated to be worth over $300 billion (Rs 18.9 lakh crore). A 2014 Walmart report reckons that this market could cross $700 billion by 2020.

Dinesh Gulati, director, IndiaMART
Dinesh Gulati, director, IndiaMART

I’m trying to find the office of Om Parkash Goyal & Sons, a trading company set up in 1954. Given the company’s age and the surroundings, I’m expecting the office to be a set of run-down rooms above a shop, complete with rickety chairs and knocked down desks. What I eventually find is a first floor office that’s like any in New Delhi—sleek workstations, brightly lit cubicles, and all the paraphernalia of a modern workplace.

That wasn’t the case even a few years ago, when the company was like any of the dozens of similar trading firms in the locality, selling power tools, electrical equipment, safety items, and construction raw materials to a range of businesses in a clear radius. For fiscal 2014-15, it declared a turnover of Rs 25 crore, pretty much par for the course in that business and for its size.

Established by Om Parkash Goyal, the company is now run by his son Mohan Goyal and grandson Mayank Goyal. The youngest has come in with radical ideas—fuelled by a master’s degree from Dundee University in Scotland. The most far-reaching was convincing his father to take the company online. Mohan Goyal was unwilling to dilute focus on the offline market, believing that niche products and niche buyers needed personalised attention. Still, he agreed to let his son have his way, and Om Parkash Goyal & Sons was listed on the B2B e-commerce site, Tolexo. In three quarters, turnover had crossed the previous year’s Rs 25 crore.

Sellers like the Goyals are part of the centuries-old, fragmented wholesale markets. And sellers like these are finding that business thrives when it’s taken online to niche websites like Tolexo. Essentially, what Tolexo does is provide a single platform that any number of buyers and sellers can transact on. “If issues like payment, packaging, logistics, and on-time delivery are taken care of, a virtual marketplace becomes much better than a physical one,” says Tolexo’s co-founder and CEO, Brijesh Agrawal, 39. And, he adds, with more than a hint of braggadocio, Tolexo intends to “challenge the physical format”.

Big words, but here’s the thing. In his alternate persona, Brijesh was also the chief operating officer of IndiaMART, a platform that connects suppliers and buyers sans the transaction part. With Tolexo, he’s taking that idea forward, playing, he says, the “role of a facilitator in the virtual marketplace”. And that means vetting suppliers, ensuring last-mile delivery, and taking care of payment systems.

It isn’t an idea that happened overnight. Its origins go back to the district of Nanpara in Uttar Pradesh, very close to the border with Nepal. That’s where the Agrawals and a motley collection of cousins—20 of them— grew up, and where many still live. The big businesses there are petrol pumps and kerosene dealerships. Brijesh could well be running a chain of such dealerships back in Nanpara, if it hadn’t been for his cousin Dinesh Agarwal, who decided to move away from the family businesses and instead spent the 1990s working for information technology companies in India and the U.S. “While working in the U.S., I was particularly impressed by the big-box stores of The Home Depot and Office Depot—those huge, clean buildings are so different from the small, dirty bylanes of Chawri Bazaar or Chandni Chowk,” Dinesh recalls.

He knew he wanted to replicate that convenience and ease of transaction at home, but Dinesh says he “never had that kind of money” to build a similar business. But the idea of a digital platform was not formidable in itself, so he looked at more affordable ways to do something similar online. He fine-tuned the idea with younger cousin Brijesh, and in 1996, the cousins had set up IndiaMART InterMESH, an online directory of small and medium businesses that connects buyers with suppliers, provides product and pricing information, and helps generate business leads. It’s not e-commerce, sure, but it paved the way for Tolexo.

Backed by Intel Capital and Bennett, Coleman & Company, IndiaMART has grown into a Rs 350 crore business, listing 26 lakh suppliers, 2.6 crore products across 80,000 categories, and a database of around 12 million buyers. More important, it makes good use of the deep cache of user data captured via the “business discovery” platform—from traffic to number of product enquiries to renewal rates and upscaling. It’s the kind of business intelligence SMEs world over are looking for, and that’s given IndiaMART pole position in its niche segment. For almost 20 years, the cousins kept at IndiaMART, although the idea of moving into e-commerce never really died.

Even as IndiaMART grew, the cousins stayed grounded, listening to buyers and sellers who used the platform. As more and more people started using the site, the founders were besieged with requests for IndiaMART to do a Flipkart or Snapdeal and enable doorstep delivery. Sellers wanted the site to get into logistics support and payment options. “But as long as buyers and sellers engaged in offline transactions, an end-to-end online marketplace with payment options and a good logistics backbone could not help them,” points out Dinesh.

The cousins had been studying the online commerce space, and realised that a transaction-based B2B portal could overcome the biggest weaknesses plaguing the existing B2C online players—deep discounting, and a limited array of products (in the non-marketplace format). IndiaMART’s supplier listing and detailed product information would take care of matching buyers with sellers. And discounts are not necessarily the magic potion to growth; as the owner of a small engineering job work firm in the Northeast says: “Buying online and at MRP is like getting a good discount”, referring to the fact that if a store in his town was to procure a speciality product for him, it would charge extra to source and transport it.

“At the time IndiaMART was looking at expansion and we had three options—a B2B transaction platform, a SaaS (software as a service) project, or SME financing. Tolexo was a natural choice,” Dinesh says. Meanwhile two more people joined as co-founders. Navneet Rai, co-founder of online fashion retailer Inkfruit (it was acquired by Zovi in 2013), came on board in February 2014 while e-commerce specialist Harsh Kundra (of Jabong and Meritnation fame) joined in January next year. Brijesh takes credit for the name. “It doesn’t mean anything. We were just looking for a catchy name, easy on the tongue, and this one rolled out.”

Tolexo was launched in January 2015.

IndiaMART is investing Rs 100 crore to build Tolexo and is committed to put in $1 million a month for the next 100 months or more. Refreshingly, at a time when almost every e-commerce venture is busy burning investor money to fund growth, Tolexo has not raised any risk capital. The parent company has strong balance sheets and enough internal accruals to see it through, at least for the time being. Tolexo itself is growing steadily, and is targeting Rs 1,000 crore in revenue by 2020. The big question is whether Tolexo and IndiaMART will be able to pump in the big bucks needed to dominate the market.

Tolexo has full access to IndiaMART’s databases and inventories, built over nearly two decades. That’s a huge plus although much of the analytics and Big Data points need to be fine-tuned to service Tolexo’s target users. Tolexo has been further jazzed up with loads of features found in B2C portals—more detailed product description, price comparison, and rating based on buyers’ feedback. But that has also led to some concerns. Some of the analysts I spoke to said they were not sure why Tolexo exists as a separate entity; an e-commerce interface could have been incorporated into the IndiaMART site, they argue.

Dinesh Gulati, director, IndiaMART, disagrees with this. First, he says, close to 35% of IndiaMART’s inventory can’t be listed on Tolexo “because these are high-value, high-risk heavy machinery”, where buyers will need to do their due diligence and deals will be struck offline. More important, “IndiaMART can’t just flip its model overnight and become an e-commerce firm. It’s essentially a product discovery platform”.

Meanwhile, Brijesh and his team are still working on various aspects of e-commerce that IndiaMART never had to deal with. Logistics, for one. “I would never have ventured into the project if B2C players like Flipkart and Snapdeal hadn’t done it before,” says Dinesh. “They were the first to tie up with third-party logistics companies and it’s now helping us.”

His team is also working on another value-added service very few have tried in the digital commerce space—providing credit to businesses listed on Tolexo. “We will tie-up with banks and NBFCs to ensure that businesses who have transacted on our platform a few times are eligible for credit, even if the seller is not willing,” he adds.

Tolexo was set up when the B2B space in India began to get more attention. A Frost & Sullivan report released in April 2015 says the B2B segment is expected to grow to $6.7 trillion in gross merchandise value by 2020, double that of the B2C market ($3.2 trillion) in that time frame. Other encouraging numbers, including the Walmart report mentioned earlier, have prodded entrepreneurs to enter this space. So, apart from Tolexo, there’s, Shotang, Bizongo, and Power2SME. And then, Amazon and Alibaba are getting ready to enter the market., the wholesale trading platform of Chinese e-commerce giant Alibaba Group, recently announced the launch of SMILE—Small and Medium Industries Leveraging Export platform. The idea behind this, explains a company statement, is to put Indian small and medium businesses in touch with their global counterparts. It will also provide trading solutions including financing, logistics (domestic and cross-border), inspections and certifications, technology, and SME trade-linked education. Most important, for Alibaba at any rate, it will open up a hassle-free passage to China, home to a vast array of small and medium businesses. claims that more than 4.5 million Indian SMEs are listed on the platform.

Meanwhile, Amazon India has started, a members-only B2B e-commerce site that allows businesses to buy and sell thousands of items, including business supplies and products for resale, at wholesale prices and in bulk. None of these companies has come up with official numbers but needless to say, they are ready to take on the likes of Tolexo.

For now, the big threat to Tolexo is homegrown B2B portal Industrybuying. It’s the older company (set up in 2013), and so has had more time to establish relationships with buyers and sellers, something founders Swati Gupta and brother Rahul swear by. “The B2B market thrives on relationship building,” says Swati. And, she adds, she isn’t really afraid of the multinationals elbowing in. They have no dedicated team “pushing industrial products online”, she says.

Industry buying has raised more than $13 million from a number of private equity players including SAIF Partners, Kalaari Capital, and Beenext. The company has adopted a hybrid model (online-offline) for better procurement and sales, and claims to have a listing of 400,000-plus products, a 40,000-strong buyer base, and 2,000 suppliers. “We also provide 30-60 days’ credit to large and medium buyers after negotiating with them,” says Gupta. “Our plan is to drive all offline business activities [like procurement, bidding, buying, and selling] online and become the biggest business e-commerce site in the next couple of years.”

But the biggest challenge isn’t competition, says Gulati. There’s a crying lack of infrastructure, lack of a uniform tax structure, lack of FDI capital, and lack of Internet penetration. “We have maybe some 4 crore or 4.5 crore SMEs looking for bulk trade. That’s a huge opportunity for all. But one thing is very clear. Only 25% of the SMEs have Internet access. Unless we get 60% to 70% of the businesses online, we won’t be anywhere near the U.S. or China.” He goes on to say that the likes of IndiaMART will continue to play evangelist, guiding offline businesses online. “Whether that’s 5% or 7% or 10% is, again, a matter of debate. But are we able to convert 25% to 30% of the businesses? The answer is no.”

That conversion is key to the success of companies like Tolexo, and to the success of organised B2B business.

After meeting the Goyals, I leave Chawri Bazar and stop by New Delhi’s Barakhamba Road, and a completely different business. Three young engineers, Nilesh Batra, Ayush Aggarwal, and Kunal Dogra, run a company called Famish International. It’s little more than a basement garage, from which the three sell industrial goods, mostly safety shoes, on Tolexo. This is their second stab at entrepreneurship; the first was a failed attempt to export rice. Why safety shoes, I ask. Pat comes the reply: Because there are very few brands in that category, limited competition, and great demand. (Safety shoes are among the fastest moving products on Tolexo; it’s a space Brijesh entered when analytics showed that this was the product most people searched for.) Famish recorded turnover of Rs 3 crore in FY15.

I leave the basement thinking that Goyal and the Famish entrepreneurs are barely a fraction of the number of entrepreneurs in the country just waiting for an opportunity to flourish. And that unsung, unsexy businesses like Tolexo and Industrybuying are giving them that chance.

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