For New Ventures, Scope Intensifies in B2B

Date:   Wednesday , December 02, 2009

Since last six to nine months, there is early adoption in B2B Internet ventures that are trying to organize fragmented businesses, with businesses like Via (formerly FlightRaja serving individual travel agents) scaling up pretty well.

However, in the Internet the direct to consumer businesses in India have been facing two primary challenges in scaling up: last mile Internet connectivity and payment mechanism. A large number of services and products like travel tickets, hotel bookings, insurance payments, investment products, and real estate brokerage are delivered through local neighborhood entrepreneurs. Though this ecosystem is fragmented and inefficient it solves the problem of last mile distribution and payment collection. The opportunity lies in organizing this unorganized market by providing platform driven services to them. If there is a value proposition, small businesses are willing to spend money and invest in a computer with Internet connection.

There have been B2B businesses in areas of logistics, commerce, auction exchanges, assisted commerce, and financial products distribution, which have seen proper traction. These platforms are helping fragmented businesses increase their efficiency, sales, and customer retention. The challenge here is to reach the fragmented customer base.

Step out of B2B, and opportunities abound around business model innovation. From the technology standpoint, it is energy efficiency and telecom, which are evolving. In telecom, rapidly changing combination of device and operating system is giving a nightmare to the incumbents. Startups are developing platforms and services to reduce time-to-launch and market services on mobile. OnMobile has recently launched their developer platform similar to Facebook app platform.

In terms of energy efficiency, there are new applications in energy monitoring and measurement. Response management is a bit futuristic at this point. However; once the monitoring infrastructure is set up, response management would be the next obvious step. Adoption is a challenge in this industry. However, industrial users can be early adopters if they see clear cost advantages.

Entrepreneurs, while starting out on their ventures should dig into big markets. Sectors like education, healthcare, commerce, and financial product distribution have big existing markets and are growing with Indias per capita income. There are existing inefficiencies and consumer pain points. A disadvantage is that there would be competition and entrepreneurs have to look for differentiation and sustainable customer value. People with relevant professional experience are ideally placed to identify niche areas of pain points in their relevant industries. There are many white spaces; hence many innovations are yet to come out. Some specific industries in the target zone could be micro-payments, commerce, ad targeting, and distribution platforms, which provide good opportunity for innovation. We have not seen expected traction in e-commerce. However, commerce on platforms like television and voice has seen some initial traction. Platforms like CashCard (ItzCash, Done) and mobile payment solutions (mChek, Paymate) are needed to facilitate micro payments. There is enough scope for innovation here.

The author is Associate at Cannan Partners