Exclusive: Japanese B2B ecommerce co buys majority stake in joint venture with SAIF Partners backed Industrybuying

Japanese industrial supply ecommerce company MonotaRO has entered into a joint venture with Emtex Engineering, the company that owns B2B ecommerce platform Industrybuying, to further its growth in this market. As part of the transaction, MonotaRO will invest $15 million to pick up a 51.6% stake in the joint venture which comprises Industrybuying's small and medium enterprise (SME) business.

MonotaRO, in a filing at the Tokyo Stock Exchange, said it expects to grow its business in the Indian market through Industrybuying’s ecommerce infrastructure.

Responding to queries from TechCircle, Industrybuying co-founder Swati Gupta said the SME business accounts for 20% of the company’s gross merchandise volume (GMV).

Gupta said its primary revenue generator, the large enterprise business (80%), is not part of the deal. Revenues from large enterprise vertical come from a software as a service (SaaS)-based offering for clients to procure industrial goods. Gupta said Vedanta, Adani Group and Flipkart were among the company’s large enterprise clients.

Emtex will continue to run all of Industrybuying’s operations in India, including the joint venture, Gupta said.

Over the years, Industrybuying has raised $29 million in a mix of equity and debt, according to VCCEdge data. It counts Indian venture capital firms SAIF Partners and Kalaari Capital, family members of Murugappa Group and the TVS Group, as investors. Japanese firms Beenos and DG Incubation, Singapore-based Beenext besides venture debt firms Blacksoil and Trifecta have backed it too.

Its last known fundraising was in September 2018, when Beenext, Kalaari Capital, SAIF Partners, Beenos Asia and DG Incubation infused $5.36 million in it.

Founded in 2013 by siblings Swati Gupta and Rahul Gupta, Industrybuying facilitates online booking and delivery of industrial materials, tools and metals. According to the company’s website, it offers over six lakhs of stock keeping units (SKUs) across 40 categories. The platform sources products from more than 5,000 vendors and stocks products from over 3,700 brands such as Su-Kam, Crompton Greaves, Kirloskar, RS Pro, Bosch, Canon and Karam.

Industrybuying is one of the early movers in the online B2B commerce space. However, like many of its peers, it had to grapple with thin margins since most SMEs operate on credit and small ticket sizes. Industrybuying reportedly cut 30-50% of its workforce in 2017.

mSupply, a B2B marketplace for construction materials, shuttered operations last year following unsuccessful bids to raise more capital. 

Tolexo, a similar marketplace promoted by Noida-based wholesale B2B platform IndiaMART, wound up operations in 2017. Its sales fell drastically on the back of the government’s demonetisation exercise.

The issues have even pushed many B2B ecommerce startups to change their business models entirely. In 2016, Gurugram-based OfBusiness pivoted from a business supplies marketplace to SME financing.

Companies in the space that raised significant funds from venture capitalists in the recent past include B2B manufacturing services marketplace Zetwerk and Moglix.