Employees of a startup work and socialize with one another, in Bangalore, India. Photo: Dominic Chavez/IFC
Accelerating the use of digital technologies is key for boosting productivity and advancing economic growth.
In India, the number of users engaging in online commerce transactions is estimated to be over 200 million, with more than 100 million of these being added over the last three years, fueled by the emergence of various Business-to-Consumer (B2C) applications over the last 10-15 years such as Flipkart, Zomato, Swiggy, Ola, Big Basket, etc. Moving ahead, expanding business digitization and Business-to-Business (B2B) transactions would be key in the country’s efforts to grow the digital economy towards the expected US$1 trillion size before the end of this decade.
Up until the mid-2010s, B2B commerce of industrial goods in India worked predominantly offline, with transactions happening through classifieds in newspapers. This contrasted starkly with B2C commerce where various e-commerce startups had successfully brought markets online. This offline model had procurement issues, including high costs and poor service, which compromised productivity.
Recognizing the need for change, Rahul Garg, former Head of AdX at Google Asia, founded Moglix in 2015. Moglix originally started as a third-party seller, B2B e-commerce platform for industrial tools and Maintenance, Repair, and Operations (MRO) procurement, focused on serving Small and Medium Enterprises (SMEs).
Over time, the company moved its focus toward larger businesses. It also evolved its offering beyond connecting buyers and sellers through a marketplace to become a one-stop digital solution for industrial firms, offering a wide range of services such as procurement and production optimization, sales support, supply chain financing and digital transformation services, among others.
Journey to $1 billion
As the largest B2B e-commerce marketplace for industrial goods in India, Moglix impacts 1,000 large enterprises and 500,000 SME customers, and over 20,000 suppliers. The company's gross merchandise value amounted to $680 million in 2023, serving renowned companies such as ITC, Unilever, and Hero MotoCorp.
In May 2021, Moglix achieved unicorn status—a privately owned company with a value of over $1.0 billion. It was India's 13th unicorn and the 5th B2B company to reach this milestone. To date, it has cumulatively raised $472.5 million, and the company’s valuation is estimated at $2.6 billion.
IFC supported Moglix’s growth with a total equity investment of US$7.2 million. In addition, it also indirectly supported the company through Jungle SeedPlus fund, an IFC investee fund, which was an earlier equity investor in the company.
The shift to a more productive manufacturing industry
India’s manufacturing sector is a key to the ongoing structural transformation of its economy and a pathway for better jobs. As the country aims to expand the sector’s capacity and increase its share of the global manufacturing demand, investing in productivity enhancements is critical.
Against this backdrop, Moglix works to digitize procurement processes, optimize production, enhance sales, and much more, helping industrial businesses in India boost their productivity. Moglix’s clients report significant cost reductions and increased efficiency: a leading chemical manufacturer reduced the rejections rate of its vendors’ supplies by 64% and realized up to 7% in direct cost savings; in another case, a leading cement manufacturer was able to process 20% more purchase requisitions (into purchase orders) per working hour, resulting in over 5% cost savings.
By removing search and contracting inefficiencies, Moglix’s platform also enables MRO suppliers to access a wider customer base, supporting their growth and productivity as well.
Disrupting and inspiring
Moglix’s successful scale, in a segment where failure and scaling issues were common, transformed the market. In the years that followed, other key players emerged, while incumbents enjoyed more growth and more favorable investor sentiment. Broadly, the B2B segment has grown in importance: the B2B market is now twice the size of the B2C market and the share of B2B startups has nearly doubled in the last 10 years.
Lessons for investors
Figuring out a scalable business model is key for generating sustained economic impact and market disruption. For Moglix, this meant escaping the thin margin struggle that traps many marketplace business models by introducing value-adding solutions that went beyond connecting buyers and sellers. The creation of new business lines including supply chain financing, packaging solutions, digitization of contracts, and more, proved critical for Moglix’s sustained growth.
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