B2B commerce GMV to reach $125 billion by 2027: Avendus

Over the past few years, several structural and macro tailwinds have favored digitization of B2B commerce in India, such as de-risking global supply chains, the China-plus-one policy and government-backed production-linked incentive schemes. Favorable conditions provided opportunities for growth for both domestic businesses and exports. Besides, the large-scale adoption of technology post-Covid created the right environment for B2B marketplaces to flourish, the financial services firm said.

Avendus expects “strong value creation” in B2B commerce and at least half a dozen public listings by 2027.

“Had the market been more positive towards initial public offerings (IPOs), few companies would have gone public compared to what we have seen in the last 12 months. We may see two to three IPOs in the next one year. In the next 24 months, we will definitely see at least a few meaningful IPOs,” said Varun Gupta, managing director, digital and technology investment banking, Avendus Capital.

The report states that vertical marketplaces will drive the next phase of technology-led growth with a CAGR of 45% over the next five years to a market size of over $125 billion.

B2B marketplaces operate at scale and provide solutions for retail distribution to manufacturers and companies such as construction and industrial materials, contract manufacturing, medical supplies and fast-moving consumer goods and address unique challenges for individual supply chains from discovery to distribution. Let’s solve. Said.

“There is a huge opportunity to create multi-billion dollar results across all categories, given that unlike the US and China, India does not have any sophisticated traditional incumbents or horizontal ecosystems.”

According to Avendus Capital, Covid helped the marketplace see a fundamental shift in growth with retail and manufacturing growing by five to 10 times during this period. A significant increase in the pace of funding was seen post-Covid, with two-thirds of capital coming in during that time and almost all existing unicorns in the space being created.

India currently has seven unicorns in this segment, and over $5 billion has been invested in these startups so far. Globally, there are 45 unicorns. In 2021, Zetwerk, a B2B marketplace for contract manufacturing, was valued at over $1 billion as it raised $120 million as part of its Series E funding round.

“India is the seventh largest manufacturing hub and fifth largest retail distribution market, offering a B2B opportunity of over $2 trillion that has yet to see meaningful disruption with technology penetration above 1%. Traditional supply chains still operate in a highly inefficient, fragmented as well as localized manner through multiple middlemen. We expect B2B marketplaces to drive phenomenal growth, deliver tangible benefits for all stakeholders across the value-chain and potentially benefit 10 million SMEs. We expect 6-7 IPOs to drive strong value creation over the next five years,” Gupta said.