When talking about the potential of ecommerce, the real opportunity isn’t in the saturated B2C sector, but it’s almost hidden in B2B.
The sector is pegged to grow more than twice as much as B2C globally by 2020 and expected to generate $6.7 trillion of revenue but in most Southeast Asian markets, it doesn’t nearly get as much as attention.
The ECOMScape series shows only a few players have dabbled in B2B and in Indonesia, one of them is Ralali, the country’s first B2B ecommerce marketplace, founded in 2013 by current CEO, Joseph Aditya.
The company’s beginning
Launched at a time when most existing websites were catalogs, Ralali generated IDR 10 billion or $750,000 in revenue during its first six months selling industrial supplies to manufacturers, contractors, and automotive businesses.
The company’s early robust growth attracted the attention of investors and in May 2014, Ralali bagged an undisclosed amount of seed funding from East Ventures and raised another $2.5 million from Beenos Plaza and Cyber Agent Ventures a year later in June 2015.
With financial backing in hand, Ralali was set to expand its business further but the company, once specialised in MRO (Maintenance, Repair, and Operational) products and office supplies, soon found that the current business model was not scalable.
“There is simply not enough reason for big companies to completely shift their procurement process online. And the problem with having big companies as a main source source of revenue is that it’s a huge risk if one decides to go elsewhere,” explains Aditya.
Ralali decided to change its strategy to be able to scale up at the rate they wanted to.
Reaching an untapped source
While assessing the pool of potential customers, they found a glaring source of untapped potential in Indonesia — small and medium enterprises (SMEs).
In Indonesia, the latest data shows that out of all the country’s registered businesses, big enterprises only make up less than 1%. The rest – or almost 58 million companies – are SMEs and they contribute 58.92% of total GDP.
The problem, however, was and is that most of these businesses are still stuck offline – only 9% have dabbled in ecommerce and only 37% have basic online capabilities.
But this wasn’t the only reason Aditya shifted his focus to SMEs, he also wanted to help even out the playing field.
“As a tech company, we are working to make life simpler and to empower more people to become efficient. Targeting the big corporations with their already vast and readily available resources, is not gonna make much impact to their business. It’s unlike the impact we could make with SMEs,” says Aditya.
With this in mind, Ralali shifted its focus to cater to SMEs and began making the adjustments needed to achieve this goal.
Business starts here
To attract more SMEs, Ralali began introducing new features like the RFQ (Request for Quotation) and included more categories on their website by expanding its SKUs. As of today, there are more than 200,000 SKUs listed under 61 sub-categories in 12 categories available on Ralali, from Machinery & Industrial Parts to Food & Beverage.
“When you’re a big company, vendors are practically queueing outside your office to get your business and you have the pick of the lot. SMEs rarely have any bargaining power,” commented Aditya.
The RFQ feature allows SMEs to select from a variety of offers made from vendors on the Ralali platform so they can find the best option for their business needs. It also helps Ralali determine what customers want in order to optimize its product selection.
Facilitating SMEs to further their business
To become the supplier choice for SMEs, Ralali changed its model to a wholesale marketplace allowing other suppliers to offer bulk purchases on its platform with tier pricing.
Right now, there are more than 3,200 suppliers registered on the platform. The company is continually scouting for sellers through offline activities with various business associations and communities geared towards educating SMEs about the benefits of digitizing.
Ralali facilitated annual transactions are worth more than $150 million or IDR 200 billion, with a basket size per transaction ranging around $1,500-2,000.
Despite focusing on SMEs, big corporations make up for 3-5% of customers for the marketplace.
Empowering the SMEs ecosystem
Not only is the company selling to small, medium sized businesses, it is also providing the skills and knowledge needed to take the first steps online.
The company recently signed a partnership with the Jakarta Cooperatives, Micro, Small, and Medium Enterprise and Trade Agency to help its members expand their businesses online.
Under the partnership, Ralali will provide training and assistance to the SMEs for one full year. Aditya says a team of Ralali consultants are going to share insights on the workings of an online marketplace and how to set up a business on the platform.
“By doing this training, we hope to help these smaller businesses increase their transactions online. Ralali wants to be the platform that connects businesses from Indonesia to all over the world,” shared Aditya.