September, 24, 2017
How Moglix is Evangelising Technology into Industrial Procurement
08 Sep
2016
Posted by Madhumita Prabhakar

Rahul Garg, whose online B2B industrial products procurement venture, is backed by Ratan Tata, Accel and the like, believes that the next three years for him and his competitors will be about evangelising technology in India’s manufacturing and procurement space.

As I begin the interview with Rahul Garg, the founder of Moglix, a B2B online industrial product procurement startup, I rattle off names of some startups I had spoken to earlier in a similar space. Industry Buying? MatexNet? I ask. He indulges in a brief conversation about their business models and quips, “Even if there are 10 players in the market, it’s a good thing because the need of the hour is to evangelise technology in this segment.”

To back his claim, he quotes some numbers. Currently, only 0.25 per cent of the industrial products procurement space in India is tech-enabled. “Imagine the growth this sector could witness if the process were made more structured,” he echoes. Not stopping there, he continues to cite numbers from recent research reports on the potential that India’s manufacturing sector has, as compared to global players, and how technology could in-turn accelerate its growth. According to him, India’s manufacturing sector is roughly valued at US $300 billion, approximately 16 per cent of the GDP. If India makes the right moves in boosting this sector, it can contribute to 25 per cent of the GDP by 2025. “Meaning, the market share we will be looking at is US $1 trillion in 10 years. And, we want to evangelise at least 15 per cent of it in the next three years,” he cites.

But what led Garg, an ex-Googler to turn entrepreneur in the first place?

The Early Days

While it was no startling realisation, Garg noticed the glaring gap in India’s procurement space after he invested considerable time in talking to customers, industry stakeholders and doing his own research. “I particularly got interested in this space after Make in India was announced in 2014, and the focus went towards India’s manufacturing sector,” he says.

With considerable experience in technology sales and marketing and product development, but not so much in the core manufacturing sector, every step with Moglix turned into a learning process for Garg. “When we started out with Moglix in April 2015, people didn’t even believe that B2B ecommerce could take off,” he recalls. Not only was the model met with scepticism, but even the small businessmen and vendors were reluctant to move from traditional, offline procurement where goods were available at negotiated rates, sold with paper approvals and more. “Thankfully, India is so diverse that if one doesn’t agree, there’s always someone else willing to experiment with your model,” he adds. It was through the early customers, and their referrals that Garg and his team began forming a cluster of manufacturers and distributors on the platform. “Although there are people who want to see you around, earning their trust will take time,” he notes.

In the early days, Garg and his team spent a considerable amount of time interacting with their clients, to understand how to make every division; be it procurement, production, sales, marketing or distribution, better. “Only if you go out and work with them will you understand what they need and how you can add value to them on a day-to-day basis,” he explains. For example, for clients who use ERP systems, they have an assigned item code they need to enter to fulfil their requirement. Hence, Moglix had to design a mechanism to map out similar item codes on their platform. A second learning they had was that prices had to be constant, instead of varying every once in a while. “A third key lesson we learnt was that these vendors need faster results with respect to resolving issues or escalating certain things. We can’t tell them we’ll get back to you in 24 hours.”


Once during a breakfast discussion, I asked Ratan Tata, how does Tata preserve its brand name so strongly? And he said, you, as a company, should decide whether you want to be on the right side or wrong side (in terms of business ethics, values, value proposition and more). You can’t be five per cent on the wrong side and claim to be right.

The Big Buck

The B2B ecommerce startup raised its first round of funding, to the tune of US $1.5 million, in October 2015, from Accel Partners and Jungle Ventures. Soon, in February 2016, it attracted investments from Ratan Tata, for an undisclosed amount. The funds, Garg claims, were channelized towards scaling the overall business.

An angel investor himself (having invested in startups such as Tookitaki, Pitstop, GoVoyagin and more), Garg cites that there’s no right or wrong pitch when approaching investors. “It’s not about how you present but what you present. Your business should add value and you need to have the conviction to steer it in the right direction. That’s all matters,” he opines.

On his association with Ratan Tata, he recalls, “Once during a breakfast discussion, I asked him, how does Tata preserve its brand name so strongly? And he said, you, as a company, should decide whether you want to be on the right side or wrong side (in terms of business ethics, values, value proposition and more). You can’t be five per cent on the wrong side and claim to be right. That makes a difference”

With over 100+ employees currently on board, and 100+ manufacturers and 1,250+suppliers on the platform, Moglix has its eyes set on capitalising at least 15 per cent of the manufacturing segment in the next three years. “While it’s all about technology evangelisation now, in two to three years competition will be all about who provides better service and quality. At that point, we want to achieve market leadership,” he envisions, on a concluding note.


Snapshot

Moglix

Founder: Rahul Garg

Year: 2015

Concept: A B2B ecommerce industrial products procurement platform

Investors: Ratan Tata, Jungle Ventures, Accel Partners

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