NOVEMBER 30, 2017

Index
B2B E-Commerce – Potential 3

E-Commerce Trends - Global vs India 4

Primary Research on B2B platform value proposition – Buyer & Seller 5-6

Category Selection Framework 7-8

Market Size by Category – Office Supplies, Healthcare, MRO & Construction 10-11

Buyer Research Findings on Office supplies 12

Companies can save minimum 25% of their Office Spends 13

Offline vs. Amazon B2B – Basket Supply Opportunity 14

McKinsey framework 15

What Buyers value in Office supplies ( buyer offline behavior) 16

Value Proposition - Buyers 17

Value Proposition - Sellers 18

Dynamic Pricing – Unique Value Proposition 19

Technology Options 20

www.ascendum.com 2
B2B E-Commerce – Lot of potential to grow

$ 470B
$ 700 B

Indiamart $4,500M

Industrybuying $15M
$ 300 B
TradeIndia $10M

Others $50M

$ 4.7B
2015 2020

2017

Source: Walmart Report 2014 , Indiamart site, INC42.com www.ascendum.com 3

E-Commerce Trends - B2B in India is ready to take off

Global trends from survey of 450 manufacturers and distributors worldwide

Huge growth in Mobile and

Internet penetration.
● B2B Commerce is becoming a
priority for buyers
● Customers are demanding online
order capability
● E-Commerce is positively
impacting Order Values & Order
Frequency because it is more
convenient to discover, compare
and complete value buying.

Source: Handshake Survey, IAMAI-IMRB-2016, STATISTA 2017

www.ascendum.com 4
B2B Primary Research: Buyers interested in a new B2B platform, and group buying

Research Sample :
Targeted Cities Ahmedabad & Bengaluru
Wholesalers & Retailers across different industries i.e., Healthcare, Industrial Supplies, Office Supplies, Electrical & Electronics
Targeted Users supplies
Reached Approached 100 Buyers (Retailers/ SME)
Interviewed 29 Buyers
Buyer Analysis
Buyer Insights
• 55% of the buyers showed interest in B2B platform if offered
• Buyers are more interested in getting a better online B2B platform which
• 45% of the buyers find suppliers thru online portals like Indiamart or provide best convenience, service & better price benefit
Justdial and remaining buyers use their referral network to find buyers
(24% find through Indiamart & 76 % find through Justdial) • Finding & Reaching right suppliers is a pain for all buyers when they want to
get quotes for their requirements
• 52% of the buyers are interested in Group buying
• Market Intelligence on Price is a pain area for buyers to get better price
• 20% of the buyers using WhatsApp as a source for finding suppliers &
products - They are part of few WhatsApp Group advantage

• 10% of the buyers provide feedback to the suppliers via Phone/ Email
• 55% of the buyers prefer online payment or Cheque mode for supplier
payment
• 75% of the buyers prefer logistics by the supplier own logistic mode
rather than third party logistics
• 55% of the buyers expects replacement for defective/ damaged goods
rather than refund or Credit Note
• Buyers are more interested in Group buying in order to get best price in the
Market
• WhatsApp is being used strongly in the Market to find & communicate with
suppliers
• Buyers expect best convenience & service when it comes to timely delivery
of goods & handling returns
• Payment Guarantee & flexible payment terms are expected by the buyers

www.ascendum.com 5
B2B Primary Research: Sellers interested in a new platform, selling to group, and
use Whatsapp

Research Sample :

Targeted Cities Ahmedabad & Bengaluru

Wholesalers & Retailers across different industries i.e., Healthcare, Industrial Supplies, Office Supplies, Electrical & Electronics
Targeted Users supplies
Reached Approached 400 Sellers (Wholesalers/ Manufacturers)
Interviewed 159 Sellers
Seller Analysis
Seller Insights
• 34% of the sellers are interested in the B2B platform
• Sellers showed interest in using the B2B Platform that we offer to get
• 28% of the sellers are interested in offering Group buying deals for the better visibility & sales
buyers
• Sellers are more interested in getting online which will be a great
• 70% of the sellers are available online in other B2B Platforms like distribution channel to get new buyers
Indiamart or Justdial or WhatsApp (45% are only on Justdial & 55% are on
Indiamart & Justdial) • Digital Catalog of Products are required by the sellers to showcase their
products to any offline/ online buyers on demand
• 32% of the sellers are also using WhatsApp as a channel to reach buyers
& showcase their products • Sellers are more interested in Group buying offers to increase their sales

• 40% of the Sellers request reviews from their buyers, their preferred
channel to collect reviews are Phone & WhatsApp – but the conversion is
less than 10%
• 45% of the Sellers have online Catalogue created by their own and Portal
(15% Catalog is created by Portal & 85% are created by their Own)
• Sellers don't have a mechanism to capture review/ rating about their
service or Product
• Sellers don't get insights or support to forecast demand
• Sellers have received false leads from portals & classifies like Indiamart &
Justdial and leads received via Indiamart or any other online B2B portals
are less convertible

www.ascendum.com 6
Category Selection Framework
B2B market categories and subcategories were evaluated after research and interviews with experts in industry.
The entry of a B2B marketplace in a specific business category is driven by market entry forces.

• Market Size • Price variation from • Standard Product • Multiple businesses

• Market share of manufacturer to Specs. buying same basket
unorganized market retailer • Availability of Product of products from
• No of Sellers • Payments/credits Catalogue single seller

• No of Buyers • Customer Acquisition • Internet Usage by • Ease of Logistics to

• Average Purchase Cost Stakeholders multiple buyers

• Extent of Government • Cost of Buying • Internet usage for • Geographic

Regulated Free • Cost of Logistics business concentration of

Market • Registered Tax sellers and buyers

Payers

Value Creation Online Commerce Basket / Group

Market Opportunities Buying Opportunities
Opportunities Readiness

www.ascendum.com 7
Category Selection Framework( To be further validated with
market research)
Office Supplies to be most attractive followed by Healthcare Supplies & construction
Office Supplies Construction Material Healthcare Supplies MRO

Market Opportunity 4.09 4.45 3.00 4.25

Value Creation Opportunity 4.07 3.97 4.14 3.29

Online Commerce Readiness 4.40 3.16 4.60 3.40

Group Buying Opportunity 3.75 2.52 3.00 2.60

Overall Average 4.08 3.53 3.69 3.38

Office Supplies & Healthcare

• Internet penetration & usage is higher amongst buyers and sellers Low 1 -3 Low suitability for B2B Marketplace.
• Planned and repetitive purchases
Healthcare Medium 3 - 4 Intermediate suitability for B2B Marketplace.
• Value creation is higher as prices vary a lot from Mfg to retailer
MRO High 4-5 High suitability for B2B Marketplace.
• 50% of purchases are unplanned
MRO & Construction
• Basket/Group buying is lower due to unplanned buying and higher ticket sizes

www.ascendum.com 8
 Market Size: By Category based on secondary data.
Market research Organization to be finalized post discussion
Office Supplies Construction

$5,000 $1,000
$474 $3,000
$4,000
Office Products
Ceramic Tiles
$2,060 Housekeeping Bathroom Fittings
Products Air Conditioning
Office Furniture Kitchen
$53,500
$5,450 Others
Office Equipment

$316

Healthcare Supplies

Research Organizations Price Time of Delivery

Contacted Quoted $155 Syringes & Needles
$60
Bandages & Dressing
IMRB TBG TBG
$110
Suturing Materials
Research and Markets $18,500 8 weeks $675
Other Consumables
Market Research Store $10K-$13K 4-6 weeks

Source: Deloitte, PWC, Technavio, Techsciresearch, Grainger, SKP Group

www.ascendum.com 10
MRO (WIP)

$20.0B
Global Leaders of MRO in India Revenue/Findings
Sonepar $22.4m(Annual Report)
Rexel India $80m(Vikas Garg, Rexel India)
Grainger Annual Reports WURTH own b2b ecommerce site
bulkMRO Major Indian Player

Beroe’s report About Beroe Research Company

• The need for an integrator in APAC region is high as the market maturity is lower • 325+ Analysts & 1800+ Experts
• Worked with 175+ Fortune 500 Clients & 5000+
• Availability, Performance & Quality is most valued.
• Headquartered in Holly Springs, North Carolina
• E-commerce growth opportunities are higher with smaller customers • Started in 2005
• Grainger has branch networks from where emergency items can be procured. • Very good procurement platform from where
intelligence is drawn

Source: Grainger, Beroe 2015 Globa MRO Report

www.ascendum.com 11
Office Supplies: Primary Buyer Research: Convenience, Service and
Price are important that current online platforms don’t provide COMPANY Annual
spend(lacs)
VIS *** 2.4
Calls were done with 14 companies from different verticals across India for office supplies of total Delta Mobility 3.0
purchases worth Rs.9.58 Crs annually. We spoke to both buyers and decision makers.
MSBC 2.3
• They have not been approached for online marketplace thus first mover advantage Cfirst 2.4
• Buyers are willing to move to Online if conveniences are met IANT-110 offices*** 840.0
Cignis Datamatics 2.88
• Convenience and Service is equally important as Price: Lower price is a value for customers only if
convenience, safety and negotiating parameters are met. Satmetrix 2.64
Satmetrix 1.8
• They buy all their supplies from single vendor for convenience and service. Same day or next day delivery
with 30-90 days credit period. Cleartrip*** 24.0
Zebra Tech 9.6
• Transparency: Decision makers value transparent prices without any possibility of commissions and genuine
products. Three of them buy from Metro cash and carry even if it is inconvenient Infiniti h*** 3.6
Brillio 6.0
• Prices are not real time: Buyers get prices for one year and they don’t recheck real time prices even after a
year C-Metrics 4.2
Aegis (24 48.0
• Competitors like Amazon and Industry buying will not be able to match the convenience and service Offices)***
required by buyer of office supplies. More details are on next slide.
Ascendum 3.6
• Low risk for frauds & better buyer credibility
Ascendum KPS 1.2
Sourcebits 3.0

Total spend per year – 9.58Crores

*** - Interviewed decision makers

www.ascendum.com 12
 Companies can save minimum 25% of their office spends by using
platform as they are not getting the lowest price

On comparing office purchases by three companies, it was found that they are paying 25-53% more as compared
to Ascendum on 11 common products. If we compare all products, it would be minimum 20% savings.

S.No Product Name Variant ASC BLR Cleartrip QTY Amount Savings % Savings IPL QTY Amount Savings % Savings SourceBits QTY Amount Savings % Savings

Colin Cleaning 500ml 79 99 6 591 143 24% 105 7 735 237 32% 87 10 870 84 10%
1 Liquid
2 Duracell Battery AA 40 45 12 538 69 13% 45 12 538 69 13% 42 144 6,083 392 6%
3 Duracell Battery AAA 40 0 0 41 10 413 17 4% 0 0

Harpic Cleaning Liquid 76 97 20 1,946 561 29% 92 7 645 142 22% 89 18 1,593 274 17%
4 Liquid
75
151 196 12 2,352 697 30% 34 0 0 196 5 980 290 30%
5 JK Copier Paper GSM

Lizol Floor 500ml 78 0 0 85 9 765 70 9% 83 10 832 57 7%

6 Cleaner
7 Cello Tape 1inch 8 18 10 177 202 114% 18 2 35 40 114% 21 12 255 401 157%
8 Notepad 1\6 15 24 40 944 508 54% 22 60 1,344 619 46% 0 0
9 Tissue roll Big/XL 21 26 170 4,413 981 22% 33 50 1,652 918 56% 38 212 8,005 6,226 78%
10 Urinal Screens 166 179 15 2,688 207 8% 0 0 480 3 1,440 2,714 188%

Vim Dishwash 500ml 114 136 4 543 104 19% 186 5 928 584 63%
11 Liquid
Total 13,649 3,368 6,669 2,215 20,986 11,022
Savings % 25% 33% 53%

www.ascendum.com 13
Offline vs. Amazon B2B & Industrybuying: An opportunity to supply basket of
products from single Vendor with huge savings

Analyzed 3 months purchase (Monthly Basket – Monthly Purchase) data of 7 companies – Ascendum, KPS, Sourcebits,
Cfirst, Satmetrix, Cleartrip & Institute of Product Leadership.

Analysis
● 90 different types of office supplies are being consumed by 7 companies
● 70% to 85% spend is on top (30 out of 90) common products across 7 companies and all products are available from single supplier
● 60% to 75% of total office supplies spend is on Cleaning Supplies.
● 100% of the buyers prefer buying all their office supplies from a single vendor for better convenience and service
● Only 25 % of these products are available on Amazon B2B currently and 35% of the basket items are currently cheaper on Amazon B2B
● 25 % of these products are not available with Industry buying and 56% of non available products are top consumed products (Eg: Cleaning liquid, Paper
products et). Industry buying has MOQ restrictions, making it inconvenient to buyers

Insights
● Buyers can create a basket of products (recurring purchase items) and make it as a monthly purchase list
● Suppliers have agreed to offer additional discount up to10 % to the buyers if we commit the basket of 50+ companies
● Buyers don’t have transparency in the pricing and they are being charged more by the vendors
● None of the online portals satisfy the buyer requirements or provide better convenience
● It is convenient to buy all products from one vendor as it helps in billing, ordering and faster delivery.
● Monthly Basket Order model fulfills the buyer requirements & adds value to their monthly office supplies purchase.

www.ascendum.com 14
 Office Supplies GMV projection at 5.4 mn USD – SME’s across 4 Cities

Opportunity

• Company Segment - SME's with employees up to 1000

Cities # of Companies

Ahmedabad 2440

Bengaluru 4660

Mumbai 9230

Delhi 11665

Total 27995

• Average Spend Per Company - 2,50,000 Per Annum

Projections

Sales Conversion @ 5 % (1400 companies) within a year of Launch

Projected GMV - Rs. 35 Crores (5.4 million USD)

www.ascendum.com 15
 Office Services (Security Guards) - Per Office Revenue can be 4x i.e. Rs. 10
lacs per office if we add manpower service like security guards to platform

• These requirements are commoditized based on skills of the service needed and the salary offered to the guards.
This makes it easier for a facilities manager(buyer) to order these services easily online.
• Ascendum office services (security & housekeeping) spend is 2.3lakhs which is 6x of office products spend
• They operate in a very segmented and organized market which is almost fair and open. This should make it easier for
us to aggregate security requirements from different smaller firms and present as one big contract to Perigrine.
• They will not accept very small contracts for a company which is less than 5 guards or less than 1 lac volume of
transaction. Hence aligns with our idea of group buying.
• They have found it harder to break-in to a new geographical location such as Mysore. If we can aggregate the
security requirements for smaller vendors in Mysore and create a group buy offer, this will be enticing for a supplier
like Perigrine.

Perigrine-Security services is willing to reduce their margin to 5% from 10% if we can group buyers for them.

www.ascendum.com 16
McKinsey Framework
Value Add for Buyers

Goal
Factors Weightage AMZN IndiaMart Industry Buying Pwer2SME AliBaba Open Commerce
Service 35% 2 1 2 2 2 4
Convenience 25% 2 3 2 2 2 4
Price 15% 3 1 3 3 4 4
Safety 20% 5 1 3 3 5 4
Special Deals 5% 4 1 4 4 1 4

Composite 3.4 1.4 2.8 2.8 2.8 4

Value Add for Suppliers

Goal
Factors Weightage AMZN IndiaMart Industry Buying Pwer2SME AliBaba Open Commerce
Reach 25% 3 5 2 2 3 3
Conversion 25% 2 3 2 2 1 4
Margin 25% 1 4 3 3 4 4
Safety 10% 5 1 4 4 4 4
DSO 10% 3 4 2 2 2 2
Special Opportunity 5% 3 1 4 3 2 4

Composite 3.4 3.6 3.4 3.2 3.2 4.0

www.ascendum.com 17
What Buyers value in Office supplies ( buyer offline behavior)
Prefer quick delivery - current trend of
DELIVERY 1-2 hours to a maximum of 1 day
• None of the current
marketplaces provide delivery Currently buyers get a flexible credit of
within 2 days minimum 30 days to a maximum of 45 days
CREDIT • Industry Buying has EMI – using Innoviti
• Amazon & others don’t provide initially

Prefer dedicated support directly with

the seller for all their purchases
SUPPORT • Except Indiamart most market
places provide support
PAYMENT MODE
Due to fear of counterfeit products, buyer
verifies the product every time on their
QUALITY purchase
• Online marketplaces don’t have an
effective way to check for fake items
RELATIONSHIP
Buyers feel ordering / returns to be
easy via phone and in person,
EASE OF ORDERING/ compared to the complexity involved
RETURNS in doing online
• All marketplaces require buyers
to return within 2-7 days time
AVAILABLITY
Prefer not to pay upfront and most of
them rely on cheque as mode of payment
Most of the buyers have a long lasting
relationship and they don’t seem to be
comfortable, when asked for a switch
• Online marketplaces are nascent hence
the relationships are new.
Not all products are available online,
whereas a single vendor is able to meet all
their requirements
• Amazon has only 25% of products
available in Office supplies category while
Industrybuying doesn’t have 25%.
www.ascendum.com 18
Value Proposition for Buyers: Convenience, Service
and Transparency with 5 to 10% savings
Price Convenience Safety Service Special Deals

• Lowest price in the • Choice of Products & • Verified Suppliers • Faster dispatch & • Special deals are not
Market Suppliers • Safe Delivery of Delivery of goods provided by Sellers.
• Bulk Purchase • Product Comparison goods • Text/ Video Chat with
Discount • 24/7 Online Ordering Suppliers
• Basket Purchase • Real time order & • Buyer Support
• Dynamic Pricing shipment tracking • Dispute Management
• Automated Monthly • Basket buying
Ordering • Credit period through
• Transparency in suppliers
transactions to
eliminate malpractices

www.ascendum.com 19
Value Proposition for Suppliers: Easy and More
business with higher margins
Reach Conversion Margin Safety DSO Special Deals

• Visibility of • Reach qualified • Pay low • Assured payments • Shorter • Special deals are
Products buyers commission from buyers Remittance cycle not provided by
• Find buyers from • Basket Sales • Joint Promotions • Safe delivery of • Cash Sales or Sellers.
different cities • Repeat Purchases • Inventory cost Goods dispatched Cash on Delivery

• Enable Online • Special Promo for reduction • Dispute • Purchase driven

Channel Bulk Purchases • Get discount on Management Credit Period for

• Digital Catalog of • Behavior based commission based • Self-delivery of Buyers

Products Product on Sales Goods

recommendations • Volume based
• Display of Ratings pricing from their
& Reviews Suppliers

www.ascendum.com 20
 Dynamic Pricing – Can be our UVP

• In dynamic pricing, the price is not firmly set; instead it changes

based on changing circumstances, such as increases in demand at
certain times, type of customer being targeted or changing
marketing conditions.

• Not much attention has been paid to marketing and pricing

research in B2B environments. Researchers in Columbia Business
school built a model that could help sellers develop dynamic pricing
model. Their optimal dynamic pricing strategy based on their model
suggests a 52% improvement in profitability compared with status
quo.

• We can work on a proprietary dynamic pricing that helps sellers get

the best margin or buyers get the cheapest price.

• We can definitely work on a dynamic pricing model for group

buying for a basket of products by buyers.

Source: https://www0.gsb.columbia.edu/mygsb/faculty/research/pubfiles/5122/B2B_relationships.pdf

www.ascendum.com 21
Technology Options
EXTENDING AQUIIRE
Pros
• Helps get a robust product out in
the market that can handle scale.
• Readily available features like
Search, Catalogue, Product
Details page etc…
• Relevant B2B Marketplace
features can be taken back into
Aquiire.
• We can branch out as a new IP
from an existing one (Powered by
Aquiire).
Cons
• Development efforts for native
mobile app is additional.
• Development (Web & Mobile)
required to make it suitable to a
marketplace will require about 4-5
months duration.
Cost: ~22 Lakhs (MVP Only)
Go Live: 5th Mar 2018
MAGENTO
Pros
• Cheapest and best solution to get
an MVP out really quick (Under 2
months).
• There are several extensions that
can be leveraged to rapidly build
features like Tiered Pricing,
integration to Pay U/PayTM etc.
• Both Web and mobile can be
done with the same efforts.
Cons
• As extensions are 3rd party.
Stability and support over a long
term maybe questionable.
• While our UIs can be applied and
customized, they may not render
as good compared to the other 2
options.
Cost: ~10 Lakhs (MVP Only)
Go Live: 31st Jan 2018
NEW MICRO SERVICES PLATFORM
Pros
• Designed and architected for a
marketplace.
• Using the micro-services
architecture, there is a significant
benefit of ease of scalability and
maintainability.
Cons
• The longest efforts for
development and Go To Market.
It would be at least 6 to 7 months.
• Native mobile development will
require additional efforts.
Cost: ~45 Lakhs (MVP Only)
Go Live: 14th May 2018
www.ascendum.com 22
Healthcare Supplies – Initial Thoughts (WIP)

Reached 19 suppliers via Phone and received clear response from 2 suppliers, others have asked for a face to face
discussion.

Insights based on the conversation with 2 suppliers:

• Indiamart provides more false leads to the suppliers

• Provides credit period up to 30 days based on relationship with buyers
• Commonly consumed items are delivered in 1-2 days, low consumption items are delivered within 15 days
• Payment remittance on time is a key problem when dealing with Major Hospitals
• Cheque is their preferred mode of Payment

www.ascendum.com 23