This bro-sis duo returned to India to bring ecommerce to industrial buyers, and they just raised $2M

Rahul Gupta’s decision to quit his job on Wall Street and move back to India couldn’t have been timed any better. And that’s not just because his erstwhile employer, Lehman Brothers, declared bankruptcy a few months later, unfurling a terrible financial crisis that rocked the world. Rahul’s move in February 2008 to take charge of a country-wide family-run industrial distribution operation with locations in Delhi, Pune, Bangalore, and Kolkata took him into uncharted territory.

Though India has several industrial clusters strewn across the length and breadth of the vast country, the wholesale markets that supply industrial goods like factory automation tools, safety and security equipment, and so on are limited to the few big metropolitan cities like Delhi, Mumbai, and Chennai. The rest of the country has dealers, sub-dealers, sub-sub-dealers, and so on. By the time the goods get to a manufacturer in a second or third tier city, the margin of every player in the supply chain would have been added to the price of the goods. And apart from the lack of price transparency, there’s another huge problem plaguing the sector. There’s very little inventory available with most of the suppliers. The buyers rarely get any variety to choose from.

Rahul Gupta, an engineer from IIT Delhi with Master’s in Operations Research from Columbia University, spotted the opportunity in this problem. His sister Swati Gupta, also an engineer with an MBA from Carnegie Mellon University, was convinced about it enough to quit her job with a New York-based big data analytics company and move to India in 2012. Together, the brother-sister duo launched IndustryBuying.com, a first-of-its-kind online marketplace for industrial supplies, in June 2013. It offers its customers transparent prices, a wide product selection – 200,000 products to choose from – and services in every nook and corner of India.

Now the Delhi-based startup has just scored US$2 million in its first round of funding from SAIF Partners. IndustryBuying.com is a first for SAIF as well. “This is the first time that we are investing in a company with a woman co-founder,” says Mukul Singhal, Principal with SAIF Partners.

Startups and tech are still mostly a man’s world in India. So every exception becomes a cause for celebration.

IndustryBuying.com aims to use its funding to pull in a new set of larger, corporate clients. While the portal has seen good traction already, with “orders doubling month-over-month,” there’s untapped potential to engage big industrial buyers among medium and large companies. “They see our one-stop model, want to buy from us, but are currently constrained by their purchase order system, enterprise resource planning (ERP), and so on. So, we are going to invest a fair amount of money into developing a system to bring corporate buyers into ecommerce. This requires a different set of solutions in addition to the usual ecommerce aspects,” Swati tells Tech in Asia.

Hydraulic surface grinders and boring bars online? How?

Industry accounts for 25 percent of India’s GDP, while retail pumps in about 14 percent. Online retail or business to consumer (B2C) ecommerce constitutes just 7 percent of the overall retail market. Yet the space is crowded with multiple players, from diversified marketplaces like Amazon, Flipkart, and Snapdeal to niche estores like Zivame, Urban Ladder, and iTokri.

So finding a white space in ecommerce to disrupt with technology made perfect business sense. The problem was to get the right suppliers on board as well as the right information on all types of industrial goods. Swati recounts the challenge of being first movers:

Suppliers in this space are very fragmented. They are not used to selling online. We were the first movers in this space. We were the first to offer a pricing platform, a specs discovery platform, and a brand comparison platform. So collecting all the information required and establishing relationships with the suppliers was initially a challenge. Once we launched the platform though, we started seeing orders flow in just a few weeks.