B2B-X www.b2b-x.com

Supplier ExchangeD KuruppathC Olson

19 May 2012

Agenda

• Introduction • Offerings / Value Proposition• Market size analysis• Competitors• Technology• Product Positioning• Demand Creation• Distribution Channel• Cash Flow• Market Survey Analysis• Unknowns / Risks

IntroductionB2BX– Fitting the puzzle together

B2B-X is a cloud based Web 2.0 compatible B2B portal allowing businesses to interact with their suppliers and also trade with them in a secure and reliable environment.

This product encapsulates a standard order management system which could be customized per business and integrated with their existing IT infrastructure.

Offerings/Value Propositions

SUPPLIERS (distributors, resellers, service providers)

Subscription based service that includes: Adding products/services to the portal Access to a worldwide customer base Premium Suppliers can promote themselves over "non-premium"

suppliers in listings in addition to making their contact information public for direct contact with Businesses

Offerings/Value Propositions …BUSINESSES

Subscription based service that includes –

Maintaining a list of all the suppliers that the businesses currently engage with

Searching for new suppliers in the market offering similar/parallel services, enquiring about their cost

Comparison feature of current supplier for a given service/product with similar competitors

Maintain a list of preferred suppliers/potential suppliers so as to be able to contact them in case of emergency, peak times, or lack of supply

Premium Businesses – can get to supplier information directly and bypass portal for making orders as well as receive discounts on other services

Offerings…• Businesses can directly place, manage and track orders through b2b-x

portal. • Available options:

• Option 1 : A default order management system to be driven by manual user entry

• Most suited for: small businesses to place online orders, make / receive payments through PayPal / Visa and track their orders.

• Option 2: Initial involvement with Portal > Configure a cloud based order management system (with required business customizations.)

• Most suited for: Professional and bigger businesses having IT established IT infrastructure

• They could also engage 3rd party System integrators / vendors for these customizations.

Market size Analysis

Total Market Size (Universe of all the possible customers) All businesses who deal with suppliers Example:

Metals Industry worldwide : 400 Billion $ in 1997 (reference: International Metal workers federation)

Electronics Industry world : 1.254 trillion Euros in 2008 (Reference: Electronics market forecast and industry trends 2007-2012)

Served Market Size (Customers reachable by channels identified)

• Metals - $11.0 billion USD (reference : http://www.researchandmarkets.com/reportinfo.asp?report_id=471256&t=e)

• Electronics - $5 Billion USD – India (http://www.isaonline.org/microsites/visionsumit/12/Presentation/VS2012_PNDhoot.pdf)

Target Market Size (Most potential customers who could buy this)

1% of the Served market size

CompetitorsAlibaba.com

Profile Chinese company - HK listed Largest online B2B e-commerce website 35 million users Membership Fee: $5000 and $8000 for Chinese Suppliers Multilingual – localized

Pros Well known in the market Open to all

B2B-X Differentiator Comprehensive order management system. Implement order management system for the business.

Competitors…Manta.comProfile

Chinese company behaving more like a company profiles directory

B2B-X Differentiator Comprehensive order management system. Implement order management system for the business.

Made-in-China.comProfile

Manufacturer directory and doesn’t include directories for other supplies, distributors etc.

Mostly China focussedB2B-X Differentiator

No focus on the geography of the manufacturers and all can participate

Comprehensive order management system.

Implement order management system for the business.

TechnologyCloud based / Web portal – http://www.b2b-

x.com/ Manages businesses / suppliers profiles Business specific - Suppliers list including

Current suppliersPotential suppliers

Business specific - Suppliers list for business specific products

Communicate with suppliers in / out of portal User specific - transactions / orders for every

customers Standard implemented solution - customizable

based on per customerBackend

Database based repository EDI module Flat file handling module Web-services based integration API available to

enable integrated with other systems in enterprise Auditing and Archiving

Product PositioningFor : Businesses who employ suppliers. They could be Manufacturers, retailers, distributors, resellers, or service providers.

Who : need to focus more on their business and getting their product(s) to the maximum number of potential customers without the labour intensive aspect of using multiple sources.

The b2bx web portal is a cloud based Web 2.0 compatible B2B portal allowing businesses to interact with their suppliers and also trade with them in a secure and reliable environment.

Demand Creation

• Influencers – customer references

• Search engine marketing / optimization

• Partners / System Integrators

• Trade Association partnerships

• Blogs

• Communities

Distribution Channel

• Primary channel is Web based portal

• System Integrators aka SI’s / Value added resellers

• OEM’s / Partners

Cash Flow - Costs• Initial Costs: $5 million - $8 million

• Resources (IT team; UI/Web design team; Management Team ; Sales team; Legal consultation; 3rd party agreements)

• IT Infrastructure to host cloud based infrastructure• Development and Maintenance of portal

• Customer acquisition costs = ~$451.67 per customer

• 200 customer/month for 1 year $ 1.1 Million

Cash Flow - Revenue• Revenue

• Transaction fees: 0.5 to 2% per transaction

• Minimum amounts:

Transactions Value Commission rate Average Revenue>20000 USD 0.50% 100.0010000-20000 USD 1.00% 150.005000-10000 USD 1.50% 112.500-5000 USD 2.00% 50.00

No: txnsAvg worth

per txnRevenue as

commission per year200 20000 20,000.00

1000 15000 150,000.004000 5000 450,000.00

10000 2500 500,000.00 Total 1,120,000.00

Cash Flow – Revenue…• As per one of the statistics:

• average B2B transaction value is $75,000 (http://www.informit.com/articles/article.aspx?p=20999)• Assuming 2400 Customers x 10 transactions per year x $

75000 x average 1.75% transaction fee = $ 31.5 Million

• Supplier and Business Subscriptions: @ $15/month and 2400 Subscriptions = $36,000 year 1

Market SurveyAn online market survey was designed and rolled out to different types of customers viz. Distributors, manufacturers, resellers and service providers.

Survey Link https://docs.google.com/spreadsheet/ccc?key=0AtrBHG6cLHukdDRZRG9MaFNUMXNNOTZ6SHMtTEpzRWc

Intent • to determine that a

"comprehensive" B2B exchange would be of interest to potential customers.

Market Survey …Our survey gathered information about -

• respondent, in general terms, • any history of online B2B use, vendor consolidation • willingness to look into online B2B commerce• willingness to pay for an online service. Also• to determine interest in future features of a B2B exchange.

Market Survey - Results

Response Statistics :• Sent to roughly 45 people • Received 18 respondents - 40% response rate (much

higher than traditional response rates)

Survey Results Highlights• Manufacturers and Distributors dominated the responses• Business size leaned towards a small business classification• The issue of consolidating vendors was evenly split

between Yes and No• The majority of respondents utilize ecommerce in their

annual spend• The majority of respondents indicated they are willing to

use a 3rd Party to access more customers/vendors as well as allowing a 3rd party to assist in the transaction process

• The results also showed a willingness to pay a subscription fee for use of an online service

Market Survey – Results Analysis

Survey Analysis:•Distribution market is primary target market & Manufacturers being second most important target market .•Distribution market should be a target as they would sell product on the portal + buy produce from other vendors via the portal. •Most respondents - were small businesses

• 100 or less employees and 50 or less vendors•Mobile applications - currently not a requirement

• Important a potential feature for future revisions

Market Survey – Results Analysis…

• Ratings of Price, Shipping Costs, Support, and Availability showed • Price is most important in Selling • Availability is most important in Purchasing• These results to be used to determine an algorithm for a

Vendor Rating system within the commerce system• Average Subscription fee approximately $15/month most popular

option• Access to more customers/vendors was the primary response for

using a 3rd party

Looking back - Survey Issues• The survey was a tiny fraction of the potential market size and may

not represent the views of the entire Target Market.• A few respondents did not answer all the questions• A few respondents did not properly rate categories in the

Purchasing/Selling area• The business types may have been skewed in the

Manufacturer/Distributor types• The survey could have been a bit more comprehensive

Unknowns / Risks

• Legal issues around taking orders and fulfilling them.

• Costs around these would be passed over to the businesses

• Optional Escrow services – who offers them and what is involved in these.• Costs around these would be passed over to

the businesses

Thank You !