Before we get to today's story, a quick recap on all the things we covered this week. On Monday we spoke about the battle between Parle and Udaan, next we saw how trees and bees can impact credit ratings. On Wednesday we talked about diabetes treatments, then we discussed how Google is getting beat at its own game and finally we reviewed the farm economy.

With that out of the way, let's get to today's story shall we?

The Story

The Aditya Birla Group is a behemoth. What started as a simple cotton trading entity in the 1800s has now morphed into a sprawling multinational empire with a presence in textiles, cement, chemicals, telecom, fashion, and financial services. The brand name is everywhere.

But of late, it seems as if there’s a new itch — to do more and tap new areas of business. Especially at its flagship cement unit Grasim.

Last year, the company made a big splash by announcing its intention to enter the decorative paints business. And that meant a direct conflict with the big daddy of the industry — Asian Paints. Many analysts even called it the paint industry’s “Jio Moment”. You know, in reference to how Reliance Jio disrupted telecom. Now it’s obvious that such an ambitious venture requires a boatload of cash. So after first announcing that it would be setting aside ₹5,000 crores for this business, it suddenly decided it would double that amount and declared that it was going after Asian Paints with ₹10,000 crores in its bank.

And even as it gears up for a battle in an already entrenched market, Grasim is entering into another battle. This time, in a market without any large or established players. We’re talking about a very niche B2B e-commerce platform — for building materials. On July 20, Grasim announced that it would spend ₹2,000 crores over the next five years to disrupt this market.

Hold on now…you could argue that the paint business kind of makes sense. After all, Grasim has a strong foothold in that market. It sells wall care putty under the brand Birla White. And we know that putty and paint go hand in hand. Kind of like biscuits and chai. Grasim could leverage the reach of its putty distributors and maybe get them to sell its own paint.

But B2B e-commerce is a different beast. Why on earth would Grasim, a company that manufactures and sells its own brand of cement (Ultratech), even consider an e-commerce foray? Won’t it mean that it has to sell cement manufactured by other brands too?

Well, that’s true. Grasim’s plan seems to be to distribute the entire gamut of building products — we’re talking cement, electrical stuff, tiles, plywood, and a lot more. That definitely means Grasim will have to supply products other than just its own Ultratech Cement or Grasim Paints or Everlast Roofing.

But Grasim’s contention is simple. It says that the building material procurement industry is worth $100 billion. And the industry is still stuck in the stone age — meaning that only 2% of transactions happen digitally. So it wants to be the first big player off the block and make some money in the process. As an added bonus, setting up an e-commerce platform doesn’t really require a humongous capital outlay. Unlike paints.

But will it work?

Well, we don’t know for sure. But let’s look at the playbook of a startup that tried to disrupt this space in 2016. A unicorn startup (last valued at $2.5 billion) called Infra.Market.

If you haven’t heard of them before, here’s a simplified version of its business model. Infra.Market built out a platform and told construction contractors, “Hey, I’ll be your one-stop shop for everything construction. Gone are the days when you had to get multiple quotes from multiple vendors. Let me do the dirty work of putting it all together for you to just make the final decision.” It worked. Entities like the Kochi and Delhi Metro Rail flocked to Infra.Market for their needs. And Infra.Market turned profitable from day 1.

Then, it did something else. It decided that it didn’t want to just remain a middleman connecting construction contractors to material distributors. It wanted to create its own brand in cement and steel. So it struck deals with manufacturers who could help them get there. It took this route one step further in January this year and bought a 24% stake in the legacy business Shalimar Paints.

Infra.Market didn’t have a brand name that people related to. It was just another unknown entity trying to digitally disrupt B2B construction. Yet, it built up the business from scratch and managed to make a mark.

Infra.Market did what most e-commerce aggregators do. Get manufacturers to list their wares. Grab users and drive sales. Track data. And then launch private labels to make more margins for themselves.

And if you think about it, Grasim is following Infra.Market’s playbook. In reverse.

People trust the Aditya Birla Group brand already. It has a whole array of its own products. It is even trying to get a foothold in paints. But the hard part will be convincing other manufacturers to let it distribute their products. After all, since Grasim has in-house brands, and has the financial muscle to enter new areas of business in the future, why should other manufacturers actually trust its intentions?

All we know is that it’ll be worth tracking the journey of Grasim’s B2B e-commerce ambitions alongside Infra.Market’s expansion.

Until then…

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Until then…

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