Moglix: Using tech to disrupt distribution

Small and large enterprises have to procure industrial products from 100s of suppliers. Moglix, a business-to-business (B2B) e-commerce start-up, is trying to use technology to disrupt the traditional distribution channels for industrial products.

Recently, the B2B start-up which specialises in procurement of industrial products such as fasteners and industrial electricals, raised $4.2 million (Rs 28 crore) in a Series-A round of funding, led by Accel Partners, Jungle Ventures and SeedPlus. It had also raised $1.5 million (Rs 10 crore) in November last year in the pre-Series-A round from Accel Partners and Jungle Ventures. Ratan Tata also invested in the start-up in February.

Founded in August 2015 by Rahul Garg, the start-up caters to around 20,000 small and medium-sized enterprises (SMEs) and 100 large manufacturing houses through its platform. It has also partnered with manufacturers and distributors from China and Taiwan.

The company charges a commission of 5-15 per cent on every transaction, which is the only source of revenue. It also plans to use the portal as an advertising and product launch platform, which will be the second stream of revenue. Moglix currently has 200,000 stock-keeping units listed on the platform and serves companies such as Lumax, IndiaForge and Indian Oil. "We are positive on contribution margin and will achieve break-even by 2018," says Garg.

The company will use the funds to expand operations across major industrial hubs, increase the SME customer base and large manufacturing buyers. It also aims to invest heavily in technology and increase its number of transactions on a month-on-month basis. It recently set up an office in Pune to cater to manufacturing companies in Gujarat and Maharashtra.

It also plans to expand its base to the southern and eastern parts of the country.