Things are moving slowly at Indiamart – Industry News

It’s been a tough few years for IndiaMart InterMesh, but Dinesh Agarwal is betting things will get better. The CEO of the country’s largest B2B portal, aimed at small businesses, hopes the pace of customer additions will accelerate. Since June 2023, approximately 2,000 to 3,000 customers have been added each quarter, compared to approximately 5,000 per quarter previously. Additionally, at present the churn rate among providers, especially those on the so-called silver plan, is worrying, as it has increased from 4-5% before the pandemic to 7-5% before the pandemic. 8% since Q1 FY24. This needs to come down. Otherwise, the steady decline in collections over the past six quarters, which slowed to 5% year-on-year in Q2FY25, will be difficult to reverse.

Agarwal admits there is a problem. He concedes there has been some lack of attention to customer service and identifying the right suppliers. Many of those who were brought onto the platform were micro-units and simply did not have the means to supply the goods ordered.

Experts say leads were randomly sent to a dozen vendors at a time, meaning conversion levels were low for many. This was particularly true for the money category of suppliers. Although they pay just Rs 28,000 per year – far less than the Rs 45,000 charged for gold plans – and generate only a quarter of the company’s total revenue, they are an important channel for the future .

High customer churn could be more of a “product problem” than a sales problem, experts say. Leads sent to Silver customers are limited, leading to low ROI and higher churn.

Shobhit Singhal of Anand Rathi Securities believes that supplier onboarding needs to be more focused. “Dedicated teams need to impart appropriate knowledge about the platform, different features, available options and steps to improve visibility,” he says. Additionally, to reduce competition, a single lead should be assigned to a smaller number of suppliers, such as 5-6 suppliers rather than 9-10, within a specific region. “This would reduce competition and suppliers would be encouraged to stay on the platform instead of using other avenues,” he says.

Much of this problem is being corrected, says CEO Agarwal, who admits that the company was looking for growth by simply adding buyers and sellers and agrees that it could take 6 to 9 months for the business stabilizes. The process of sending leads to vendors has been streamlined, with only 5-6 vendors receiving leads simultaneously. The leads are more relevant. Minimum quality guidelines for sellers are being strengthened with the implementation of more filters. Sellers now need to upgrade their catalogs and provide many more product specifications.

The idea is to make the platform much more robust and improve the user experience both on the website and the mobile application. For experienced sellers, more sophisticated tools are implemented while features are added to help new buyers and sellers navigate the platform more easily. This should help attract more regular subscribers. Currently, that figure is just over 50% for shoppers on a 90-day Silver plan and just 30% for those on a monthly Silver plan. An ideal figure would be 66%. “Our matching algorithm works correctly most of the time now. And out of them, 20-30% will call you back,” says Agarwal. But it’s going to be slow. The Street expects its revenue to increase by just 11% over the next two years, compared to about 18% for the current year. Agarwal does not deny it, he is happy if the churn rate goes down. “Even if I get to zero additions, I would be more than happy,” he says.

Meanwhile, IndiaMart has cut spending on its sales team which slowed sharply to 47% of revenue in the second quarter of September 2025, compared to 57% of revenue in the first quarter of FY24. In FY23, sales team additions totaled 300 to 400 per month, but have since declined.

As Garima Mishra and Ishani Swain of Kotak Institutional Equities observe, sales effort in the form of field labor is a key cost for the company, as is teleservice. They emphasize that both are essential for acquiring new customers as well as retaining and selling to existing customers.

This is not the first time that IndiaMart has found itself in a difficult situation in its quest for growth. But the virtually stagnant number of calls and inquiries in recent quarters, with the exception of Q2 FY25, suggests that fewer quality leads are being sent to vendors. At the same time, experts point out that the return to pre-Covid price levels could have led to an increase in customer expectations, but without them being met. As Jefferies’ Akshat Agarwal and Ayush Bansal point out, there is room for growth given that this space is largely untapped and adoption of technology among SMEs is low.

Additionally, IndiaMart has enough liquidity to continue operating even though it has reduced its investments. Agarwal’s decision to not chase growth at the moment but to get his house in order is a good one. He must stick to this strategy and take it to its logical conclusion.