The Indian building materials and construction sector is a significant and expanding market. As of 2022, it was valued at $225 billion and is expected to grow by 8-12% over the next five years. This growth is primarily driven by urbanization, the real estate market's momentum, positive prospects for the healthcare and hospitality sectors, and rising income levels.
Despite its size and growth potential, e-commerce penetration for building materials and construction products in India remains low at only 2%, compared to 30% for mobile, electronics and appliances and 5% for even furniture and other home products.
The e-commerce sector for building materials faces several challenges, including high shipping costs, a lack of product standardization, and difficulties in providing accurate product information and services.
However, there are promising developments that are rapidly changing the landscape. The entry of new start-ups, investments by large incumbent players in e-commerce platforms, and business model innovation by brick-and-mortar retailers are transforming the building materials e-commerce opportunity.
Start-ups like Infra.Market and OfBusiness have achieved remarkable revenue growth through their innovative business models and utilization of technology. Infra.Market, a Mumbai-based start-up founded in 2016, has raised over $500 million in funding and experienced a 404% revenue jump in FY22 over the previous year. Similarly, OfBusiness, founded in 2015, has raised more than $890 million in funding and seen over 4X increase in revenue from operations in 2022 compared the year before.
Established players are also investing heavily to strengthen their position in response to the changing dynamics of the building materials e-commerce industry. For example, Grasim, a leading conglomerate in India, has announced a $270 million investment to enhance its e-commerce capabilities. JSW Steel has launched the JSW One platform, a comprehensive online marketplace that aims to provide a seamless experience for customers to procure building materials.
Brick-and-mortar retailers are building digital capabilities to leverage the digital space as a discovery platform to drive customers to their physical stores. Shankara Buildpro, a leading player in the building materials space, has launched a digital platform to drive growth.
The e-commerce growth in the building materials market presents several attractive opportunities for companies in categories such as cement, RMC, steel, plywood, floor and wall tiles, paint, sanitary ware, and home electricals. These opportunities include reaching a wider audience, offering a broader range of products, and providing better customer service.
To tap into the e-commerce growth opportunity, building product companies must set a bold aspiration, develop an effective digital strategy, and build digital capabilities.