India’s biggest e-commerce player, mjunction services, has grown beyond e-auctions to become a leading provider of B2B e-commerce services
Not many people would be aware that the largest e-commerce company in India is neither Amazon nor Flipkart. It is a little-known company called mjunction services that transacted over 1.3 trillion worth of business in FY17. The icing on the cake? Unlike peer e-commerce companies, mjunction has been profitable since the first year of operations.
Set up 16 years ago as a 50:50 joint venture between Tata Steel and Steel Authority of India, mjunction runs the world’s largest e-marketplace for steel. Over the years, its e-auction platform has helped transform India’s steel and coal marketplace by bringing in transparency and fair practices. In the last few years, it has entered new areas of business, including the auction of the highly prized telecom spectrum. And yet, in spite of its solid reputation in the e-commerce field, mjunction remains low-key, much like its deliberately chosen lower-case name.
Much of mjunction’s success can be ascribed to two key aspects: a readiness to diversify its business areas and a business model based on an optimum blend of technology and service. The company started out as metal junction, a platform for the online auction of steel. Soon thereafter, the Kolkata-headquartered company extended its e-auction platform to other areas such as coal, minerals, second-hand vehicles and idle capital assets.
It was renamed in 2007, when its repertoire grew too large to be contained by the old name. Since then, the company has remained at the forefront of the e-marketplace space in India. This year, it even auctioned 1.1 billion worth of diamonds for a public sector mining company, having first worked to widen the bidder base by reaching out to them via social media. Says mjunction CEO Vinaya Varma, “Our biggest strengths are that we understand our clients’ needs and effectively leverage technology to develop innovative solutions to address their problems.”
At the heart of mjunction’s business engine is its proprietary e-auction platform which helps to discover the price between its large community of buyers and sellers. However, mjunction’s role isn’t limited to being an auction facilitator. The company also offers a wide range of associated services such as e-finance, inspection, logistics and knowledge services that help businesses to operate with greater process efficiencies.
For instance, it operates ‘buyjunction’, an online procurement platform that services 100 clients and a base of 80,000 vendors. “Since we work with many companies and industries, we generate extensive transaction data about the market, suppliers’ performance, and so on. We use our expertise to help our clients reduce their costs. This distinguishes us from other e-auction providers,” explains Mr Varma.
The first step for mjunction is to evaluate the entities that may be interested in a particular e-auction and reach out to them. “The software proposes a list of invitees and intimates all interested parties about the e-auction that we are going to conduct,” says Vinaya Varma, CEO, mjunction. The terms and conditions of the e-auction are explained to all those concerned. Information about the quality of the goods and services being put up for bidding is also shared with all.
Participating companies submit their bids online. While all companies can see the value of the best bid, they do not know the identity of the other bidders. Participants are at liberty to revise their bids to match or better the best bid. This benefits the sellers because they get the best price. The openness of the system also makes the e-auction a dynamic and transparent process.
The primary benefit of an e-auction is that no company, whether it is a buyer or a seller, receives any undue advantage. “There are no hidden bids and no favourites in an e-auction,” says Mr Varma. The company has put systems and processes in place to safeguard against favouring any organisation. And that is the winning formula for mjunction.
What gives mjunction a solid edge over other e-auction players is this role as strategic advisor to companies. The company uses business intelligence tools to glean insights from online transaction data and also leverages big data. “We advise companies on their sourcing strategy, how they should prepare for an online auction and what price they can expect,” explains Mr Varma. The company is now extending this to become a supplier of maintenance, repair and operational items such as electrodes and fasteners to large enterprises.
The success factor is the company’s robust e-procurement management platform, which connects with suppliers and supports procurement-related processes. Leading organisations such as Hindustan Copper, BHEL and Ordnance Factory Board use this platform. It has built in features to ensure the highest level of information security. The company is rated CMMI Level 5. Mr Varma explains, “We get our software and systems vetted by third-party specialised agencies at fixed intervals. Based on their recommendations and feedback, we work to further secure our technological platforms.”
In the last few years, mjunction’s success in the e-marketplace has opened up new avenues. Impressed with its expertise, the Government of India invited mjunction in 2014 to conduct an e-auction for the allocation of mobile telecom spectrum. “Earlier, a lot of issues were raised regarding the lack of transparency in spectrum allocation. So the Indian government moved to the e-auction mode of price discovery for increased transparency,” says Mr Varma.
“The March 2015 offering of spectrum was the biggest until then. The brief from the government was to design the e-auction system to accommodate simultaneous auction in four spectrum bands,” he adds. The value of that spectrum allocation was over 1,000 billion. Another high-value e-auction of spectrum was facilitated by mjunction in October 2016, when it handled auction in seven spectrum bands simultaneously.
The successful handling of this project paved the way for mjunction to enter four new areas. The first of these was to open up e-bidding for oil and gas fields on behalf of the government. Mr Varma says, “The government will be able to use e-auctions to allocate different oilfields for exploration and extraction, which would help to bring down India’s oil import bill by $8 billion annually.”
The second area was the e-auction of wheat and rice stocked by the Food Corporation of India. Once again, the government approached mjunction to conduct weekly e-auctions to enable food grains to be sold to the states.
Similar e-auctions have been organised for forest products such as timber, herbs and plants, which India has in surplus. “The process of allocating natural resources to private entities was conducted in a questionable manner in the past. This is where our methodology of creating a system rooted in transparency, efficiency and equal opportunity pays off,” says Mr Varma.
mjunction is also present in the field of online financial solutions. ‘financejunction’ vertical has tied up with large banks and financial institutions who provide supply chain finance. The company also supports the issue of commercial paper for large organisations. SAIL has used the platform to issue commercial papers in excess of 24 billion.
Another field where mjunction is using its skills is analytics. Companies are looking for innovative ways to differentiate and strengthen their relationship with their channel partners who help in reaching their products to consumers. The company, through its analytics-based loyalty programmes, is helping its clients achieve differentiation through the innovative use of technology and processes.
Offering back office procurement services for clients through its shared service centre is another business segment. “We manage the procurement function for many organisations, saving them the hassle of having their own procurement team. By sharing our procurement personnel and knowledge of markets, we ensure that they benefit from more cost-effective deals,” Mr Varma explains.
Despite having competitors in each line of business, mjunction is unique in being the only company straddling several e-commerce verticals. This has helped the 900-employee strong company grow into its industry leadership position and firm up its reputation as a preferred vendor to the Indian government for e-auctions of state-owned resources.
With India established as its comfort zone, mjunction is now venturing overseas. It launched its first international office in Dubai in September 2017. This will help the company move closer to its customers in the Middle East, where it already has several clients. It is currently negotiating a high-value contract with a Tata company in Europe. It also plans to further expand into other developed markets across the world. Given its track record in the e-marketplace, that shouldn’t be difficult for mjunction.