Since the late 1990s, there has been a smattering of academic papers written about online procurement. Yet today, twenty years into the era of Amazon.com, cracking the online B2B construction materials and procurement market remains an elusive challenge. Still, it’s one that startups across the globe still seem keen on tackling, particularly in India, where the New Delhi-based building material online store Rootefy recently announced that it has obtained $200,000 in seed funding from the Indian real estate firm BNB Group.
Rootefy plans to use the funds to build out its online infrastructure, improve product presentation in its online catalogue, and further develop its technology and staff. It’s already looking to raise $3M in its next round and was founded last April by Nitish Gupta and Manish Kishore; Gupta decided to found the company after his own experience renovating his single-family home.
The company isn’t the first e-commerce effort that is specific to construction, particularly in India, where Supplified.com, mSupply.com, and eConstructionMart.com were all aimed primarily at the residential and interiors market segments, while the industrial goods marketplace Moglix raised $12M in a Series B round back in July from investors that included the Silicon Valley-based venture fund Rocketship. Another Indian startup, Brick2wall Technologies, raised $200,000 from angel investors in July and, last September, BuildTraders, another online construction materials marketplace, raised $200,000 from the Dubai-based early-stage venture firm Idein Ventures.
Over in Europe, a German AEC software company exists called RIB Software AG, which owned 75 percent of a company called Iceprice, an international AEC e-commerce platform that was at one time generating euro 5M in annual revenue with 100K visitors/month. However, it is unclear whether that site still exists, and as of early 2016, RIB was trying to launch its own AEC e-commerce platform called xTWO that would be specific to construction materials. Again, it is unclear where that effort stands. India too has seen its share of construction e-commerce failures; Buildzar.com and Tolexo both shut down last year after failing to generate any significant revenues.
The problems with developing a construction e-commerce solution seem myriad: products are bulky, heavy, and therefore difficult and expensive to package and ship; traditional providers like FedEx or UPS can’t or won’t enter construction sites (when I worked on a high-rise project in Times Square, I remember having to walk cross-town to get the elevator rails for the mockup at the 11th Avenue UPS site because they wouldn’t come behind the construction fence to deliver anything!); an industry with a very traditional, entrenched way of doing business; and a supply chain that is highly fractured, localized, and difficult to aggregate.
Still, there is clearly interest in this segment, particularly in India – and even while Amazon makes a strong push into the country’s e-commerce landscape. (This is possibly because of how India protects its retailers from foreign incursion; Amazon can only operate a third-party marketplace in India and not provide a full retail offering, which I suspect is what has opened the door to these various construction marketplace competitors.) Regardless, we’ll be keeping an eye on e-commerce solutions for construction here at AEC Labs, and look forward to discussing this topic in greater detail in the weeks ahead.