A marketplace is the go-to resource for today’s buyers, from baby boomers to Gen Xers to millennials. As the latter make up a larger and larger percentage of decision-makers in businesses, it’s no wonder that the online B2B marketplace is quickly disrupting what we know and understand about B2B eCommerce.
Amazon’s success demonstrates that collecting third-party products under a single roof removes friction, boosts transparency, and gives the buyer more selection. Collectively known as the “Amazon Effect”, this disruption in B2C commerce has a profound impact on B2B selling, too. Amazon’s B2B marketplace already surpassed $25 billion in annual sales, more than doubling the numbers over the last three years. Global brands like Shell launched a B2B marketplace for the mining sector while Tata Group is close to launching a marketplace of their own.
But that doesn’t mean that smaller players can’t capitalize on the marketplace boom. In fact, marketplaces are already changing our understanding of B2B Marketplace transactions. Consider that:
- The B2B Marketplace is roughly six times the size of the B2C market, and marketplaces remain an untapped opportunity in many verticals. Being first to market with a marketplace has many advantages, from gaining a dominant position in the market, building an ecosystem, to collecting commissions.
- Marketplaces are easier to build than physical or “direct” eCommerce businesses. Starting and sustaining an online store with a B2B Marketplace platform costs a fraction of a brick-and-mortar store. You don’t even need to carry inventory or have a warehouse to build a marketplace.
- Businesses buyers create long-term relationships with sellers, which means a steady stream of recurring revenue for marketplaces. Since marketplaces remain industry specific, they are leaders in their sphere, and attract large traffic as a result.
- A B2B Marketplace gives marketplace owners immense data on vendors and their customers. By tracking various sales metrics, they can introduce new products, optimize supply and demand, and offer customers goods and services that truly matter to them, and even introduce products of their own.
Let’s explore what makes B2B buyers gravitate towards marketplaces, how marketplaces meet the needs of marketplace operators and sellers, and why marketplaces continue making a permanent impact on B2B commerce. And if it’s the route you want to take, we’ll also give you some pointers on creating a marketplace of your own.
B2B Marketplaces are a Growing Opportunity
If Amazon’s or Alibaba’s success is any indication, marketplaces offer tangible benefits to marketplace businesses themselves, those selling on the platform, and consumers. Yet for business buyers, sales processes can be much more cumbersome. It involves spending time researching, submitting RFQs, requesting content, and juggling approvals. Thus, in B2B eCommerce, marketplaces are more than a nice-to-have. They promise to streamline the way suppliers, procurement professionals, and buyers interact.
Benefits to Marketplace Operators
- Automation: Marketplace operators typically rely on revenue gathered from transaction fees and commissions. Any B2B Marketplace requires powerful automation features to ensure that these processes are performed within the platform.
- Data Collection: A marketplace is a treasure trove of information on vendors, their products, customers, their purchase habits, and more. This means important insights that can help you boost revenue and uncover more opportunities.
- Scalability: Customers are more likely to use an eCommerce store with a broad appeal, and that’s where marketplaces shine. If traffic grows, marketplace operators can quickly scale infrastructure or add more vendors to meet demand.
Benefits to B2B Sellers
- Access to Customers: Today’s customers are everywhere, and it makes sense for sellers to position themselves front and center with customers. More exposure opens sellers to markets they wouldn’t normally serve, meaning more sales.
- Freed Up Time: Some marketplaces take care of certain aspects of fulfillment, payment collection, and customer support on behalf of sellers. This gives sellers more resources to focus on perfecting their products and growing their business.
Benefits to B2B Buyers
- More Options and Convenience: A marketplace gives customers more options, lower prices, and a single destination for their needs. This attracts more traffic – from both customers and sellers, who, in turn, can help customers make informed decisions.
- Easier Shopping and Fulfillment: Buyers choose to shop on marketplaces due to streamlined purchase and shipping processes – that is, they have a single place to select what they need from multiple vendors, perform payment, and arrange shipping.
- Lower, Transparent Pricing: In an online marketplace, sellers compete with one another on a level playing field. Thus, it’s in their best interest to offer customers competitive pricing, complete product descriptions, and great reviews.
How to Build a B2B Marketplace
The way B2B customers are purchasing is changing, and marketplaces remain a large driver of these changes. If you’re looking to launch a marketplace of your own, here are some tips to keep in mind.
- Follow the Customer: While the shopping is getting more competitive and complex, buyers still value a great experience. Time and time again, buyers report that an easy and convenient buying experience gets them to stick around.
- Automate, but Personalize: Modem marketplace platforms will let you automate things like pricing, quoting, and ordering functions. However, as you grow your marketplace and expand your offering, it’s also important to maintain high levels of personalization.
- Analyze your Data: Make data your guiding light for everything marketplace related. From the moment you establish your vendor relationships, start accepting products, and engaging with customers, a marketplace is a never-ending opportunity to optimize.
- Build an MVP: If your industry is new to marketplaces, it’s a good idea to build an MVP version to test your idea out. It’s a great way to build out your customer base, test out products, and the feasibility of features.
Marketplaces: A B2B’s Secret Weapon
The eCommerce world doesn’t keep still and marketplaces are the next big evolution of B2B commerce. While building a marketplace website where there was none is intimidating, B2B marketplaces bring immense opportunity to those that are up to the challenge. Those that are will capitalize on increased word of mouth, create lasting customer relationships, and unlock new sources of revenue.
“Hi, I am Mohd Zaid Mansoori, a teenage Content Marketer, Designer, Digital Marketer, and Tech Enthusiast from Uttar Pradesh, India. I am a student who is also a freelancer and is working on some Awesome Websites like InnovationFunda.”