B2B marketplaces are on the rise. According to a recent survey, one in three B2B buyers worldwide now buy at least half of their products on business-to-business marketplaces. Moreover, during the corona pandemic, the frequency of purchases through marketplaces and the average amount spent increased significantly, indicating the increasing importance of the sales and purchasing channel in the overall B2B market. An article by McKinsey also points to the growing influence and popularity of B2B marketplaces. So it's time to dive a little deeper into the world of the marketplaces and look at the added value of this channel.
In a general sense, a B2B marketplace is an eCommerce channel that allows third parties to offer their products and services directly to sellers. Such a marketplace offers an extensive range of different suppliers and is therefore very good at linking supply and demand.
B2B marketplaces do not differ that much from well-known B2C marketplaces such as bol.com or Amazon. They also offer a website where users can buy and sell products. Basically, B2B marketplaces are huge ecosystems of online commerce where companies and customers meet and do business online.
However, there are certainly differences between the two marketplaces:
Aside from the growing popularity of eCommerce in times of corona, marketplaces offer solace for some typical B2B challenges.
If we look at the B2B landscape, we see that many companies (even very large ones) in the past made little or no investment in digitizing their customer relationships. The emphasis of their digital transformation was on the 'inside' (ERP and CRM systems) of their business. As a result, they often still primarily sell offline.
Before the corona pandemic, B2B marketplaces continued to grow. Still, 2020 was a milestone in eCommerce sales for many of them. According to various studies, as many as 57% of purchasing managers are spending more on eCommerce sites as a result of the changing market conditions caused by COVID-19. At 22%, those expenses were even significantly higher. The same pattern can be seen when looking at the rise of B2B startups in the market. Almost overnight, startups like Faire and Mirakl transformed into powerful and hugely lucrative platforms. During their journey into a new digital sales future, they earned billions in valuations along the way.
There are roughly two different types of marketplaces: specialist vertical marketplaces and more general horizontal marketplaces.
Vertical marketplaces usually sell specialized products or items with a more complex or longer life cycle than common "bulk goods". Vertical markets also often include products and services that people or companies don't buy just by looking around the market. These are often purchases for which buyers request a quote and sellers provide a specific offer.
The vertical marketplace facilitates this process with dedicated, niche-specific tools and services. For example, a vertical B2B marketplace allows the buying and selling of products or services between limited segments of a particular industry. Good examples are Metro Markets (catering), Joor (fashion industry) and QSTA (fresh market for food professionals).
Horizontal marketplaces have a more general character in terms of support for the buying and selling process. The sales process for these types of products is usually simpler. Sellers of less complex products are usually fine with a one-size-fits-most model.
Unlike vertical marketplaces, horizontal B2B marketplaces connect businesses across different segments. The best-known example is probably Amazon Business. On this platform, both large companies and SMEs from a wide spectrum of industries find each other.
Digital marketplaces are here to stay in the B2B landscape. It is not yet entirely clear what the future of the channels will look like. For example, a scenario is conceivable in which a giant like Amazon Business becomes a dominant player with a multitude of categories, but this is not written in the stars. There are more successful B2B marketplaces, so it is also possible that we will see healthy competition between a few large marketplaces within many specialist sectors.
It is important for distributors to find the right ways to play with B2B marketplaces. This can be done by selling products, but also, for example, by entering into strategic partnerships. By making smart use of digital marketplaces, major distributors can create a future for B2B distribution that is competitive and dynamic.
Marketplaces are undeniably an important part of the future of B2B e-commerce. The great thing is that distributors can still play a key role in shaping that future. Are they not taking that opportunity? Then Amazon probably will…