Marketplaces like Airbnb, Etsy (News - Alert), and Craigslist have been around for a long time, and it's difficult to imagine life without them. They are convenient, easy to use, and give customers a product and service quality that's difficult to match.
There are many different types of marketplaces out there. Many are built for a particular goal, geared to specific customers, or offering one service or product type. Some are centered around a specific ecosystem (Google (News - Alert) Chrome Store for Chrome extensions) or a certain industry or service area (Upwork).
B2B marketplaces such as Rakuten or Amazon Business share many characteristics of their B2C businesses. While this does help in user adoption, B2B marketplaces see tremendous growth potential due to their ability to solve multiple productivity gaps faced by B2B companies.
In this post, we’ll share the future of B2B marketplaces, the types of B2B marketplaces out there, what to do before selecting a B2B marketplace platform, and the three crucial questions you should ask your vendor when choosing a B2B marketplace platform.
Why are B2B marketplaces an untapped opportunity?
Depending on the industry, the B2B sales process can be slow, cumbersome, and full of inefficiencies. Performing research on Google, entering data into spreadsheets, writing out RFQs, requesting certifications are just some of the inefficient, repetitive tasks plaguing sales departments. A marketplace can resolve many inefficiencies during the procurement process, streamlining the experience both for the seller and the buyer.
Consider the following:
Marketplaces are growing fast within B2B, changing how suppliers, procurement professionals, and vendor managers view the buying process. What's more, they are quickly changing the status quo around how products and services are brought and sold across every industry vertical, connecting sellers and buyers with everything from physical goods, digital services, subscriptions, and much more.
Today, Gartner estimates that over 25% of global enterprises currently use online marketplaces in some capacity to procure their products and services. As enterprises warm up to the idea, business leaders must formulate clear guidelines on how they want stakeholders to manage the procurement process via marketplaces. By analyzing their markets, forging strategic partnerships with other companies, and utilizing a B2B marketplace platform, businesses can even launch their own.
How does a B2B marketplace generate money?
While building a B2B marketplace involves investing some time and money, there are also many ways to earn ongoing revenue with a marketplace. Aside from the benefit of cross-selling and upselling unrelated products to increase average order values of your (or your client's) products, you can collect revenue in the following ways:
Most marketplaces run on commission, meaning they charge a percentage or flat fee out of each purchase made on their platform. Many B2B sellers with large or many transactions will be happy to pay a small commission off each sale.
Charging customers or end-customers to access your marketplace can help you build a following. If you want to negotiate prices with vendors or prefer to pass the savings on to their customers, this could be the right model for you.
Just like charging for access, you can also charge a B2B vendor or seller for listing their item on your store. Sellers pay a fixed fee regardless of how many times the product is purchased.
B2B transactions are large in order value and long-term in nature. When coupled with the targeted nature of your marketplace audience, this can attract high-paying advertisers to your site.
What types of B2B marketplaces are there?
A B2B product marketplace connects multiple buyers to multiple suppliers via one platform. They help business buyers discover new suppliers and purchase from them according to their approval, payment, invoicing, and shipping options. Examples of B2B product marketplaces include:
SaaS (News - Alert) Platform Marketplace
The popularity of cloud-based software introduced a need for a single place to search, purchase, deploy, and manage SaaS applications. Such marketplaces target those within their ecosystem, enterprises, or businesses looking for cloud-based applications. Examples of B2B SaaS platform marketplaces include:
IaaS Platform Marketplace
IaaS marketplaces help IT, infrastructure, and operations professionals utilize cloud infrastructure technology to manage their business. Examples of B2B IaaS platform marketplaces include:
These marketplaces allow freelances to offer services online. Businesses can explore and select freelance services from a diverse pool of freelancers. Examples of freelance marketplaces include:
What to do before selecting a B2B marketplace platform?
Determine whether your industry needs a marketplace
Not all business procurement processes need a marketplace. Analyze purchasing decisions, where time is spent, and what is possible to automate. For example, many businesses use established procurement channels such as going directly to the vendor, using a reseller or broker, while others use a more software-based approach with integrations.
It's important to remember that while many business processes are inefficient, they could be an important reason why things are done a certain way. While from the outset, calling vendors and faxing specification sheets back and forth seems very inefficient, it's likely that focusing on a single pain point - for example, by centralizing data in a B2B eCommerce platform - would be a great start.
Analyze the risks of starting a B2B marketplaces
While it may seem that having your own B2B marketplace is a great idea, it can bring a number of risks. For example, if you hand over the responsibility for product specifications to the seller, everything from miscommunication to incomplete data will reflect poorly on your brand. Customers will reach out to you as the first line of defense and will expect you to rectify the situation to their needs. Select a marketplace platform that gives you communication options to the end-customers, or one that integrates with your sellers' ERP for inventory, warehouse, and accurate fulfillment information.
If you operate globally, you'll need to keep in mind other risks such as operating multiple websites, complying with taxation laws, or carrying restrictions on certain products. All of this and more can be prevented by researching your B2B eCommerce software options well and picking a solution with the right feature set.
Build a minimum viable product (MVP)
A minimum viable product by definition is a carefully designed product with enough features and appeal to get tested out by a small customer group known as early adopters. For a B2B marketplaces, it's designed to do just that: gauge the interest of a small customer segment, collect feedback, and determine if there is any value in the product.
Some businesses make the mistake of assuming that the MVP is a first iteration of the product and neglect the user interface and testing. While your MVP doesn't have to be perfect, it needs the minimum required working features and must be well presented, designed, and help the user see value in it. In fact, software that doesn't look good, or work as intended will just drive all your users away.
What features should a B2B marketplace platform have?
The features you'll want your B2B marketplace to have will depend on the industry you're in and your audience's needs. While businesses and their customer's needs can vary, there are some commonalities between them. Amazon, Alibaba, or eBay have similar functionality that helps sellers remain visible, and buyers find what they're looking for.
Ultimately, your marketplace features should make it easier for businesses to list their products, run their business effectively, and offer great user experiences. Your B2B marketplace features need to help your vendors sell more and increase their customers' average order value and lifetime value.
What else should you look for in a B2B marketplace platform?
Aside from the feature list, the ease of setting up, hosting and backup, finding developers, security compliance, and the ease of onboarding vendors are also things to consider. Perhaps most importantly, think ahead of what your marketplace will be like in the future and look for a platform that allows you to extend and grow your marketplace in different ways.
Lastly, don’t forget about cost. As the number of users grows, the customizations, add-ons and integrations can also increase, which can strain your budget if you’re not careful.
Conclusion: How to find the best B2B marketplace software for your needs
Whether you're pursuing a B2B marketplace opportunity or are ready to take your existing B2B marketplace to new heights, your platform should help you build the right space and destination vendors and customers will love coming back to.
After you select the right platform based on your industry and audience, construct an MVP with the right feature set, collect the customer feedback, and don’t forget to keep updating your B2B marketplace with features that improve the buying and selling experience customers.