B2B marketplaces were a rarity not too long ago. That is no longer the case. However, they are still far from being fully developed: not all companies and sectors are using them yet and the user experience is often not yet at the level of D2C marketplaces.
The biggest challenge before the time of marketplaces was scalability. Ultimately, there are always inhibiting factors in the field of logistics. How much space do you have in your warehouse? After all, a limit to the number of products you can store also automatically means a limit to the number of products you can sell.
A marketplace solves that problem: you use the range of others, in addition to your own offer. In our case that was an excellent solution. To express this in figures: within six months we were able to add hundreds of thousands of new products to the range. We did what we are good at: offering digital purchasing. Suppliers on marketplaces automatically have greater sales because they can reach more customers through the platform.
Benefits for all parties
As a marketplace manager, it quickly becomes the most logical solution. But put yourself in the shoes of suppliers who are active on the platform: does it still make sense? Many suppliers have old trusted sales channels. Isn’t it a big risk to also offer via a marketplace? Does that generate more sales or are you competing with yourself?
Marketplaces offer sellers a unique and versatile customer base, from freelancers to large multinationals. Sellers reach those target groups through the marketplace. That makes the chance of tapping into new target groups much greater than the risk that you consume your existing target groups. In this way, a marketplace is complementary to your existing sales channels, instead of a threat.
Manufacturers normally have little contact with the end customer, because there are retailers and resellers in between. Through a marketplace, manufacturers can deliver directly to end users (direct-to-consumer; D2C). This also means that manufacturers suddenly get all kinds of new insights, such as who the end customers are exactly, and what their purchasing behavior looks like.
Traditional vs modern
The main drawback of traditional sales channels, such as brick-and-mortar stores, is the fact that customers are forced to look for alternatives or wait if stocks are insufficient. This is especially a risk in the area of longtail-Products. You sell few of these types of products and logically there is little space for them in a physical store.
It is completely different for a seller on a marketplace: longtailproducts do not take up the space of better-selling products. Of course, providers must prepare their companies for digital sales, but that does not alter the fact that sales via marketplaces are of great added value. That’s not the only benefit of marketplaces for sellers. In addition to the fact that physical space is no longer a problem, you also benefit from the reach of the platform you are affiliated with. That is often broader than your own network, and in some marketplaces also international. Because marketplaces streamline purchasing for customers, you no longer have to arrange that as a seller. The threshold for customers to buy your products is clear VAT invoices and efficient purchasing processes.workflows much lower.
Where do marketplaces come from?
Experience shows that suppliers and manufacturers benefit from marketplaces, but where does the concept of ‘marketplace’ come from? Look at the marketplaces from the B2C world, such as bol.com and Amazon. They make it clear that B2B can still learn a lot from B2C. But it is clear that B2B marketplaces are also becoming increasingly important.
There are major lessons to be learned, especially in the field of user experience. B2C marketplaces use great search engines, making this way of shopping a big hit with consumers. But business customers value a good user experience just as much, and there are still some challenges for B2B marketplaces. In this area, more and more developments are visible regarding various forms of e-procurement.
As companies grow, procurement processes become more complex. For companies it is important to keep control over the expenditure. Where and what do you spend money on? Marketplaces for consumers often don’t offer solutions for comprehensive billing statements, but for business customers this is crucial. The answer to this challenge is integration. A business marketplace that is easy to integrate into a customer’s purchasing system saves a company a lot of time and effort. There is also a big difference between B2C and B2B. Where consumers are constantly looking for the lowest prices, continuity is often more important for a business customer.
Insight into your customers
Moreover, marketplaces can offer more than just a sales channel. As a supplier, you are quite far away from your customers in a traditional market. There are all kinds of parties in between, such as distributors, wholesalers and dealers. That also makes it difficult to properly estimate the purchasing behavior of your end customers. If you receive customer data at all, it is aggregated data: that makes it difficult to draw customer-specific conclusions. Without detailed data, it is difficult to respond to the wishes of your customers, while it is crucial to keep them satisfied.
As a supplier, you get more data through a marketplace. Not about your competitors, but about your own portfolio and how customers react to it. You can now hear how users react to your products, because the lines are shorter. You receive direct feedback and that is of course the best way to ensure that your products are and remain interesting for your customers.
About the author: Rick Huisken is Director Marketplace International at Conrad.
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