Expert Guide
B2B marketplaces have fast-developed into one of the world’s most efficient ways for large entities to transact, but why and what’s the big deal, and what are they really? This page is designed to give you a quick overview of everything you need to know about marketplaces so let’s start with a simple definition.
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Traditionally, marketplaces are a platform where sellers and buyers converge to offer and purchase products. When Amazon first launched its online marketplace in November 2000, the idea of third-party vendors congregating on a website to present products to consumers was still very much a novelty. These days, marketplace sales account for 62% of the global online retail sales. In 2020 alone, about $2.67 trillion was spent on the world’s top 100 marketplaces. As global marketplace giants such as Alibaba, Amazon, eBay, and Etsy make continued efforts to increase their market share, the relevance of online marketplaces will become even more apparent to potential vendors and businesses alike.
Marketplaces offer immense growth potential for businesses within B2C and B2B industries. By adopting a marketplace model, companies have the opportunity to scale at a much quicker pace while reducing risk. Gartner predicts that by 2023, 15% of medium-to high-gross-merchandise-value digital commerce organizations will have deployed their marketplaces, thereby creating an entirely new digital ecosystem. For organizations with an existing traditional e-commerce platform, a digital marketplace could be the next step in accelerating customer acquisition and increasing revenue. B2B is when businesses provide products or services to other businesses. Marketplaces are where multiple buyers and sellers transact. Therefore, B2B marketplaces are typically centralized digital platforms that enable large entities to conduct business with their partners or other organizations on a large scale.
Worldwide B2B marketplace sales could reach an estimated $3.6 trillion by 2024, up from an estimated $680 billion in 2018.
For manufacturers, especially in the B2B environment, digital commerce means more than simply providing an online store. It also stands for the development of a clear business model, reorganization of traditional sales channels and the establishment of new operational capabilities to meet modern customer expectations.
Trusted by major companies:Around the world, wholesale distribution supply networks are shifting towards e-commerce technologies that allow companies to make better use of existing resources while developing sustainable strategies for future success.
Trusted by major companies:Digital commerce in retail gained a new momentum with the advance of technology and a corresponding shift in customer expectations. Digital commerce is the new normal in retail, and in the midst of trends like voice commerce and click & collect, companies must now find ways to quickly adapt to ever-changing markets and create a shopping experience that delights their customers today and in the future.
Groceries seem to be the last thing that people still largely buy offline today. But even though the shift happens slower than in other retail segments, the digital transformation is inevitably progressing for food and beverages as well. So far, the role of digital channels for groceries has often been restricted to price research, and Amazon held large shares of the overall small number of digital grocery purchases.
Trusted by major companies:The healthcare sector is quickly going through a digital transformation. Many Medical Technology companies have been employing telesales to sell medical devices or pharmaceuticals since the 1990s, which saw a drop in market share due to digitalization and increasingly tech-savvy competition. Buyers in the MedTech B2B space increasingly expect an easy, online experience on any device, mirroring their journey when shopping for personal products.
Trusted by major companies:Digital commerce for manufacturers of consumer goods means a variety of opportunities and changes. The key to a successful business is the customer, and digitalization is redefining the roles and expectations of the seller and the customer. Subscription models, omnichannel approaches, and click & collect are just a few of the many trends that drive the unprecedented convenience of a digital customer journey. And the advance of technology makes it easier than ever for CPG / FMCG manufacturers to connect with customers directly through D2C e-commerce solutions.
Trusted by major companies:The CPG Playbook
The CPG industry is changing due to B2B digital technologies and consumer preferences, requiring companies to adapt to stay competitive by providing personalized experiences. That's why we have launched The CPG Playbook as a guide for navigating the new digital landscape.
Access the Playbook
While there are countless differences between B2B and B2C we’ve highlighted some of the key contrasts in the table below.
The two main types of marketplaces are vertical and horizontal. Vertical marketplaces are focused on a niche market, which means they tailor their offering to match the specific needs of a set group of customers. Etsy and Airbnb are examples of vertical marketplaces.
Regular e-commerce stores offer businesses attractive storefronts, automated processes, secure transactions, virtual support, and global brand exposure. While this is a great improvement from offline transactions, marketplaces offer even more:
Marketplaces allow several merchants on one platform, offering a wider range of products, competitive pricing, and solutions to supply chain issues by providing multiple product and material sources from more than one location.
In the manufacturing industry, for instance, businesses can benefit from specialized marketplace technology which enables them to manage their revenue better by optimizing their warehouse space through advanced inventory management.
Online marketplaces can be segmented by their
1. Target audience:
2. Focus area:
1. Enriched product portfolio leading to effortless scalability
2. Increased profit margin due to redistribution of business risk and financial commitment
3. Competitive advantage through a diverse product offering
4. Autonomy over merchant activities, products, and price levels
5. Reduced marketing costs owing to expanded customer base
6. Well-rounded portfolios lead to increased customer loyalty and trust
7. Increased global visibility
Building a marketplace that will enable your business to scale with minimal risk involves aligning with best-of-breed solutions. While this may seem like a mammoth task it is important to find a technology partner that is adapted to the latest trends in web application design.
1. Marketplace Storefront
2. The Merchant Portal
3. Merchant Products and Offers
4. Back Office for Marketplace Operator
The marketplace storefront can be used as a stand-alone or integrated extension of your storefront to create a more seamless shopping experience for your customers.
The Spryker Merchant Portal is the management interface for third-party Merchants and enables them to take care of all administrative tasks in one place.
Benefit: Expand your business and save costs by allowing merchants to create and manage their offers.
Merchants can create their portfolio of products to sell in a marketplace. Additionally, they can set up offers for products listed in the marketplace and define prices, stock availability, and validity dates for their Products and Offers. Each merchant can easily filter, search, and manage their existing offers in the Merchant Portal.
Benefit: Easily expand your product portfolio with low costs and fulfill customer expectations by introducing merchant offers.
The Back Office functionalities for Marketplace Operators leave you in charge of managing your Marketplace and Merchants.
Benefit: Ensure compliance with your Marketplace guidelines and by managing them effectively within your Back Office.
While the top 10 list of successful marketplaces in 2022 contains the world’s best, there are a number that didn’t make the list including Upwork, Uber for business, eWorld Trade, Global Sources, Airbnb, Booking.com and many more interesting examples that are known and loved.
Although marketplace giants such as Amazon currently dominate the B2C Marketplace scene, there is still immense growth potential for B2B marketplaces. Businesses within industries such as manufacturing, construction, MedTech, and several others within the B2B field still have so many opportunities to drive revenue with the marketplace model. In addition, creating a vertical/niche online marketplace can help a business rise above the competition.
Vertical/niche marketplaces solve specific customer needs, making it easier for businesses to gain recognition from customers at a much quicker rate. Focusing on a particular market segment will instantly make your platform the go-to place for customers searching for such products or services.
Marketplaces provide immense benefits for independent sellers, corporations, and customers alike
Investing in and sourcing inventory gives way to an efficient onboarding of merchants that will enrich your product portfolio.
More merchants equals less resources, while redistribution of business risk and financial commitment will increase profit margin.
A growing number of merchants meeting customers’ needs faster than your competition will diversify the product catalog.
The operator will always define and control the common playground: merchant activities, products, and price levels.
Merchants get access to a huge number of new customers once their account is live and running. No marketing needed!
Merchants benefit from the halo effect of a trusted marketplace, while a well-rounded portfolio will foster customer loyalty.
Turning a high-performing merchant profile into a marketing activity is a great opportunity for more global visibility.
Learn all the Benefits of using Online Marketplaces
Read NowB2B Marketplaces
We can agree that the main question is not when to start your B2B marketplace, but how to ensure that your marketplace initiative is successful and resilient on the market. Let Oskar help you with this!
Are you ready to offer the most compelling B2B features? Buyers return to the marketplace that solves their pain points with top-notch service. And who are your merchants? Onboard the correct merchants who align with your overall goals.
Extend your commerce platform to sell your products along with third party products, or start as a pure marketplace by only selling third party products.
Your business must be able to adapt to suit modern best practices, recognize customer needs and react to them, and take small risks by trying new things via a Minimum Viable Product (MVP).
Invest in a marketplace-native commerce platform which is best suited for building sophisticated solutions such as complex B2B marketplaces. Lower initial prices of distinct marketplace solutions come at the expense of higher maintenance costs.
When you decide to create a marketplace, some of the key things you would need to consider are the features that contribute to the overall customer experience.
Merchants should be able to define their presence in your marketplace. This includes categorization, localization, product and service offerings and much more – all by administering their operations from one centralized dashboard.
It’s crucial to have a powerful product detail page enhanced with rich media to provide a digital experience of your product catalog. Features such as multi-languages, multi-currency and taxes can help achieve global presence.
Marketplaces can offer split ordering and split delivery to meet the demanding needs of B2B customers worldwide. Additional approval order processes, return and reorder management provide merchants and customers with an industry-leading experience in B2B.
Unifying operational excellent into one cohesive and relevant front-end experience will provide your B2B customer with out-of-the-box experiences: advanced search capabilities, quick ordering, customer order reference, and more.
Strong features allow operators to run the entire marketplace from one single interface while keeping full control. Approve and onboard new merchants, review their product and price listings, and define access to the marketplace.
As global marketplace heavyweights like Alibaba, Amazon, eBay, Etsy, and many more continue to compete for market share, the value of online marketplaces will become even more apparent to both potential vendors and B2B or B2C businesses.
Marketplace technology can go beyond the typical “many-to-many” marketplaces. You can:
There are several marketplace business models, such as Standalone Marketplace, Marketplace Extension, Indirect Sales Solution, Sourcing Platform, Auction Platform, and Multi-Brand Store. The key to successfully commercializing your business services is choosing a marketplace approach that meets your business requirements.
As already mentioned, B2B marketplaces have immense growth potential, with vast opportunities for early adopters to claim the top spot in their industry. With future-proof marketplace technology businesses are enabled to scale quickly with little to no inventory risk. B2B marketplace sales are expected to reach the trillions in just a couple of years, while e-commerce in the US alone is set to be worth $1 trillion by 2023, according to a recent report by Insider Intelligence eMarketer. Alongside this, Amazon Business is projected to surpass $52 billion in GMV by 2023.
E-commerce sales opportunities have grown immensely in the last 12 months and B2B businesses particularly, are obliged to find new ways of satisfying the increasing customer demand. Many B2B organizations undervalue marketplace technology’s potential to both scale and enable their business for the increasing demand for digitization. Marketplace technology can help B2B businesses to extend their reach, without taking on additional inventory risk. Therefore, it’s the perfect complementary revenue channel to test new products or regions - helping companies to keep up, and ultimately beat, the competition.
While most B2C companies are not keen to launch broad marketplaces because of competition from the giants, there is a unique opportunity for B2B businesses to capture the market of a specific vertical. B2B businesses should look to European companies such as Alzura and Mano Mano for examples of marketplace success stories. While not so well known globally, Alzura accounts for 50% of the two billion euros worth of tires and wheels sold in Germany each year via its B2B marketplace. Mano Mano is the largest DIY marketplace in France and attributes 20% of its sales to B2B.
While it’s obvious to many that we are in an era of digital disruption, it’s less understood that the pace of change is still accelerating and the pace is more exponential than linear. Many companies are having a hard time wrapping their heads around this and need to take a step back and ask themselves the real driver for their marketplace initiative. Was it a trendy idea that was thrown into an investor meeting or will it bring true value? To stay ahead retailers need to get excited for the future and be open to testing new technology. Don’t assume a model that has been successful in the past will be equipped to carry you into the future.
Learn more about the future of marketplaces and e-commerce as a whole on Commerce Talks with Alexander Graf
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