GUEST COMMENT Online marketplaces – B2B’s secret weapon
Online marketplaces have been a significant trend in retail for over a decade. Three of the world’s biggest ecommerce firms – Amazon, eBay and Alibaba – are all based on marketplace platforms. Many brick-and-mortar retailers have launched their own online marketplace, attracted by the value proposition of increased product choice, competitive pricing and a superior customer experience, without the restraints of inventory and logistics. The National Retail Federation’s State of Retailing Online 2015
report notes that 32% of retailers planned to spend more on online marketplaces in 2015 vs 2014, as online marketplaces play a prominent role in customer acquisition.
Business to business (B2B) has been slower to consider online marketplaces, yet the principles apply just as much as they do to B2C. In B2C, legacy retailers underestimated the potential of e-commerce; B2B players are aware of this, and online marketplaces are a cost-effective, scalable opportunity for them to leverage digital technology and drive their businesses forward. As B2B continues to feel increased pressure from pure players, and retailers look for a viable method to further engage their customers, online marketplaces will be their most powerful weapon to gain ground over their competition and retain their customer base rather than surrendering it to Amazon and Alibaba .
Changing behaviors of B2B stakeholders
The traditional way of conducting B2B business is changing: rapid delivery, greater product choice and transparency over pricing are elements we’ve come to expect in both personal and professional settings. B2B companies can capitalise on these expectations through an online marketplace.
Specifically, three major trends – changing technologies, network effects and the changing business landscape – are driving B2B businesses to consider implementing online marketplaces.
Evolving technologies are redefining the expectations of B2B buyers. Today, instant access to products, reviews, and customer support have become the norm. Users expect a seamless, comfortable experience both in their private and professional interactions, leading B2B players to ramp up their digital investments.
The rising importance of network effects is also influencing the B2B industry, as businesses do not buy products in isolation anymore, but leave reviews, comment, and increasingly expect to find everything in one place.
Lastly, the business landscape has transitioned from local to global: businesses are now competing with every other B2B company in the world, and buyers can source their purchases from a greater variety of actors. Companies that embrace these trends will outperform those that don’t.
Marketplaces and B2B
Being smart in retail essentially means giving the customer what they want: choice, price and service, the three core principles of retail. Pure-players can deliver on this promise, and B2B companies must tweak their models to ensure they can compete.
A recent Forrester report
showed that 82% of B2B buyers would purchase again from the same supplier because of that supplier’s broad selection. Eighty-four percent of B2B buyers would buy again from the same supplier because of consistently low prices.
An online marketplace is a business model that meets these criteria, and more. It not only helps drive commerce but also offers a greater scope for expansion as well as higher profit growth and lower risk; it helps better serve customers in an innovative way and puts them at the core of business.
Quality of service has never been so important in commerce, with customers ready, willing and empowered to go elsewhere if standards are not met. An online marketplace allows an organisation to offer improved customer service, greater product choice, and competitive pricing.
B2B marketplaces in action
An online marketplace can deliver in a variety of ways in the world of B2B. A distributor, whether with or without physical stores, can use a marketplace to significantly broaden his product offering without carrying extra inventory; these products can be complementary to those already offered, or new categories into which he wants to venture. The Staples Exchange is an example of this type of B2B online marketplace.
For a manufacturer of B2B products, an online marketplace is a great means of federating and controlling his distribution network, providing them with a new sales channel as well as streamlining their inventory management, and gaining valuable insight on their performance.
What’s more, B2B businesses can gain more end-consumers knowledge and provide more value to them through product transparency and availability on their own marketplaces, as well as a single sales portal.
By granting customers a 360-degree view of every product – including pricing, origin and availability – and collecting feedback, marketplaces can tailor their product selection to their customer base. This is impossible on third-party marketplaces such as Amazon or Alibaba, where they have no control over other vendors or website visitors as a whole.
The future of B2B online marketplaces is bright
A single seller of B2B products can only store and distribute a finite number of products, however big his business. Furthermore, the threat posed by pure-players cannot be under-estimated, but that’s not to say that B2B companies are already beaten. Those in the B2B space have to think creatively about how to engage customers and add value to their purchasing journey. If they are unable or unwilling to innovate, they will see their customers flock to pure-players, which will dominate the market.Adrien Nussenbaum is CEO of Mirakl Inc