The Buzz around B2B Marketplace
Beyond AI, the hottest topic around ‘the next big thing’ commercially seems to be B2B Marketplace. While the giants like Alibaba and Amazon Business (which began operating in 2015) continue to grow, visionary leaders are capitalizing on opportunities in their own verticals. They are using specific marketplaces to expand relevance with their customers in very measurable ways.
What is a B2B Marketplace?
Before we jump into the how, let’s briefly answer the question – What is a B2B marketplace? It is simply a one-stop online shop for business customers (executives, procurement professionals, purchasers, etc.) to purchase goods and services that enable them to deliver or enhance their business offerings to their clients. Marketplace dynamics provide a new way to open up opportunities in traditional B2B markets. In the old days (and still in many places currently) a supply chain model looked like this:
Product manufacturer builds the product, sells to wholesaler and/or distributors who find channels for the ultimate sale of the product.
In the platform economy, where B2B marketplaces are at the center, the marketplace operator coordinates with sellers to offer more products to serve more customers. Everything is done via a single online location, where merchandise is sold. Operators receive a commission on the sale and share information with sellers.
For example, in the Auto Parts Business the AC Delco Marketplace (Connection), offers access to over 120 of AC Delco’s product partners and distributors. As a store owner, professional mechanic, or purchaser of auto parts for any of these, you immediately experience the benefits. One shop for a variety of product brands – think about the ease of use and increased productivity for all involved! One of the other key attractions to marketplace transactions is the inherent inventory model. No longer are customers forced to make long-term forecasts to (hopefully) have the right inventory at the right time. Instead, products arrive in JIT-like fashion with very little, if any, carrying costs.
So let your mind run wild a minute… what industry would not benefit from this change in structure? And, what if the B2B Marketplace operator added complimentary services (likely via partners) to the marketplace? Think about the benefit of having such features as hazardous waste pickup or cleaning added to a medical supplies marketplace; installation services for office furniture companies, as part of the service package. Such features equate to greater satisfaction for the customer and can solidify relationships, creating greater long-term value.
So, as the world continues to change for B2B purchasing, consider the following Macro-Economic realities:
Millennials are Digitally Native
The Baby-Boomers were a large generation, but those born between 1980 and 1995 (the Millennials) are an even larger demographic. At the beginning of 2019, Millennials made up almost ½ of the labor force in the United States. They are the first digitally native generation – as a result, they expect to digitally interact with the world. 97% of Millennial purchasers use B2B Marketplaces. 26% of all B2B purchasers list Marketplaces as their preferred channel.
Not only does this generation prefer to engage digitally, they expect to engage digitally. Almost half (49%) of 2018’s $7 Trillion in B2B purchases were done manually. That’s very good news for those who are willing to change and it should serve as a warning to those who believe that the old manual status quo is merely good enough.
Technology is Making a Difference
Finally, we all know that the marketplace giants have invested millions in their proprietary eCommerce platforms, however, building a B2B marketplace has never been as cost-effective nor as fast as it is today. There are multiple players in the market to make the implementation of a proprietary hosted marketplace a quick, and by comparison, inexpensive option for your business.
So whether you operate one or sell via a partner that does, one or more of these B2B marketplaces are likely in your future.