We're all used to digital marketplaces as one of the quickest ways to get goods. Think of Amazon and Aliexpress. They all thrive because of the sheer demand of consumers across the world. But the truth is that online marketplaces aren't only for B2C companies. B2C companies can also use enterprise marketplaces as a pathway for total digitalization.
According to Gartner, by 2023, at least 70% of the enterprise marketplaces launched will serve B2B transactions. Similarly, according to Forrester, in the US, B2B eCommerce transactions are expected to reach $1.8 trillion by 2023, accounting for at least 17% of all B2B sales in the country, which will create a new business model and ecosystem for companies willing to make the leap.
To unlock the true potential of B2B marketplaces, their current state, and their pros and cons, we've asked B2B marketers their opinions about the possibilities opening a marketplace brings to B2B companies.
Online marketplaces are digital platforms that host product offerings from different sellers. They have evolved from the traditional ecommerce model. In a marketplace, the operator can sell both its products and services or third parties, or even function only as an intermediary between two parties.
B2B marketplaces are a new subset of online marketplaces like Amazon, but the difference is that they aim to facilitate commerce transactions between that company and other businesses.
In B2B marketplaces, suppliers might be one-person businesses or independent contractors offering their services to businesses. The benefit of B2B marketplaces is that they offer companies convenience and a transactional system that's already familiar to consumers.
The good thing about B2B marketplaces is that they're not limited to vendors and contractors. According to Kelly Sarabyn, Product Marketing Manager at New York, NY.-based Pandium, "SaaS and IaaS companies can create their own marketplaces where their partners can showcase their apps. Companies can also enter the marketplaces of their larger partners to generate new leads and capture budget that is already allocated for the marketplace."
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There are plenty of types of B2B marketplaces to explore, and here are some of them.
As B2B marketplaces become the new normal, businesses in different sectors will continue to adopt the marketplace model to address underserved needs or tackle specific markets, providing services that other companies might not find elsewhere. However, every rose has its thorn, and not all can be positive as B2B marketplaces can also come with some cons. Let's take a look.
One way or another, we are all used to Amazon and Aliexpress. They offer customers a seamless buying experience that is quick, simple, and safe. B2B marketplaces are made to give business customers a similar experience, bridging the gap between B2C and B2B and offering businesses a familiar environment.
One of the main benefits that come with B2B marketplaces is customer data. As Erica Mazzucato, Product Marketing Manager at New York, NY.-based Corra says, "marketplaces offer access to valuable customer and behavioral data. If analyzed consistently, this data can translate into the ability to reduce friction in the buying journey." Also, data enables superior customer service, personalized offerings, and better content for companies.
B2B marketplaces give companies the ability to connect other suppliers, salespeople, and vendors without additional overhead. According to Mazzucato, "by connecting third-party suppliers and dropshippers with buyers, businesses can unlock new revenue streams without added inventory or technology costs." Thus, rather than absorbing additional costs, companies can share the load with third-parties.
Mazzucato shared that initial costs can be a big con for B2B marketplaces. "Enabling a B2B marketplace can be a considerable investment, and the ROI is not guaranteed. The intrinsic complexity of B2B workflows makes it harder for organizations to ensure smooth transactions and retain buyers." That means that B2B marketplaces can be too expensive for some companies and that retention is not always guaranteed as with other high-touch selling strategies.
If a business isn't too sure of what it wants or the needs aren't clear from the start, chances are that a B2B marketplace might not catch the decision-makers' eyes. For instance, if they are still at the consideration stage, a B2B marketplace is not the place for them to compare and contrast options and likely it wouldn't work well to convert those customers.
B2C marketplaces like Amazon or Airbnb have shown that a substantial customer experience is a must for buyers. However, in the B2B sphere, where sellers interact more or less directly with customers, a B2B marketplace might reduce the interactions between company decision-makers and sellers, which results in less control over the experience and could increase the number of touchpoints companies need to complete a purchase.
However, as we move forward, B2B marketplaces will become more common, more competitive, and an increasingly integral part of most businesses' B2B sales strategy.
B2B marketplaces present an opportunity for B2B companies to go omnichannel and meet other companies' demands worldwide. Keeping your eyes open for the opportunity that B2B marketplaces bring could be just what you need to consolidate your B2B strategy in 2021 and beyond, but don't don't take the plunge without having seriously weighed your pros and cons.