A B2B marketplace is more than just a buzzword.
From Airbnb and Uber, to Etsy and Ebay, to Amazon and Alibaba, revenues from marketplace platform providers are expected to double by 2022, according to a recent survey by Coresight Research. In 2016, consumers completed half of their eCommerce spending on online marketplaces and Forrester Research expects that to increase to two thirds by 2021.
Consumers appreciate the ease of shopping on marketplaces; being able to shop multiple suppliers or vendors in one place, compare prices, view reviews and place orders with one “swipe” of their credit card.
But how is this translating for B2B businesses?
We asked Four51’s Co-Founder, Rich Landa, to share some insights on B2B marketplaces, and how they’re changing the economics of the businesses who are embracing them.
What is a B2B marketplace?
A B2B marketplace is an online procurement network that allows an approved group of suppliers to offer products to an approved group of buyers. The decision on who is approved to do business in the marketplace is made by a marketplace sponsor, or operator. The sponsor sets rules on what can be purchased, by whom, and at what price, enabling procurement decisions to be automated.
Marketplace sponsors and operators take on many forms depending on the marketplace that’s being enabled. We’ve seen and worked with sponsors who are start-up technology businesses that want to disrupt an industry by connecting suppliers with buyers digitally. We’ve also seen sponsors come from traditional supply chain management functions in large retail corporations that need to connect suppliers around the world with thousands of retail locations. Other sponsors might be franchise corporations that want to efficiently connect franchisees with approved suppliers and manage aggregated pricing across their network. In every case, a marketplace sponsor has an interest in bringing together an approved group of suppliers with an approved group of buyers and setting rules around how the marketplace can operate, while automating the process using online technologies.
In our world, B2B marketplaces are really the intersection of eProcurement and B2B eCommerce. B2B marketplaces make sense for businesses that are trying to provide a modern purchasing process that is mobile, transparent, cost-effective, intelligent and easy-to-use for both the buyers and the suppliers.
What are some key features of a B2B marketplace?
There are some common features or capabilities you should expect from B2B marketplace technology:
- Connected suppliers
- Vendor Management
- Vendor/supplier fulfillment rules
- Catalog Management
- Streamlined order management
- Complex approval rules and permissions
- Consolidated billing
- Streamlined communications
- Bulk ordering and quote creation
- “Amazon-like” ordering experience for the buyers
The beautiful thing, for our customers, is that they aren’t limited to a pre-built feature-set. Four51 OrderCloud is a headless platform and an open-API, enabling us to deliver completely custom B2B marketplace concepts based on the sponsors’ unique needs.
How has Four51 seen B2B marketplaces change the economics of businesses it serves?
By digitally connecting your suppliers with your buyers on a custom B2B marketplace, you can expect amazing results:
- Reduce overhead by eliminating unnecessary roles (massive call centers or regionally-based vendor managers), streamlining supplier onboarding and the ongoing management process, and decreasing rogue spending amongst buyers.
- Increase profit margins by adding a new revenue stream to your business model in the form of commissions for supplier sales that take place on the B2B marketplace network.
- Grow a loyal customer base and/or improve the customer experience by adding a new service. The B2B marketplace becomes a central location for ordering, eliminating the need for buyers to shop on multiple sites and the potential for a lost sale due to buyer confusion.
- Create efficiencies in communications and marketing due to the ability to reach all of your buyers in one single location, and through extremely accurate, up-to-date contact data.
- Achieve more cost-effective pricing by aggregating the demand of your buyer side.
If you have questions on how a B2B marketplace could help generate similar results for your business, let us know!