The Rise of the B2B Marketplace
We’re all familiar with the B2C marketplace. Websites such as eBay, Amazon, Alibaba, Etsy, and dozens more all provide a convenient place for business to sell their products online and reach new audiences with relative ease.
However, as we are increasingly seeing B2B brands adopting the strategies of the B2C market, we are also witnessing a large number of buyers for businesses flock to a new generation of B2B marketplaces to purchase products for their organizations.
According to Statista, in 2021, one third of B2B buyers completed half or more of their purchasing on marketplaces. 26 percent of those surveyed made between 50 and 74 percent of their B2B purchases on marketplaces, while 9 percent relied on these kinds of websites for 75 percent or more of their B2B buying.
B2B Marketplaces
The research above indicates there is indeed a trend for brands to increasingly rely on marketplaces for their procurement. This makes perfect sense of course. Marketplaces make it simple and time efficient to find everything a business is likely to need in one place. It also makes it far easier to compare prices and enjoy lower costs due to increased competition.
Other reasons for the proliferation and popularity of B2B marketplaces comes down to the way traditional supply chains operate.
The distributors would normally aggregate supply and be responsible for delivery, while providing short-term credit according to previously negotiated terms. This system directly benefits larger purchasers, who wield the budgets and buying power to negotiate the best deals.
Unfortunately, the same system lease small to medium sized enterprises out in the cold as, due to their comparably small buying power do not gain access to the best prices or delivery guarantees and are often subjected to exorbitant credit terms.
B2B marketplaces remove go-between distributors from the process and allow SMEs far more attractive service and terms by being able to by directly from manufacturers or through a single intermediary using systems such as drop shipping. Drop shipping has an agent source products directly from a manufacturer and sent onto the buyer. They usually operate on wafer thin margins, relying on large bulk orders to turn a good profit.
COVID-19
What supply chain related article in 2022 would be complete without talking a little about the global COVID-19 crisis?
As we are all aware, the COVID pandemic had a catastrophic impact on traditional global supply chains and even now they are struggling to recover. However, these shutdowns of worldwide shipping provided a convenient vacuum which B2B marketplaces were able to take advantage of.
By removing steps from the traditional supply chain process, B2B marketplaces were able to offer struggling firms quality products at reasonable prices and reliable delivery schedules, coupled with necessary standard credit terms, at a time when companies the world over were struggling to access even the most basic of items needed for the day to day running of their operations.
And, even now most would agree the worst of the crisis is behind us, COVID-19 has given B2B marketplaces the opportunity they needed to make their case to SMEs, meaning in the future we are likely to see even more of these businesses leveraging the services of these innovative ecommerce portals.
Sellers also have a lot to gain from the proliferation of B2B marketplaces. Not only does it give brands the opportunity to access new markets and audiences, but as competition between marketplaces increases, B2B sellers can enjoy even better terms and options than at present. Amazon doesn’t have a stranglehold on the B2B marketplace space the way it does with B2C ecommerce, and this can only be a good thing for sellers.
As Digital Commerce 360 reports, "Ideally, you want to be selling on not just one marketplace, but rather multiple marketplaces in your vertical. When marketplaces compete, sellers win. If only one marketplace dominates your industry—as Amazon does many areas of B2C—then you can expect to face margin compression as the marketplace gains market power. Marketplaces rarely raise prices on buyers—they squeeze the sellers first. So, you want to diversify your marketplace channels and hope that multiple B2B marketplaces continue to thrive in your industry."
Final Thoughts
The rise of the B2B marketplace offers significant benefits to both buyers and sellers when compared to traditional supply chains and the COVID-19 crisis has provided them the opportunity they needed to state their case.
However, it’s critical that multiple marketplaces are allowed to flourish as to avoid near monopolies such as the one Amazon hold over the B2C space.
B2B marketplaces are set to be a hot topic at B2B Online Connect 2024, taking place this June at the Rancho Bernardo Inn, San Diego, CA.
Download the agenda today for more information and insights.