The question is deliberately provocative, but we couldn’t resist!
In 2021, after a year spent in front of our screens because of the Covid pandemic, if we were to create two columns to compare the benefits of marketplaces and e-commerce sites, it would be difficult to find much to add in favor of the latter.
What was previously true for B2C is now true for B2B: the marketplace model has spread to a much wider range of sectors than fashion and travel and a number of sophisticated examples are proving the relevance of this approach.
Total, Alstom and Suez are just some of the companies behind inspiring examples over the last few months (read more below).
In the last quarter of 2020, marketplace activity grew by 81% around the world: a meteoric increase that is double e-commerce’s (impressive) growth rate.
In response to recurring questions from our clients and potential clients, we’ve decided to share our answers here and ensure that B2B readers can benefit from our experiences.
A reminder of the key differences
What distinguishes a marketplace from a retail website?
On a retail website, the buyer enters into a relationship with the seller, without any intermediary. This reflects the buyer/seller relationship in physical stores: a retail website merely digitizes the sales process.
The seller manages the store front (in this case, the website) and the “engine room”: stock, payment, deliveries.
The business model is still based on retail price margins, just as it is in store.
However, the marketplace model involves a third player: the marketplace operator. This trusted third party adds value to sellers’ offerings, helps buyers find what they are looking for and is paid on commission. Sellers continue to manage stock and deliveries to meet demand. They can access a new distribution channel without weakening their existing sales network and without having to reconsider their long-standing processes.
Everyone wins. Buyers have a single point of contact, committed to providing a certain level of service. The customer experience is significantly improved (smooth process and fewer problems). As a result, orders increase and sellers are reassured by these sales which are brought to them “on a plate”.
In particular, B2B sellers benefit from a rapid improvement in user experience.
2. The five benefits of a marketplace
Don’t lose sight of the fact that professional buyers also prefer online shopping! In a study entitled B2B Marketplaces Are Blossoming, published by the consultancy firm Roland Berger in June 2018, it was reported that 74% of B2B buyers search online for at least half of the products they buy. And once they’ve made their decision, 91% of buyers prefer to place their order online.
In reality, B2B buyers’ behavior is the same in the office as it is at home: their habits and their expectations have changed as a result of the UX revolutions brought about by Airbnb, Uber and other Internet giants.
A marketplace ticks the following boxes:
• It provides support for sellers. This support includes every stage of the process (onboarding, moderation, scoring), each of which can be displayed on dashboards.
• It aggregates and analyzes all data relating to the sales cycle, something that is valuable both for the seller and the marketplace operator: product and service data, purchase data and behavioral data.
• It enables seamless order tracking from shopping cart to delivery, including promotions.
• It generates financial indicators on sales, profitability of products and services, average carts, billing, etc.
• It facilitates buyer management: returns, refunds, messaging, ratings, etc.
Provided that the marketplace reaches a “critical mass” (the balance between sellers and buyers), the model is solid and scalable.
3. Define your business model
What are your main challenges? What problems are you trying to solve?
Start at the beginning. Do you want to:
• complement an existing physical network by combining physical and digital points of sale?
• digitize procurement (e-procurement) as Total and Alstom have done?
• focus on the circular economy as Suez has done with the Organix marketplace?
The marketplace model meets these three objectives.
As we have seen, the user experience is crucial when choosing a marketplace model.
The almost limitless possibilities when it comes to customization are another marketplace advantage that should not be underestimated. There are as many potential B2B marketplaces as there are businesses. For one of our clients (an e-procurement marketplace), we’ve made it possible for buyers to create quotes, for example. Every industry has its own requirements and so does every sector. A marketplace allows for bespoke development.
As you can see, the marketplace model has become an essential tool for B2B players because of its reliability and modularity. You must now be wondering how you can launch your own marketplace. Does it involve the same process as for an e-commerce site? What skills are necessary? You’ll find the answers to all your questions in the articles on our blog.
THREE CASE STUDIES
SUEZ - Organix
This marketplace focuses on the recycling and recovery of organic waste: Organix connects waste producers with buyers who will process this waste.
ALSTOM - StationOne
Alstom is a world leader in transport systems, connecting rail operators with international vendors. In addition to an incredibly wide range of parts (wheels, bearings, motors, suspensions, cables, screws, cameras, tools and personal protective equipment), the marketplace offers services including installation, repair, servicing, training and technical advice.
A B2B marketplace for the professional internal purchases of goods and services.