The Rise of B2B Marketplaces
In the world of B2B ecommerce, Amazon Business is a genuine phenomenon. It grew from $1 billion to $10 billion in sales in just three years. And more than 70 percent of business buyers use it to research products and prices.
Understandably, a growing number of businesses are opting to build their own B2B marketplaces. According to Gartner, at least 70 percent of enterprise marketplaces launched will serve B2B transactions by 2023.
What’s behind this trend? Where’s the growth in B2B marketplaces popularity? Are marketplace technologies becoming more accessible?
This article will consider these questions and identify key reasons why merchants are building B2B marketplaces — and why you might consider it, too.
In this B2B marketplace guide:
- What is a business-to-business marketplace?
- What do today’s emerging B2B marketplaces look like?
- How to achieve B2B ecommerce growth
- How hard is it to build a marketplace?
- Questions to ask if you’re thinking about building a B2B marketplace
- Key takeaway
- Frequently asked questions
What is a business-to-business marketplace?
A B2B marketplace is an ecommerce site whose customers are themselves running a business. It has a number of features that distinguish it from regular B2C sites, such as specific product offers at business-only prices. If your business is a regular bulk buyer of office equipment or janitorial supplies, you’d tend to visit a B2B marketplace to ensure your needs are met.
What do today’s emerging B2B marketplaces look like?
Of course, the new generation of B2B marketplaces is not “one size fits all.” Broadly speaking, new B2B marketplaces fall into one of two main categories — niche players and market leaders. The niche players are businesses that are focused on a particular niche market or community of users.
The market leaders are businesses that already have a large customer base, have a lot of organic web traffic, and want to grow even bigger by offering more choices to their existing customers.
How to achieve B2B ecommerce growth.
You can help your business to grow by mounting a successful business-to-business marketplace. Here are a few tips to help you see where the most successful cases are coming from.
Get ahead of the competition.
One of the main reasons businesses are creating B2B marketplaces is to get ahead of their competitors.
Many companies identified the window of opportunity offered by the pandemic, when face-to-face sales were not an option, and evolved. In November 2021, B2B sellers were more likely to offer ecommerce channels over in-person sales for the first time in history.
According to research by McKinsey, innovative business strategies tend to deliver higher returns than risk-averse strategies. The three-year revenue growth of companies that move first with digital strategies is nearly twice that of companies that play it safe in response to digital competition.
Give customers what they want.
Another important reason businesses are launching their own B2B marketplaces is to retain existing customers and attract new ones by giving them what they want. And what they want, increasingly, is the ability to buy multiple products on nicely designed, highly secure, and easy-to-use marketplaces.
Another reason why B2B buyers often prefer marketplaces is price transparency. Historically, B2B buyers have worked closely with sales reps to get custom quotes from multiple vendors for similar products. Comparing prices was often a big, time-consuming challenge. On many marketplaces, however, comparing prices is as easy as point and click.
Help channel partners sell more.
On many B2B manufacturers’ websites, visitors can view detailed product information, including specs, analyst reports, and case studies, but they cannot complete a transaction. Instead, they must leave the site and contact an authorized channel partner via the partner’s website, email, or a phone call.
Because of the added friction, many interested buyers never make the leap from “interest” to “purchase.”
When you set up a B2B marketplace and recruit your channel partners to act as sellers, you can more easily turn interested website visitors into actual buyers. Instead of having to contact a channel partner independently, visitors can navigate to your marketplace and compare partners’ offerings. As a result, your channel partners sell more — which also means more demand for your products.
Earn incremental revenues.
Your B2B marketplace is also an opportunity to earn additional revenue without adding new products to your portfolio. If you offer a fairly narrow range of products, you can recruit sellers with complementary products that would be convenient for customers to buy along with yours.
Then you can charge sellers a commission for every sale, even through your sellers are typically responsible for their own product listings and fulfillment logistics.
Test the demand for new products.
Amazon Business is known for using its market data to understand trends and identify opportunities to create its own brands. If you build your own B2B marketplace, you can do the same.
As your marketplace grows and you analyze sales trends over time, you may keep an eye out for products and product categories that perform especially well. And that information can inform your product development plans over the medium and long term.
Position your business as a market leader.
Having your own B2B marketplace is a good way to position your business as a market leader in your niche. When B2B buyers visit your marketplace to browse products and access content, they are continually exposed to your brand.
Over time, it can become their “go to” destination for a wide range of products and services beyond your core offering — which can also fuel revenue growth as mentioned above.
Know (and manage) your B2B marketplace risks.
While building a B2B marketplace has a lot of compelling benefits, it also comes with some well-defined risks. Most importantly, you face seller risk. Incomplete product information, as well as orders that aren’t accurate or delivered on time, can reflect poorly on your marketplace and on your brand.
To manage seller risk, you need to provide clear expectations and minimum standards for all sellers, and you need to give customers a way to contact you if they are having difficulty with one of your sellers.
Another risk to keep in mind is compliance. When you operate a B2B marketplace — especially if it’s global — you need to keep track of changing local, regional, and national tax and banking regulations that affect marketplace sales. To minimize your compliance risk, you need a trusted tax and accounting expert and the right software.
How hard is it to build a marketplace?
While B2B marketplaces have become increasingly popular, many businesses are concerned that building a marketplace could be expensive and time-consuming. They often envision lengthy systems integration projects and custom development.
However, marketplace technology has matured over the past couple of years. Existing marketplace software means you can start your own marketplace without having to write all the code from scratch.
Generally speaking, to create a marketplace you need a well-developed ecommerce platform and a marketplace solution that works with it. Ideally, your marketplace solution will also connect seamlessly to your ERP.
Questions to ask if you’re thinking about building a B2B marketplace.
Of course, running a B2B marketplace is considerably more complex than managing a single-company ecommerce store. If you’re thinking about building a marketplace, it’s important to develop a comprehensive strategy and understand how you’re going to address a range of challenges, from seller onboarding to handling taxes and compliance.
If you’re thinking about building a B2B marketplace, some questions to consider include:
• Who will sell on the marketplace?
• Will your competitors be allowed to sell on the marketplace?
• Will your marketplace allow buyers to compare competing products?
• How will you onboard new sellers? How much of the process will be automated?
• How much control will sellers have over their product listings?
• Will you allow sellers to offer varying shipping and return policies? What sorts of minimum standards will they have to meet?
• How will you handle local, national, and cross-border taxes?
• Will you be the merchant of record for marketplace transactions? And, if so, what will that mean for your accounting?
Key takeaway: now is the time.
If you think your business might benefit from building a B2B marketplace, now is the time to get started. As more companies launch new marketplaces, it will become more difficult to attract high-quality sellers and make your marketplace a destination. If you can start a B2B marketplace ahead of your competition, the rewards — in the form of higher earnings and the chance to lead your market — will be rich.
Frequently asked questions regarding B2B marketplaces.
How much did B2B ecommerce make in 2021?
According to research in the 2022 U.S. B2B Ecommerce Market Report, the B2B ecommerce sector grew from $1.39tn in 2020 to $1.63tn in 2021. Analysts say it’s because both buyers and sellers see B2B ecommerce as a more efficient way to get their goods.
Which market is bigger – B2B or B2C?
Stats from Statista show that in 2020, the $14.9tn value of global B2B ecommerce is more than five times that of the B2C market. For example, businesses which regularly buy office equipment are potentially worth much more than the one-and-done consumer, hence the value of repeat custom in B2B.
How important is personalization in B2B buying?
According to Accenture, half of B2B buyers said personalization is a key feature when finding an online supplier. They’d spend 48% more when they get the personalized experience they’re looking for. Read our tips on personalizing your B2B approach.
To learn more about getting started with B2B marketplaces, we invite you to take advantage of these new resources:
• Infographic: 5 Reasons to Start Your Own B2B Marketplace
• Infographic: B2B Marketplaces Maturity Model
• Podcast: Should You Start Your Own B2B Marketplace?
• Podcast: Should You Be Selling on Amazon Business?