Online B2B Marketplaces: Beat Them or Join Them?

June 6, 2019
 

Online transactions are on course to make up nearly half of all business buying by 2020; as B2B grows, so does the activity on third-party marketplaces, aka an online b2b marketplaces, geared toward corporate purchasing. Indeed, Gartner predicts that by 2022, some 75% of companies’ “tail spend” will occur on third-party marketplace sites. This is because businesses look to streamline purchasing of non-strategic, increasingly-commoditized products such as office supplies and IT equipment.

Dominant eCommerce brands are already well-positioned to take advantage of this trend. Chinese juggernaut Alibaba offers a B2B marketplace and has partnered with Office Depot to smooth distribution within the U.S. Meantime, Amazon Business now claims $10 billion in annual sales, with 50% of its revenue coming from third-party marketplace transactions.

As B2B marketplaces rise, business suppliers are asking themselves the question that has long dogged B2C sellers: Can we beat them, or must we join them?

While answers will vary, every B2B eCommerce strategy should at least acknowledge the growing role of marketplaces. To develop the right approach:

1. Accurately Gauge Vulnerability for Online B2B

B2B vendors should assess their product lines and their current customers’ purchasing patterns to understand how much exposure they have to competition on marketplaces. Vendors with products that are highly technical, customized, or specialized are likely to be less vulnerable to the self-service, commoditized environment of a marketplace.

2. Set Strict Parameters for Marketplace Selling

Marketplaces can be a double-edged sword: even as they can boost brand visibility with new audiences, they can inhibit loyalty, since ownership of customer data often belongs to the platform, not the seller. The downward pricing pressure common to marketplaces is a concern for B2B vendors accustomed to offering custom catalogs to their customers; A third of B2B sellers fear pricing transparency on the Web could undermine their business, according to B2BeCommerce.

Vendors who do proceed with marketplace selling should restrict activity to set categories unique enough to withstand price pressure, without cutting into core sales. This includes specialty items that have “long tail” appeal within the industry, for example, or hard-to-find accessories or components.

3. Use B2B Marketplace Efficiencies To Test New Markets

B2B vendors looking to reach new audiences abroad or to test prototypes in new categories may find marketplaces advantageous for their quick visibility. This can make marketplaces a more cost-efficient way to launch initiatives than developing comprehensive new eCommerce offerings.

How is your business navigating the B2B marketplace conundrum? Learn more with the help of Kibo.