Speaking to Econsultancy this week, Marc Teulières, General Manager of B2B at marketplace platform Mirakl, described a ‘mental shift’ in B2B commerce, saying that buyers are “more and more ready to make large transactions online.”
Teulières commented on the growth in B2B marketplaces, and their role in digitally transforming the procurement process, which depends heavily on networks of trusted suppliers.
“The reality – when we carry out surveys and studies – is that the quality of [B2B] marketplaces is often higher than traditional ecomm,” he says. “Trust and quality are of the utmost importance. [B2B businesses] are usually more diligent in the choice of suppliers that they bring onto their platform.”
A ‘mental shift’ in B2B commerce: Why marketplaces are thriving
If you’re a B2B wholesaler or even a well-positioned brand, you may be considering whether to launch an online marketplace or one-stop shop, in order to grow the share of spend you already command into an aggregated ecosystem around your company.
Launching a marketplace of your own isn’t the only way to engage with this growing trend, of course. Teulières comments that every B2B business should be considering how to engage with marketplaces in some form: “Should you buy on marketplaces, should you sell on marketplaces – or should you become a marketplace yourself?”
For those who do decide to launch a marketplace, what are the pitfalls to avoid, and what measures will give the best chance of success? Here are the key considerations that Teulières highlights.
1. Have a vision – and commit to it
Although some businesses might want to experiment with a marketplace model to see if it’s a good fit, Teulières cautions that this is one of the things that can doom a marketplace to failure. “Not all marketplaces are successful … you should not launch a marketplace just as a proof of concept.”
Instead, the marketplace strategy needs to come from the very top of the organisation, and have a strong team behind it. “Especially nowadays, with the fears of recession, and so on – I see that the people who are signing with us have a real strategy. … [The marketplace] has to come from a vision.”
2. Create a Minimum Viable Ecosystem
Similarly, when creating a marketplace it’s important to commit to launching a fully-fledged platform, as marketplaces need a certain scale in order to take off. “You need to have a decent offer right from the beginning,” says Teulières.
“It’s the notion of what we call ‘Minimum Viable Ecosystem’ … it doesn’t mean that you should make a big blast and start everywhere at the same time.” However, a marketplace should add to the quantity of your core product assortment by a significant amount. “Clients will ask me, ‘How many products do I need to have?’ And the answer is: ‘It depends.’
“If your core assortment is 5,000 products, and you bring in 1,000 products [through the marketplace], that’s already pretty good. But if you’re a wholesaler of manufacturing parts, and you have one million parts in your assortment – if you bring an additional 1,000, it will be insignificant. The likelihood that your buyers will bump into a marketplace product is close to zero.
“So, here, you need to bring something like a hundred or 200,000 products right from the beginning to get a chance to sell.”
3. Aim to sell more to your existing clients
“Usually, marketplaces work better when it’s about selling more to your existing clients versus gaining new customers,” says Teulières.
“Over time, it can help you to get access to new customers – but the shortest route to success is: you have an existing customer segment; they love you, they are loyal to you, they are sticky; bring them more, and try to sell them more.”
4. Resist the temptation to launch as a new entity
As mentioned, the name and reputation of a B2B business can help to establish confidence in a marketplace launched by that business; so it’s important to make sure that any marketplace endeavour is recognisably part of the same entity.
“You should resist the temptation to launch under a new entity. A marketplace is very simple, actually – you bring more assortment to your existing buyers, and you open your customer base to a fragmented ecosystem,” says Teulières. “So, launching a new brand is – with very few exceptions – a very bad idea.”
5. Pay attention to payments
Payments and invoicing are integral to the B2B ecommerce experience, so it’s important to ensure that any marketplace gets them right. “Invoicing is a very important topic; payments is a critical topic, too. There is a full ecosystem of players who are actually developing technology and solutions that are specific to the B2B world.”
This is important for ensuring that marketplaces can present the same payment options and invoicing agreements that B2B buyers and sellers are used to. “The general rule is: the more integrated your marketplace customer experience is, the better,” Teulières says.
“So, if you can offer the same website, same payment methods, same invoicing – you will succeed.”
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