Technology Insights

The 3 Biggest Myths About B2B Marketplaces

By Ideas @ AppDirect / Jul 27, 2020

The 3 Biggest Myths About B2B Marketplaces

When Dell Computer launched its business-to-business (B2B) marketplace in 2001, the company hoped to increase traffic to its website and improve sales by aggregating goods and services for business buyers in a one-stop. Just four months in, however, the marketplace was shuttered after signing up only three major suppliers and failing to ignite interest among business customers.

But what many hailed as the death of B2B marketplaces was really just the beginning. While the demise of the Dell Marketplace can be attributed to a number of factors—including an immature market for e-commerce, lack of an adequate online payment infrastructure, the complexity of B2B fulfillment, and more—20 years later those issues have been resolved, and B2B marketplaces are finally having their day.

Listening to Millennials

One reason for this is that millennials are now the ones making buying decisions at many companies, and they want to make business purchases the same way they do personal purchases—that is, online, and preferably through a marketplace resembling the business-to-consumer (B2C) ones they’ve grown accustomed to using.

So B2B marketplaces have begun to rise again: Today, more than one-quarter of B2B buyers identify marketplaces as their most preferred purchasing channel, and more of these buyers (87 percent) purchase through marketplaces than through any other channel.

Seizing the Moment

This B2B marketplace rebirth could not be happening, though, if the technology wasn’t there to support it—and it is, in spades. Having matured rapidly over the last decade, today’s marketplace platforms offer personalization, automation, security, mobility, integration, and speed. As a result, more and more businesses are looking to them to address many of the problems that have long plagued traditional B2B purchasing, such as slow purchase cycles and decision-making, complicated payment mechanisms, and complex ordering, re-ordering, and fulfillment requirements.

It’s not surprising, then, that marketplaces are on pace to reach sales of more than $3 trillion in 2024 (up from $680 billion in 2018). And lest you think these numbers represent market saturation, consider the following: As of early 2019, only 56 percent of B2B companies had an e-commerce site, and only 11 percent had a marketplace.

Exploding the Myths

Clearly, opportunity abounds for B2B companies that launch marketplaces that give business purchasers exactly what they’ve been asking for, including the ability to buy multiple products and services on well-designed, highly secure, and easy-to-use marketplaces offering transparent pricing, detailed product information, and more.

To make that process a little easier, the following dispels three of the most widely held misconceptions about B2B marketplaces:

Myth 1. Building a B2B marketplace has to be a complex and costly undertaking

When it comes to marketplace creation, lengthy systems integration projects and custom development are largely a thing of the past. White-label marketplace software and open APIs eliminate the need for writing code from scratch—meaning businesses can now launch and manage marketplaces with real-time multi-vendor product catalogs and accurate SKU and pricing information with ease and speed. Indeed, with a well-developed platform, you are well on your way to creating a B2B marketplace that will delight your customers, benefit your vendors, and propel your business.

As for cost, think of it this way: With 86 percent of consumers expecting more product choice, marketplaces provide a cost-effective and lucrative way to scale your assortment and sales with a minimum amount of effort on the part of your business.

Myth 2. Launching a B2B marketplace will disrupt your distribution channels

First of all, define disrupt. While it’s true that adding a B2B marketplace to your arsenal of sales tools will change how you do business with your dealers, distributors, and channel partners, it will not put you into competition with them.

Instead, by inviting them into your marketplace, you make it easy for customers to compare partners’ offerings, helping them sell more and creating more demand for your own products. What’s more, you’re also allowing your partners to tap into the trend of online shopping while enhancing your ecosystem and accumulating critical data about your partners’ customers. In other words, you’re creating a new sales channel for both your channel partners and your business, which is a win-win for everyone.

Myth 3. One and done: If you build it, they will come

Back in the early days of digital marketplaces, Benchmark Capital’s Bill Burley had the following to say, which is just as relevant today as it was nearly a decade ago: “Great marketplaces don’t simply aggregate a market; they enhance it.”

In other words, think of your B2B marketplace as a living, breathing organism that’s as dynamic as your business, and understand that you must constantly improve on the status quo of B2B purchasing and the user’s experience with your marketplace in order to offer economic advantages to both your marketplace participants and your own business.

This means keeping up with technological advances so that you can make buying easy, cost-effective, secure, and fast for your customers. It also means constantly curating your marketplace ecosystem to give buyers not only the products and services they’re looking for but also the content, case studies, and resources that business customers need to build consensus and demonstrate ROI.

To learn about the questions you should ask to evaluate and choose the right marketplace platform provider, read our guide, "Finding the Right Marketplace Platform Provider."

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