What You Need To Know About B2B Marketplace and Why
B2B marketplaces are starting to generate a lot of interest. Companies like Ariba, Chemdex, Commerce One, FreeMarkets and Internet Capital Group have attained breathtaking stock market capitalizations. Venture capitalists are pouring money into more B2B marketplace start-ups. Even industrial stalwarts like General Motors and Ford have announced plans to set up their own marketplace platforms to bring their suppliers and buyers closer.
As this is a new entrant with new business models in the B2B space, it’s increasingly difficult to make sense of the landscape. In this article, we introduce how the different types of B2B marketplace models work and how they create value, we hope to provide useful guidance not only to entrepreneurs looking to launch marketplaces but also to the many buyers and suppliers developing strategies for capitalizing on B2B marketplaces.
Why B2B marketplaces?
● Companies can streamline their processes and eliminate unnecessary costs by moving many of their business operations online, having separate portals for customers and suppliers. With the advent of online marketplaces, it has become easier to track the growth of the business.
● B2B markets generate a lot of data about many aspects of a business such as stock movements, spending patterns, and cash flow which can be analyzed to evaluate sales effectiveness, customer engagement, marketing campaigns, and much more. Increased data analysis provides actionable insights.
● B2B marketplaces can be available 24/7, every day of the year. Companies don’t have to rely on the availability of a sales team, nor are they troubled by time differences in international markets.
Business Purchasing Decision Break-down
To understand B2B marketplace platforms, it’s useful to understand what businesses buy and how they buy. Businesses buy a diverse set of products and services, ranging from printers to software products, from steel to machinery. At the broadest level, the purchases can be classified into Raw Materials and Maintenance Parts.
Raw Materials: are products and services businesses need to build a product - these goods and services vary considerably from industry to industry - e.g car manufacturers buying steel and braking systems. These purchases are made from specialized industry-specific vertical supplier markets.
Operating/Maintenance Parts: are products and services that businesses need to operate their business - these goods and services do not vary considerably from industry to industry - e.g spare parts, office supply, cleaning services. These purchases are made from industry-agnostic horizontal supplier markets.
Get ahead of the competition
One of the main reasons businesses are creating B2B marketplaces is to get ahead of their competitors. As of early 2019, only 56 percent of B2B companies had an eCommerce site — and only 11 percent had a marketplace. Many companies are identifying this window of opportunity especially in sectors like wholesale distribution and manufacturing, where businesses have been historically slow to adopt new digital strategies.
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