“Get rid of the middle man and let’s get down to business”!
The elimination of middlemen in B2B and B2C industries seem to be gaining steam. The removal of wholesalers and warehouses are becoming a global trend in the product and service industry. Especially in B2B direct marketplace, where bulk reordering and a decisive customer base are already aware of what they want to purchase. Retailers and suppliers now want to be connected directly to increase efficiency and transparency in the B2B sales cycle and big businesses are taking steps to ensure there is a platform for these buyers.
According to a recent study by Forrester B2B eCommerce by 2023 is expected to reach $1.8 trillion just in the US and account for 17% of all B2B sales.
Leading B2B organisations, globally, have started to recognize the need for a strong digital presence as 40% of their revenue comes from B2B e-commerce sales, according to a study by Magento and Econsultancy. The same research of over 500 companies in Asia Pacific region specifies that 68% of companies in Australia and New Zealand have a B2B transactional website. As we can observe, there is a growing trend of B2B portals and marketplaces in ANZ region. However, ANZ is still not as developed as other global markets in terms of B2B e-commerce, only 70% of the executives surveyed in Magento’s study ‘strongly agreed’ that their company is committed to investing in B2B e-commerce experience.
Although companies are increasingly investing in delivering a better B2B customer experience through digital transformation, ANZ still lags behind in this regard compared to the US, China and even India. The lack of commitment towards providing professional buyers/retailers a comprehensive omnichannel CX is just one of the problems. Senior executives also doubt they have the capability to deploy a cutting edge B2B platform. Plus Small Medium Enterprises (SMEs) often lack the financial power to launch such a platform. The birth of marketplaces like IndieDirect platforms and other B2B marketplaces have come from this large gap and obvious need.
B2B marketplaces differ from direct B2B portals. As the name suggests marketplaces are platforms where companies sell their products alongside competitors’ products. Whereas direct marketplace involves setting up your company’s e-commerce portal to exclusively sell your own product to customers.
They do not need to be seen as competitors, in fact, many companies sell products through their own portal and marketplaces so they can be viewed as complementary solutions.
It is not easy setting up your own company portal although it allows you certain long term benefits such as a brand building. Financial costs incurred in setting up and maintaining a B2B portal are high which not all firms can afford. Furthermore not every organisation has the expertise to develop and maintain such a portal and give customers a highly personalised experience. Sometimes the complex nature of B2B products and pricing also makes it hard to set up a portal.
A B2B marketplace provides you with a cheaper and effective alternative in this regard. You simply need to register yourself with the portal and for a set fee or commission you are ready to make transactions from the first day. Product updating, ordering, invoicing, receipting and even distribution, etc all become the headache of the marketplace. Retailers and suppliers can now concentrate on other functions more important to their business needs and in which they have specialised expertise.
One of the key advantages of using a B2B marketplace is the managed security, the marketplace becomes fully accountable for ensuring secure transactions. Security is a big deal and these marketplaces are a great solution. A recent study from Magento showed that “ 54% of executives believe security and compliance are the top priority feature they consider when looking at B2B e-commerce platforms “. IndieDirect marketplaces usually have highly competent teams looking after the security needs of suppliers and retailers.
Due to the volume and value of transactions involved in B2B e-commerce, it is essential to have a bargaining/negotiation feature where supplier and retailer can directly negotiate rates and terms of the contract. Very often marketplaces do not provide this flexibility and buyers try to bypass the platform and get direct with the supplier. However, if an added functionality allowing transparent bargaining was in place the entire purchase experience would be more gratifying for all parties involved, marketplaces like IR Exchange are aiming to incorporate this feature to take a competitive advantage.
The order management system of the marketplace is one of the most important features. 43% of Australian companies surveyed by Magento recognize it as the most important. The retailer and supplier would both have considerably less work to do if an efficient OMS was in place and chances of human error would be minimised. Many companies are moving from OOTB OMS systems for this exact fact and using standalone platforms like Fluent commerce to really accelerate their digital abilities.
The lack of transparency in digital marketplaces sometimes puts off businesses and customers. They can lack clarity and this means customers do not know who they are buying from, at what price exactly and how much are actual components of the eventual price. The marketplaces sometimes have their own hidden charges and do not transparently communicate these hidden fees on the platform. To gain the confidence of both the buyer and seller the marketplace should provide high transparency in the transactions carried out through their platform so no party feels cheated.
There is a high demand for being able to create special user groups according to loyalty or history with the customer. These user group with different degree of rights and freedom can easily become a part of affiliate marketing programs. Functionality on the marketplace would allow developing premium marketing campaigns in which existing users can be given a certain discount or a commission if someone registers or does a transaction through the marketplace with their reference. This would be a great way to incentivise existing users to refer your marketplace as B2B transactions are often high in value and reference discount or commission would be of substantial amounts.
Across the globe, we have seen a digital revolution, a unanimous shift of focus on customer experience and a need to simplify & streamline sales processes. This has dawned the birth and growth of the b2b marketplace, where companies can now access a digital market that facilitates an easier and faster way to do business online. Moreover, these marketplaces are evolving to reflect the needs and demands of customers, meaning more transparency, more personalisation, more security and lower operational costs. The businesses at the vanguard of digital transformations are listening to demands of the market and developing real digital marketplaces for unique and secure interactions that cannot be competed with. For more information on b2b marketplaces and the common platform you can use to support this type of transformation get in contact with FAIR Consulting Group and lets start a discovery today!