B2B Marketplaces Capitalize on E-commerce Expansion
Globally, e-commerce sales totaled nearly $5 trillion in 2021 and are expected to surpass $7.4 trillion by 2025, according to Statista. And Morgan Stanley reports that global e-commerce rose from 15 percent of total retail sales in 2019 to 21 percent in 2021.
With so much money at stake, it’s no surprise that companies are turning to emerging CRM technologies and platforms to help them manage the complex digital sales and marketing opportunities and challenges that go with selling online.
While much of the current e-commerce sales volume has come from the consumer channel, to reach business customers, retailers in the online world are increasingly turning to B2B marketplaces, whose numbers continue to grow.
In fact, according to Digital Commerce 360, the number of vertical B2B marketplaces has more than tripled since 2019. This is due to an increase in demand, with roughly 40 percent of businesses reporting that they now purchase as much as half of their goods and services through a marketplace. And by 2023, the B2B e-commerce market is projected to be valued at $2.3 trillion alone
The entire B2B e-commerce market is far more complicated, and few companies have the expertise in-house to handle it.
B2B e-commerce is still about five years behind B2C e-commerce, according to Matt Hudson, CEO of BILDIT, providers of an e-commerce platform for mobile app development. “B2B is very entrenched in a few different ways. From the technical perspective, they don’t have the teams, the tooling, or the business ability to really coalesce around e-commerce,” he says.
B2B companies are also entrenched in the current toolset, with sales teams looking to avoid friction with traditional sales.
On top of that, companies selling globally to other companies often have to deal with far more complex exchange rates and taxes, according to Matt Mudra, vice president of planning and performance at Schermer, a Minneapolis-based B2B marketing agency.
B2B e-commerce sales platforms are designed to provide solutions to many of these challenges, but the market for such products is very diverse and fragmented, both in terms of geography and industry vertical.
A BOOMING BUSINESS
By many estimates, there are as many as 400 B2B e-commerce marketplaces today, and that number is only going to grow, most experts agree.
So too, is the adoption of such marketplaces.
Hudson sees incremental movement in the growth of these marketplaces in the next year, as businesses that aren’t using them yet will start to when they see competitors having success with them. But he cautions that many businesses are still entrenched in traditional sales methods.
“Brands should make sure marketplaces are part of their selling transaction strategy but be realistic that it should presently contribute 20 percent to 30 percent of the selling route to their market mix,” adds Heather Margolis, senior vice president of 360insights, a Canadian channel engagement and business optimization company. “Brands and partners selling need to accept that marketplaces are part of the future because this is where many customers want to buy.”
One of the top e-commerce companies in the world where customers are going to buy is China’s Alibaba, which has more than 22,000 employees worldwide. While it is largely a consumer platform, a big part of the company’s recent growth has come from B2B e-commerce transactions in the United States. The company provides suppliers the necessary tools to connect with local and international customers.
Amazon, another top e-commerce shopping destination, has been in the B2B realm for years. In 2015, the online retailer launched Amazon Business, a marketplace strictly for businesses. The site replaced AmazonSupply, a marketplace that the company launched in April 2012 with 500,000 products aimed at industrial contractors, sanitation workers, lab scientists, auto repairmen, and plumbers, among other labor-intensive jobs.
In addition to discounts and deals, Amazon Business tailors to businesses’ unique needs by being able to surface product recommendations and ads relevant to their industries on the home page. Business account holders can also access instructional product videos from manufacturers and connect directly to sales reps via a number of communications channels. Buyers that use the platform include 55 of the Fortune 100 companies and more than 50 of the 100 largest U.S. hospital systems, according to Amazon.
Some of the other leading global B2B marketplaces include EC21, a Korean platform with 2.5 million members, more than 7 million product listings, a database of more than 2.5 million buyers, and around 3.5 million visitors monthly; ECPlaza, with more than 1 million members; eWorldTrade, with more than 500,000 registered users; SeeBiz, a marketplace of more than 600,000 items from more than 1,000 vendors; and Made-in-China, a marketplace designed to connect buyers with Chinese suppliers for industrial machinery and electronics, clothing, computer products, furniture, and other products. Made-in-China reportedly boasts more than 3,800 categories, 6 million registered supplier members, and 14 million registered buyer members.
Among the leading vertical-specific B2B e-commerce marketplaces are Convoy, covering trucking freight; Faire, which connects small wholesalers and manufacturers to local retailers; Parts Town, offering replacement parts for restaurant equipment; Bay Supply, for industrial fasteners; Grainger, for safety gear, tools, and electronics; ADI, for fire and security solutions; and DigiKey, for electronic components.
Of these, Faire has been one of the most influential, according to Ryan Lee, founder and CEO of Nautical Commerce. Previously, there was not much visibility for smaller brands to get in front of retailers, but with Faire, now smaller companies have a way to get in front of the right types of retailers without huge marketing spend, he says.
PRIVATE OPTIONS EXIST
While Amazon, Alibaba, and many of the other platforms have done a very good job of addressing the unique challenges of the B2B environment, there are numerous businesses that eschew the public B2B marketplaces for their own private e-commerce platforms.
“Even historic retailers and brands are starting to offer their end products via a self-run service,” Shermer’s Mudra maintains. “Through vertical integrations, they are not only producing and shipping but also now selling directly to their customers, allowing them to compete not only against direct competitors but also skip traditional distribution channels and even B2B marketplaces,” he says.
“There are a lot of different marketplaces—horizontal marketplaces, vertical marketplaces—but one thing they all have in common is that it’s hard to get one category for a very specialized product or one with a complex configuration,” says Johan Liljeros, general manager and senior commerce adviser at Avensia, an e-commerce services and solutions company.
There’s a marked difference between selling common business products, like pens, pencils, or computer equipment, and very specialized products, like those for orthodontia, Liljeros explains. Avensia recently helped establish a private e-commerce marketplace with American Orthodontics, one of the world’s largest orthodontic equipment manufacturers. The company’s made-to-order products are different for each client.
A private e-commerce platform like this can offer more specialized customer service while also enabling B2B providers to differentiate themselves from companies on the public B2B marketplaces, Liljeros says. “It makes it easier to position yourself. You put your brand in the center and then you have more flexibility in building the brand experience when you have full control over your sales channel.”
By having your own B2B marketplace, you have better control over sensitive issues, such as privacy, traceability of products, etc., that are essential for companies in healthcare and other heavily regulated industries, according to Liljeros. There also needs to be traceability for insurance reimbursements.
MARKETING TO B2B BUYERS
But while other platforms exist, the larger public options are still the default for most companies, and those outside platforms could be especially difficult for marketers to manage and navigate on their own. Luckily, most marketplace operators conduct marketing campaigns on their merchants’ behalf to promote the products listed on their sites and bring in targeted leads.
Merchants also stand to gain from the network effect of B2B marketplaces. Buyers are already flocking to these platforms in search of information about products and services and to compare them to other merchants’ offerings. Online sellers can expand their networks of potential buyers without conducting massive outbound campaigns.
“Marketing in B2B requires a channel strategy that embraces influencers and is structured to support a broader ecosystem to impact a brand’s success,” 360insights’ Margolis says.
When companies use Amazon, Alibaba, or any of the other large B2B marketplaces, it’s important for them to stand apart from their competitors selling there.
Amazon, for example, offers its own marketing resources, which might be a little more expensive than using your own but will give better search results, according to Hudson.
“It’s hard for people to engage if they don’t see you,” he says.
Hudson and others also recommend making it easy for buyers to ask questions and post reviews.
The latter is especially important, as more than 90 percent of shoppers acknowledge that they read online reviews before they make purchases. While it can be difficult to build this kind of social proof, B2B marketplaces provide functionality for users to rate products and leave reviews to help their merchants build their brands and, ultimately, generate more sales.
Marketplaces should also make advertising easy for merchants, says Christie Zhang, product marketing manager for the retail media business unit at marketing and advertising solutions provider Moloco. “To be successful, marketplaces need not only to enable merchants to sell, but also provide a strategic partnership with shared interests and success. This is where self-serve in retail media can play a key role—enabling merchants to set up, manage, and drive sales with simple ad campaigns with automated capabilities like bidding and targeting so they don’t need to be ad experts or hire a whole team.”
With tightening marketing budgets, advertisers are looking to tie their spending to tangible business outcomes, like conversion and revenue, Zhang adds. That means being able to optimize not only individual campaigns for return on ad spend (ROAS) and other metrics but also, by leveraging algorithms, every ad campaign for every advertiser, in real time.
When marketing and selling products on a B2B marketplace, the most important first step is to realize the differences between B2C and B2B customers, experts agree. Most B2C buying decisions are made relatively quickly by one or two people. B2B purchasing decisions tend to involve multiple people, and the sales cycle can be several months long, even if the final part of the process is a simple click of a mouse.
But even then, though there are notable differences, B2B buyers expect the same ease that B2C buyers have enjoyed for several years, notes a commercetools blog: “B2B suppliers are now expected to deliver the content, features, and experiences that their buyers enjoy from their daily lives as B2C consumers. For a commerce strategy to be successful, it must take this reality into account.”
Another mistake some B2B sellers make is failing to provide e-commerce buyers the same level of service they would provide in-store buyers, according to Hudson.
“Don’t assume the marketplace knows what you are offering,” Hudson says. “A national brand is going to have a significant advantage of trust in the brand, the ability to go into a store and see it, and the ability to touch it.”
That’s a challenge that is unique to the channel, which is why Alibaba stresses the need for companies selling on its platform to ensure that buyers who never meet you in person will believe you.
To foster that level of trust, Alibaba recommends that companies complete their company profiles, verify themselves via authentication processes, showcase photos of their operations, and provide other content that can help authenticate them.
Alibaba further recommends on its website that companies using its platform be flexible and adaptive, offering product customization, price modification, and personalized responsive services; respond promptly to inquiries; encourage customers to leave feedback, even negative feedback; and include as much product information as possible.
But regardless of how they choose to sell and market their products to the B2B marketplace community, merchants that choose to sell on a B2B marketplace can bring maximum speed and efficiency to their digital commerce operations with minimum investment.
More businesses are clearly buying more frequently on marketplaces. The market is still young, but by getting listed on these platforms early, companies can beat their competitors to the punch, capturing market share, building successful online brands, opening new revenue streams with a more diverse set of distributors and end customers, and expanding their geographic sales areas without opening new stores.
Phillip Britt is a freelance writer based in the Chicago area. He can be reached at email@example.com.