B2B marketplace
A B2B marketplace is a type of eCommerce platform where both B2B buyers and sellers can do business online in one centralized place.
Updated: November 29, 2024
The rise of the B2B marketplace is one of the most prominent trends in B2B eCommerce. The business relationship between B2B buyers and sellers can be redefined by the impact of B2B marketplace model. It also acts as a networking point. A huge opportunity can be represented for traditional B2B wholesalers and distributors to accept the online marketplace model in order to get ahead of their competition.
What is a B2B marketplace?
A B2B marketplace is an eCommerce platform where businesses connect to buy and sell goods and services online in a centralized location. Unlike B2C platforms, B2B marketplaces focus on bulk transactions and value-added services. Sellers typically include manufacturers, suppliers, wholesalers, and brands, while buyers are other businesses. The marketplace operator facilitates these transactions by managing the online platform.
B2B marketplaces are also referred to as B2B trading platforms, procurement portals, multi-vendor marketplaces, sourcing websites, catalogs, directories, and more, depending on the specific nature of the transactions.
Meaning of B2B:
B2B simply refers to 'business to business'. It represents a business model in which companies that perform services or provide products for other businesses are involved rather than individual consumers. B2B is identical to online trading and can also be applied to Software as a Service (SaaS) products, B2B marketing companies, and other business supply companies.
It is highly likely that you will interact with a B2B company at some point in your business life if you are involved with an SME or mid-size enterprise. Therefore a better understanding of this principle should be gained.
Comparison of B2B with B2C, C2B, and C2C:
It is useful to compare B2B with other types of sales such as B2C, C2B, and C2C to have a complete and better understanding.
- Business-to-consumer (B2C), also known as retail sales is a simple business transaction in which goods are sold directly to individual customers with lower volume, a fixed price, and less administration.
- Consumer-to-business (C2B) involves customer reviews or influencer marketing, in which consumers offer facilities and values for business to consume.
- Consumer-to-consumer (C2C) involves selling of goods between two individual citizens.
B2B companies generally target an entirely different audience. The raw materials, products, semi-finished parts, finished parts, services, or consultations that is required for other businesses to operate, grow, and profit is offered by B2B companies.
B2B sales are characterized by quick or spontaneous purchases, fixed pricing, low-volume orders, products sold "as is," immediate payments, simple shipping processes, and minimal or no paperwork.
However, B2B transactions often involve complexities that distinguish them from the B2C model. These include:
- Price variations based on product type and order quantity
- Bulk sales and longer purchase cycles
- The need for product samples
- Customization options such as labeling, OEM, or ODM
- Diverse payment methods and potential international payment challenges
- Logistics and distribution considerations
- Documentation and bureaucratic requirements
All these factors must be carefully addressed when building and managing a successful B2B marketplace.
Types of B2B Marketplaces and their Business Models:
Different types of B2B marketplaces are there depending on the structure of the participants and other factors. These include:
Vertical versus horizontal marketplaces:
Vertical marketplaces, also called 'vortals' or vertical portals, deals only with a single category of products or a particular industry whereas Horizontal marketplaces deal with products and services of different kinds, keeping in mind the needs of buyers across different segments or sectors.
One-to-many versus many-to-many marketplaces:
A single purchasing company generally manages a one-to-many marketplace whereas buyers and suppliers are of different entities and the marketplace is managed by a third party in many-to-many marketplaces.
Local versus global marketplaces:
We can differentiate between local and global B2B marketplaces in terms of geography. Companies supply only to their local market on local marketplaces, whereas the exchange of goods and services are facilitated by global marketplaces, unrestrained by geographic boundaries. A greater risk and challenges is always there to run a successful global marketplace, as it has to handle additional issues related to international payment, language and communication barriers, cross-border trade and logistics, and more.
The business models and sources of revenue for a business is other important things to know about whether you intend to proceed on your own B2B marketplace or sell with big B2B platforms. The most commonly used business models in B2B marketplaces are:
Commission-based business model:
A percentage is paid as commission to the marketplace operators for every successful order a seller gets from the platform. Different costs may be charged by the marketplace depending on the category of products, type of products, value of the cart, order volume, and other trade variables.
Subscription-based business model:
Marketplaces often charge sellers a membership fee to grant them access to the platform for conducting business. This model is particularly common in large-scale B2B trade marketplaces with a high volume of repeat customers. Subscription packages may include added benefits, such as enhanced product visibility in catalogs, dedicated account management, access to exclusive categories, logistics support, advertising tools, and more, to attract and retain memberships.
Listing fee business model:
The sellers are asked to pay an extra amount as a listing fee for posting a product to sell in this model.
Benefits for Suppliers when they are part of a B2B Marketplace:
A huge potential is there to take sales and business to the next level for suppliers who are part of a B2B marketplace. The benefits of selling on a B2B marketplace include:
Build your online presence:
You can stay ahead of a lot of your competitors who still adhere to the traditional in-person ways of B2B sales by digitizing your entire catalog. Your chances of reaching qualified buyers and closing big deals increases by showcasing your products online. It is similar to being in a global trade fair which runs 24/7 and 365 days per year when you are a part of a B2B marketplace. You will always be present and visible.
Capitalize on existing buyer demand and expand your network:
The convenience and confidence of engaging and purchasing from many verified and trusted suppliers is offered to B2B buyers on one centralized platform with the B2B marketplaces. Choosing to sell on a B2B marketplace can take the burden of your work and help effectively expand your network if you don't have the time and resources to invest in reaching customers across offline and online channels on your own budget.
Low costs:
Usually, a low initial cost is included for the access to a B2B marketplace which is affordable for any company of any size, regardless of the business model of the platform, as in the structures of seller fees The suppliers can also have the opportunity to decrease operating cost. There is no need to update lengthy printed catalogs or spend money on traditional marketing channels.
Easy set-up:
A standardized user interface and easy-to-use seller portal is featured in a B2B marketplaces, where you can simply load your business and product information to get your online business up and running. Product management, shipment, CRM, and payment solutions or services can be integrated with marketplace. It can be expensive and time-consuming for the development and integration of such sophisticated systems to your own website.
Test out new products:
Managing products through a centralized online portal simplifies the process of clearing obsolete inventory and SKUs. A B2B marketplace provides quick access to your sales data, enabling informed decisions about product development and selection. Additionally, marketplace portals often offer sales trend insights and aggregated data across various segments or industries, allowing you to adapt swiftly to market trends and gain the advantage of being a "first mover," especially during times of crisis.
Expand your customer base globally:
Localization settings and configurations is supported by modern B2B trading marketplaces. For example, your products can be displayed in different languages and translation tools or services can be integrated to the platform. Solutions and services can also be offered to take care of the complexities of international transactions and logistics. So, a wider range of audiences can be easily accessed by the wholesalers and manufacturers. They can also develop new contacts all over the world, without becoming an expert in cross-border trade.
Access to foreign markets for SMEs:
B2B marketplace platforms, with their low startup costs, enable SMEs to sell their goods and services internationally. These platforms offer an affordable way to promote products while allowing small businesses to showcase a wide range of offerings without the need for costly international travel to secure business deals.
Increase customer service and loyalty:
Connection and conversation with your buyers can be facilitated and you are allowed to own your business relationships with the help of a good online B2B platforms. You will be able to manage your relationship in a more efficient way and timely manner with digitized solutions. You will get more time to drive your business growth as less time is spent on fielding leads and orders over phone and email.
How to succeed in a B2B marketplace?
Some strategies that can be applied to ensure you sell successfully in a B2B marketplace are:
Build trust:
Doing all steps necessary can build the trust of the buyer who is on the other side of the globe and never meet you in person. Completing the profile of your company, verifying yourself through verification or authentication processes and showcasing other information that authenticates your business, such as licenses, certificates, awards, or photos of your factory, office, and employees are included in this.
Post and Manage Products:
Posting high-quality product listings can give you a competitive edge. Optimize your marketplace rankings by incorporating descriptive keywords into product titles and descriptions. Using well-designed images and videos enhances product appeal and helps buyers gain a clear understanding of your offerings.
Be Flexible and Adaptive:
Flexibility is key to helping your business thrive and grow. Staying connected to your customers and adapting to their needs gives you a unique advantage. This can include offering product customization, adjusting prices, and providing personalized, responsive services.
Offer logistics and customs clearance advice:
You should make sure to advise your customer on the best way that you can ship or freight the delivery. You can also help customers to be aware of the rules and regulations required for the products to be exported into certain countries.
Respond to inquiries:
Always make sure that you should deal with inquiries in a professional, organized, and timely fashion as there can be no orders without inquiries.
Use feedback to optimize your offer:
Your business can gain trust with the help of positive feedback and testimonials. It also help build your client base. You should always encourage your customers to leave feedback as it can help you understand what went wrong with negative feedback.
Offer sample products:
You should offer sample products as potential customers mostly prefer to check the quality of a product before making a bulk order.
Respect your potential buyers:
You should show respect, professionalism, and interest to any business regardless of the size of the company that contacts you because you will grow together if you serve them.