For B2B eCommerce, Amazon Business was a phenomenal success. It changed the way B2B businesses think and sell, it opened a window to an opportunity that they had so far ignored. Amazon Business grew from $1 billion to $10 billion within merely three years! This made the B2B businesses realize the role of B2B marketplaces. The effects of Amazon Business were not confined to B2B businesses that sold on it. The accessibility to products on a large scale from suppliers all around the globe enticed the B2B buyers.
A marketplace is basically an eCommerce store form where customers can buy products sold by multiple third-party vendors. Similarly, B2B marketplaces deal with large-scale or wholesale transactions of products. B2B marketplaces further split themselves into two main categories - the niche players and market leaders.
The niche players are the ones that focus their business on a niche market or community. This could be anything from stone surfaces to electronics. Such marketplaces are dedicated to a niche market that serves the needs of a very specific buyer group. In comparison, market leaders are those who are already well established, like Amazon. They have a huge customer base and immense organic traffic. By providing a B2B capability on their marketplace, they only intend to grow even bigger.
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However, B2B business is unlike the typical B2C eCommerce transactions that most of the public are familiar with. It is the same when it comes to the eCommerce side of it. B2B relationships are usually long-term, meaning there are fewer users to deal with. Hence the quality of service must be superior here. However, establishing your brand to be a reliable one can be challenging, especially if your niche is a highly competitive one.
Why B2B Businesses Prefer to Sell Through Marketplaces?
1. Improved Sales
Selling through a marketplace is no different than putting up a new store in a shopping complex because now your business has more exposure and can be accessed by potential buyers across the sphere. With the help of a marketplace, you can attract more potential buyers, thereby giving you a chance to boost your sales.
2. Lower Cost
Marketplaces are the most cost-effective way for B2B businesses to sell their products online as there is practically no cost involved to set up. Although a marketplace may charge you for selling your products on their platform, it is negligible compared to setting up an eCommerce store. Furthermore, many marketplaces opt for a commission-based payment where you only pay when a transaction occurs via their marketplace.
3. Broaden the Reach
It goes without saying that an online presence either through a dedicated eCommerce website or through a marketplace enables your business to be accessed by customers all around the globe. You can reach not only new clients but also new markets that were previously beyond your reach.
4. Customer Feedback
In a conventional B2B business, there is almost no room for getting customer feedback or using them to influence buyer decisions. With a B2B marketplace, you can help your customers make a well-informed decision after considering both positive and negative reviews of multiple products listed in your store.
5. Better Search Engine Ranking
With a dedicated eCommerce store, you'll have a hard time getting it SEO ready and have it show up among the top results. With a marketplace, especially one that is already well-established, you give an instant boost to your online traffic and can make it to the top SERP with relative ease.
6. Low Risk
Without the right guidance or the right partner, eCommerce is a risky affair. Unless you have a platform-agnostic and experienced eCommerce partner like Virtina, a dedicated eCommerce website involves great risk. There is a considerable cash-investment for creating a dedicated eCommerce store, whereas a marketplace is an extremely low-risk solution with much higher ROI potential.
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Questions You Should Ask Yourself Before Building a B2B Marketplace
Before you build a B2B marketplace where you can sell your products or help others sell their products or both, there are some questions you need to ask yourself. Asking yourself these questions will help you better understand your prospective B2B marketplace and what you wish to accomplish with it.
1. Who Will Sell or Buy on the Marketplace?
The first question you should ask yourself is the target audience. Since you are building a marketplace, your target audience is not limited to the buyers but also the vendors. In fact, the success of your store greatly depends on your sellers or vendors and their products. Furthermore, you also need to consider the logistic capability of the seller and their deliverable limits. This means that you can not afford to partner with any seller and must have a well-defined guideline for accepting sellers.
2. Should I Allow My Competitors to Sell on the Marketplace?
One of the interesting things about building a B2B marketplace is that you may have to share your marketplace with your competitors. Although this decision is totally up to you, you must decide which is best for your business. If your competitor sells the same products as you and at the same price or lower, it is probably best not to allow them to sell through your B2B marketplace. However, if they offer a different set of products which are unique from yours, then you should consider including them.
3. Should My Marketplace Allow Buyers to Compare Competing Products?
A comparing feature is welcomed by most of the users who browse for products online, and hence it is highly recommended that you implement one. However, some B2B marketplaces intentionally avoid adding this feature either because of their limited budget because they don't want their own product compared with their competitors.
4. How Can I Onboard New Sellers and How Much of the Process Should Be Automated?
The strategy to entice and lead B2B sellers to your B2B marketplace must be created beforehand. Choose between local sellers or sellers from outside your state or even country based on your unique business requirements. Furthermore, you also need to figure out how much of the process should be automated so that it is easy for a seller to set up the business online via marketplace.
5. How Much Control Should I Give the Sellers on Their Product Listings?
Marketplaces operate differently based on their preferences. Some marketplaces give the sellers the utmost freedom on their product listing provided that they follow the guidelines provided. Simultaneously, some marketplaces have full control over the product listing accessible through a central hub enabling the site admin to make any necessary changes.
6. What Sort of Shipping and Return Policy Should I Adopt?
Ensure that you have practical yet economic shipping and return policy in place. B2B businesses deal with large quantity shipments, and you must be careful when formulating shipping and return policy. You can either allow varying shipping and return policy for each seller or use a fixed one. Furthermore, special attention must be given in preparing the minimum standard that is to be maintained for the shipping and return of the products.
7. How Can I Handle Local, National, and Cross-border Taxes?
One of the hardest things about running an online marketplace is the tax calculation of its orders. Depending on the shipment's nature, i.e., local, national, or international, the order's taxes may vary. You can automate this process by employing a plugin or integration available on the market. There are also several third-party applications available in the market that can be used for the same.
8. How Should I Keep Track of the Transactions on the Marketplace?
The transactional records of a marketplace can either be consolidated with the admin or be shared with the respective sellers of the marketplace. It is ideal for making the transactional details of a seller's sales easily available to them. However, it is equally essential for the admin to access and calculate the transactions taking place in their B2B marketplace.
5 Key Features of a B2B Marketplace
The difference in the way both B2B and B2C businesses are conducted means that the B2B marketplace requires unique requirements. To meet the needs of the B2B customers, there are some key features that you must ensure on your B2B marketplace, and they include the following.
1. Confidentiality
Confidentiality is an essential requirement for all business transactions, be it B2B or B2C. However, when it comes to B2B businesses, the confidentiality of information is taken exceedingly seriously. Why? Because unlike a typical B2C purchase, the B2B businesses deal with companies and are subject to legal requirements to protect sensitive information about their products. This is to ensure that there is no scope of piracy in any manner.
Furthermore, it is best if you can enable the seller to choose the buyers they want to sell to depending on their brand positioning. This can be useful if you have sellers who are a premium brand in your B2B marketplace and don't want their products sold by a discount retailer. To accomplish this, you may fill out profiles and have them cross checked by an operator. This also helps to establish trust between the seller and the buyer.
2. Pricing
B2B eCommerce pricing is perhaps one of the most complicated pricing models ever to exist. Various factors need to be taken into account to ensure that you have the right pricing strategy for your business. These factors include the buyer's transaction history, the quantity of the order in question, the product itself, and more. Because of these factors coming into play, the B2B pricing is often dynamic.
B2B transactions are based on long-term relationships, and you need to encourage buyers with discounts and custom pricing to establish and maintain long-term relationships with them. Furthermore, it would help if you also encouraged them to make larger purchases. This is where pricing strategies like volume-based pricing and tiered pricing comes into the picture.
Volume and tiered pricing reward the buyer based on the quantity of order with discounts. The discounts are increased depending on how big the order is. Similarly, B2B businesses also employ customized or individual pricing to provide long-term or repeat customers with a better deal. In this case, the price, as seen by the loyal customers, will be comparatively lower than the actual selling price.
3. Payment Features
Another key feature in the B2B marketplace that you simply can't afford to ignore is its payment methods. As mentioned before, B2B businesses deal with large-scale orders, and the transactions often include a considerable amount of money. It is not practical to demand cash upfront on such large transactions, especially if you are trying to establish a warm, long-lasting relationship with the customer.
Hence it becomes necessary to offer your customers flexible payment methods. The flexibility of payments can do wonders for your B2B marketplace. You should make room for credit as a payment method, which has become a must for online B2B transactions nowadays. You may also consider implementing escrow payments. And as far as a B2B marketplace is concerned, you also need to consider the sellers' risk as most products are shipped even before the final payment is made.
How you display your products in your B2B marketplace and how the user navigates through your products is also different from a typical retail store. As the products are sold in bulk orders in a B2B transaction, they are most likely to come in indivisible packs. Hence the sellers must have the capability to select the product and integrate its quantity.
You must also make it a point to enable the user to browse through different product options and ensure that they have independent pricing. For example, if your B2B store sells clothing, it must display clothes of different materials on it in a mutually exclusive way. The user must also be able to categorize the products based on their preference, such as the color, type of materials used, and so on.
5. Industry-specific Features
Having the right features on your B2B marketplace can drive the conversion and sales potential of your website. The buyers are often discouraged from shopping in your B2B marketplace if it does not provide adequate features that can make the shopping experience easy and straightforward. Implementing the standard features for a B2B marketplace should be no trouble. However, these features are just one of the general requirements that all B2B marketplaces are expected to have.
Depending on the industry it serves, your B2B marketplace needs to have unique features that can complement and assist your buyers. Every industry has its own individual requirements, and features must be implemented to meet these requirements. For example, if your business involves perishables, then you are legally bound to showcase certain information about the product like origin or conservation method. Similarly, other industries also have unique requirements for their store, and these must be met.
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Top 10 Challenges Faced By B2B Businesses
B2B businesses face a plethora of challenges. They face a considerable struggle to achieve their sales targets, maintain proper growth, keep a steady revenue, and boost their profits. B2B buyers often complain about not finding a robust self-service portal, anything that will diminish their interactions with sales reps. They also find it difficult to checkout smoothly and quickly from an eCommerce website.
Many procurement officers cannot calculate the shipping costs for their order volume because the seller hasn't integrated any software that helps them do so. The reordering and return processes are complicated. Buyers can't seamlessly return a damaged or defective article. On top of that, buyers find themselves confused on a B2B site.
The lack of product information leaves them with doubts and stalls their decision-making process. Overall too many outdated B2B eCommerce stores still rely on legacy solutions and fail to offer a fluid user experience on their website.
How to Create the Ideal B2B Marketplace?
1. Choose the Right eCommerce Partner
The most important thing when it comes to developing a B2B marketplace is possibly an eCommerce partner who has a demonstrated history of working with B2B brands. The reason why choosing your eCommerce partner is a number one priority for B2B marketplace development is not one but many. But, the most prominent of these is that the B2B business is different, and so is the setup of a marketplace. This makes the B2B marketplace a niche that's not familiar with many eCommerce developers.
What you need is an eCommerce partner like Virtina, who has proven expertise in the field of the B2B marketplace. As far as marketplaces that deal with B2B or bulk orders are concerned, the key is to figure out each human's requirements who interact with the website. This includes the sellers, the users, the admin and their employees who interact with the website. By doing so, we can ensure that the B2B marketplace is a comfortable place to sell and buy and manage every aspect of one's business.
The admin can enjoy the convenience of managing even the hardest part of the business, such as inventory management and even tax returns. Hence your eCommerce partner must be one who knows their way around B2B marketplace development. The right eCommerce partner can come up with ideas unique to top your business and create an eCommerce website that is capable of delivering the desired result.
2. Identifying the Unique Requirements of Your Business
As soon as you come up with an idea for a B2B marketplace, you will naturally start picturing it. You'll think about how it should look, how it should feel, what all features you must include, and pretty much everything else. These ideas will form the theoretical framework for your B2B marketplace. However, these can only serve as a guideline for developing your B2B marketplace. However, the actual framework is formed after you discuss everything on your mind with your eCommerce partner.
You need to discuss all the features and unique requirements of your business with your eCommerce partner. And although many of your ideas may seem simple enough, it is not necessarily simple to pull off. Depending on the complexity of the project, the implementation cost of it may vary. You may have to use third-party applications or even employ a custom solution and further affect the project's total cost. It is essential to discuss everything in detail with your eCommerce partner to figure out what features can or can not be included in your B2B marketplace.
3. Platform Selection and Development
Once you have carefully analyzed and figured the required features to be implemented on your B2B marketplace, you can narrow down on which platform you can set up the B2B marketplace. Many developers and business owners make the mistake of developing an eCommerce store on the most popular or the cheapest platform. However, this platform-first approach can backfire badly and is highly risky.
What you need is a platform-agnostic approach like Virtina's so that you may choose an eCommerce platform that can handle all your business requirements. Furthermore, it ensures that your regular business affairs are manageable without any external help. At Virtina, we have certified expertise in all major eCommerce platforms, enabling us to suggest the best option for your business and its growth.
The development process of your B2B marketplace should comprise all your vision for the website. B2B marketplace development must take into account the major challenges faced by the business mentioned above. The site must be built after taking the challenges as well as the unique requirements of your business.
Conclusion
The B2B marketplace is turning out to be an essential service in today's time and situation. It is evident that B2B brands need to be capable of selling with or without the help of their local distributors. As time goes by, it is becoming more and more necessary for B2B brands to become self-reliant. eCommerce is the best way for B2B brands to sell their products without being limited to their local distributors.
However, a dedicated eCommerce store is not the ideal option for many small and medium-scale businesses. The most effective option for B2B brands who are just getting into eCommerce is marketplaces. B2B marketplaces come with a lot of advantages. B2B brands need not spend a fortune developing a dedicated eCommerce store. They get instant exposure to the online community without having to go through stringent SEO standards and more.
At this point, it is clear that the B2B marketplaces hold immense potential as they deliver everything B2B brands could ask for. A B2B marketplace provides the ideal platform for buyers and sellers to find each other, especially an industry-focused one. Furthermore, creating a platform that can connect such sellers and their potential buyers while selling your own products gives you the added advantage of earning from each sale made on the website.
