What is a B2B marketplace – and should you be selling on one?
Online marketplaces such as Amazon, eBay and Etsy have dominated the B2C space for years – but more recently, B2B marketplaces have been gaining traction around the world. If you work for a B2B brand, should you be selling on a B2B marketplace and what’s the international growth opportunity for your business? Read on to find out more.
What is a B2B marketplace?
A B2B marketplace is a digital platform that enables companies to connect with other organisations to trade in one place. In a B2B marketplace, the sellers are brands, manufacturers, suppliers and wholesalers, and the customers are other businesses. Transactions are processed online by the marketplace operator.
B2B marketplaces are sometimes also known as B2B trading platforms, B2B procuring or sourcing websites, B2B portals, multi-vendor marketplaces, or B2B directories.
The last few years have seen the rise of B2B marketplaces around the world, especially in Asia which leads the way for B2B e-commerce but also in the US and Europe. Their growth continues although B2B marketplaces remain less mature than the B2C segment. Growth is uneven across industries – they are most prevalent in MRO (maintenance, repair and operations), food equipment and automotive. Gartner projects that 75% of B2B procurement spending will take place via online marketplaces by 2023.
B2B marketplaces share similarities with B2C marketplaces, but there are key differences:
- Products are bought in larger quantities
- Products tend to be more complex to handle and deliver
- Customers are generally wholesalers, distributors, or other businesses
- B2B marketplaces are less established than B2C marketplaces
Currently, it’s estimated that about a third of B2B buyers buy 50% or more of their goods from B2B marketplaces.
Several factors are driving the rise of B2B marketplaces
Digital natives and millennials are taking over
B2B buyers are getting younger: According to B2B International, millennials will make up 44% of the workforce by 2025. A study by Global Web Index showed that 74% of millennials are involved in making buying decisions at B2B companies. They are driving a digital approach to B2B buying and selling. Whilst statistics vary by market, most B2B searches now take place via mobile.
B2B buyers increasingly have consumer expectations shaped by B2C
Younger B2B decision-makers are digital natives who grew up online. They are used to the speed and ease of Amazon and eBay – on-demand, easy-to-use consumer platforms which have radically shaped their expectations in business. For their B2B buying, they want a consumer-like experience that minimises purchasing complexities. They also want transparent pricing to support their decisions.
B2B buying is collaborative
The typical B2B path to purchase is longer and involves more decision-makers than B2C. As a result, the agile nature of online marketplaces – which makes product comparisons easier and pricing more transparent – lends itself to the collaborative nature of B2B buying.
The effect of the Covid-19 pandemic
The lockdowns, social distancing and restriction measures caused by the pandemic bolstered online marketplaces across the board, as B2B customers turned to e-commerce to maintain their operations. B2B marketplaces have helped to mitigate the supply chain and business continuity issues highlighted by the pandemic. By gaining access to a broader array of vendors, B2B buyers are able to decrease their dependence on a small group of suppliers.
B2B marketplace examples
European B2B marketplaces
There are over 300 B2B marketplaces in Europe alone, up from just 20 in 2010. Examples include:
- Sennder in Germany, which connects shipping and trucking companies through its online portal.
- TravelPerk in Spain, which supports business trip bookings across numerous travel options.
- Meero in France, which focuses on the photographic industry.
- Packhelp in Poland, which promotes itself as Europe’s leading supplier of custom packaging for e-commerce brands.
Asian B2B marketplaces
Asia has long been a leader in B2B e-commerce. Key marketplace players include:
- Alibaba, the flagship site of China’s Alibaba Group which connects businesses to global manufacturers. Businesses can use Alibaba to find a manufacturer to create bulk products and then have them imported into their country.
- IndiaMART, an Indian e-commerce company founded in 1996 which provides B2B and customer-to-customer sales services via its web portal. TradeIndia is a close competitor.
- Made-In-China, a Chinese platform which promotes trade between Chinese businesses and international buyers.
- Global Sources, based in Hong Kong and founded in 1971, which provides sourcing information to volume buyers and marketing services to suppliers worldwide.
- Ralali,founded in Indonesia in 2013, which has expanded from industrial products into medical equipment, office supplies, construction, and more.
- OfficeMate,founded in Thailand in 1994, which focuses on office and IT equipment, plus furniture and other needs for professional venues.
US B2B marketplaces
- Amazon Business, which dominates the market. It’s similar to Amazon but has added features tailored to the needs of businesses. These include multi-user accounts and bulk discounts.
- eBay for Business, which is another significant operator, with its parent company making $US10 billion in revenue in 2020, and an income of more than $US1.7 billion.
- Zageno which is headquartered in the US with offices in Germany and Poland. Zageno specialises in connecting e-commerce with life sciences.
Australian B2B marketplaces
- TradeSquarewhich is an Australian start-up which launched in 2020 and is driving local B2B e-commerce. TradeSquare focuses purely on Australia.
UK B2B marketplaces
The UK generally lags behind its B2B marketplace peers in North America and the Asia-Pacific region. But the UK does have some big players including these examples aimed at tradespeople :
- Screwfix,which has over 700 stores that work alongside a multichannel online marketplace. Screwfix has been able to tap into a large market of tradespeople through e-commerce and an effective mobile app.
- Brickhunter, a UK-based marketplace that has expanded globally. Brickhunter’s US division uses a cloud-based inventory of types of bricks available across the country.
There are different types of B2B marketplaces
Vertical B2B marketplaces
A vertical marketplace – sometimes called a ‘vortal’ or vertical portal – specialises in a single category of products or a particular industry.
Horizontal B2B marketplaces
A horizontal marketplace sells products and services of different types, across multiple sectors.
One-to-many B2B marketplaces
A one-to-many marketplace is operated by a single purchaser. For example, a large car company like Nissan can establish an e-commerce marketplace where suppliers can be granted access and submit bids and quotations.
Many-to-many B2B marketplaces
A many-to-many marketplace is managed by a third party and involves multiple buyers and sellers from different entities. Alibaba and Amazon Business fall into this category.
Local B2B marketplaces
A local marketplace caters to a particular market.
Global B2B marketplaces
A global marketplace facilitates transactions across borders. This brings with it greater challenges related to international payments, cross-border logistics, linguistic barriers and more. Using a Local In-Market Expert can help you to navigate these challenges.
What are the main advantages of B2B marketplaces?
- Testing demand for new products
- Driving growth by reaching new audiences
- New revenue opportunities
- Ability to cater to specific desired buyer experiences
- Uniting buyers and sellers within a particular niche
- Meeting needs for new and used products
- Allowing B2B relationships within a vertical to grow
- Building communities so buyers and sellers can forge a closer relationship with the companies they transact with
- Building confidence and trust
- Providing a one stop shop for customers
- Bypassing wholesalers
- Monetising long tail products
What are the potential disadvantages of B2B marketplaces?
- Complex set-up
- Operational difficulties
- Cost of generating new leads at first
- High level of competition
In conclusion: If your business is looking to expand, connect with other businesses, or build its customer base, then it’s worth considering a B2B marketplace. This is an area of B2B which is set only to grow in the years ahead.
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If you are looking to grow your B2B brand internationally, Oban can help. Since 2002, we’ve been helping businesses of all sizes expand across borders using our LIME network. To find out how, please get in touch.
Oban International is the digital marketing agency specialising in international expansion. Our LIME (Local In-Market Expert) Network provides up to date cultural input and insights from over 80 markets around the world, helping clients realise the best marketing opportunities and avoid the costliest mistakes.