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What Is a Company-Owned B2B Marketplace?

Accelerated by the Covid-19 pandemic, the global business world has made a hard turn toward digital sales, and there’s no going back. For their part, many distributors have moved quickly to enhance their e-commerce technologies, while others have started selling their products on behemoth B2B marketplaces like Amazon and Alibaba.

However, the true innovators are thinking bigger and longer term by forming their own vertical-specific, company-owned marketplaces.

An extension of an e-commerce site, a B2B company-owned marketplace is an all-encompassing online store for anything within your vertical — from products and services to installation and consulting. A marketplace lets you continue to sell your products directly while also providing a technology for customers to buy products from vetted third-party distributors and manufacturers, otherwise known as “suppliers.” Adding new suppliers and products draws more customers to your site, helps you to avoid stock-outs, and allows you to test out adjacent categories while gaining a better understanding of your customers’ preferences.

Here’s how it works

When you build out a marketplace with these additional suppliers and products, you do not incur the burden of buying and stocking the inventory. The mission of a marketplace is to present the inventory of third-party suppliers and to streamline transactions for sellers and buyers alike. By eliminating the need for warehousing and inventory, this model delivers substantial cost savings. After the marketplace processes the transactions, the orders are fulfilled by the third-party suppliers.

Marketplaces offer your customers clear advantages as a one-stop shop:

  • an exceptionally wide product range from numerous suppliers;

  • the ability to view all buying options and narrow them using one website;

  • the convenience of completing multiple transactions in a single place; and

  • the availability of products that might be experiencing widespread shortages.

Why Distributors Are Building Marketplaces

Marketplaces are surging — 87% of buyers use them to make purchases, according to Forrester. As a result, outside B2B marketplaces like Amazon Business and Alibaba have begun to chip away at distributors’ market share. Facing a competitive crossroads, it’s imperative that distributors act decisively to launch their own marketplace strategies. To optimize your strategy, include these five items on your to-do list:

  1. broaden product offerings with access to scores of new suppliers and to expanding line cards from existing suppliers;

  2. offer services that help buyers develop technology solutions and design help;

  3. integrate ERP, PIM and CRM systems to streamline the buyer experience;

  4. automate tasks, such as shipping arrangements and the uploading of product information, to reduce reliance on manual processes; and

  5. empower customers with exhaustive product data and pricing info. Your B2B customers expect the same experience they enjoy in the B2C world.

So, what will distributors reap by adopting this dual e-commerce approach?

  1. Scalability. Marketplaces do not require resource investments in direct sourcing. As a result, distributors can achieve 10x greater efficiency when onboarding suppliers—and millions of products—compared with direct sourcing.

  2. Profit margins. With virtually zero capital investment, marketplace sales maximize profits.

  3. Agility and price competition. In contrast with owned inventory and drop shipping, distributors won’t get locked into pricing that becomes less competitive.

  4. Free traffic acquisition. Marketplace listings boost search engine optimization and increase the appeal of your site.

In a world challenged by the unrelenting demands of digital coupled with supply chain shortages, distributors that develop a network of vetted marketplace suppliers just might meet the moment.