Amazon Business in the world of e-commerce B2B (business to business) is an absolute phenomenon. Their sales increased from $ 1 billion to $ 10 billion in just three years. Their success is so spectacular and the popularity so high that over 70% of business buyers use it to check products and prices. It is therefore understandable that a significant proportion of B2B companies are deciding to move their stores to the Amazon platform. Still, there are more and more companies that are choosing to build their own B2B platforms. The demand for this type of services is growing and market technologies are becoming more available. Why is this happening? What do tailored B2B markets offer?
What is a B2B marketplace and what opportunities does it offer?
Market B2B is an e-commerce site where customers can choose from many products from various third-party sellers. The best examples are Amazon Business and Alibaba.
The new generation of B2B platforms are not universal platforms, tailored to everyone. The new B2B markets fall into one of two main categories – niche players and market leaders. Niche players are companies that focus on a particular niche market or user community. Market leaders are companies that already have a large customer base, large organic internet traffic and want to grow even more by offering more and more opportunities to their existing customers.
A chance to stay ahead of the competition
One of the main reasons why companies create B2B markets is the desire to stay ahead of the competition. At the beginning of 2019, only 56% of B2B companies had an e-commerce website, and only 11% had a market. Many companies have noticed this opportunity and have taken action, hoping to be a pioneer in their industries.
This opportunity is still valid. Especially in sectors such as the wholesale industry, distribution and production, in which companies have long not adopted new digital strategies. Innovative business strategies typically provide higher returns than risk avoidance strategies. However, this naturally involves taking risks. The three-year revenue growth of companies that are the first to introduce digital strategies is almost twice as large as the growth of companies that do not take risks in response to digital competition.
Responding to market and customer requirements
Another important reason why companies open their own B2B markets is the desire to retain existing customers, but also attract new ones. Customers increasingly want to buy on well-designed, secure and easy-to-use trading platforms. According to a survey conducted by B2BECNews in August 2019, among B2B contractors, over 50 percent of buyers reported that they had made over 10% of B2B purchases at Amazon Business.
Another reason why B2B buyers often prefer supermarkets is price transparency. In the past, B2B buyers worked closely with sales representatives to get custom offers from many suppliers for similar products. Price comparison has often been a time-consuming challenge. Now, using B2B stores, price comparisons can be made with a few clicks.
Helping each other
On the websites of many B2B manufacturers, users can only view product information, specifications, analyst reports and usage examples, but they cannot complete the transaction. To do this, they must leave the site and contact an authorized channel partner via the partner’s website, email or phone call. Due to such an additional obstacle, many interested parties decide not to buy or postpone it.
After setting up a B2B portal and recruiting business partners to act as a reseller, you can more easily turn interested site visitors into real buyers. Instead of contacting the channel partner themselves, visitors can go to your portal and compare partner offers. As a result, your channel partners sell more, which also means more demand for your products.
Increase revenues without increasing production
Your B2B market is also an opportunity to generate additional revenues without adding new products to your assortment. If you offer a narrow range of products, you can recruit sellers with their products. It is more convenient to buy several related products in one place. Then you can charge sellers a commission for each sale, just like Amazon Business does. Even if the sellers themselves are responsible for their product listings and implementation logistics.
Testing demand on the sales market
Amazon Business is known for using market data to study market trends and identify opportunities to create your own brands. If you build your B2B market, you can do the same. As your B2B site grows and you analyze your sales trends, and over time, you can look out for products and product categories that perform particularly well. This information can help you develop your product development plans in the medium to long term.
Create the image of a leader
Having your own B2B market is a good way to position your company as a market leader in your niche. When B2B buyers come to your store or supermarket website and browse many products in many categories, they are constantly exposed to your brand. Over time, your site may become a destination for customers looking for a wide range of products and services.
Setting up your own B2B marketplace has many significant advantages, but it also involves some risks. First of all, the product presentation and logistics related to it rests on your shoulders. Incomplete product information, as well as orders that are not accurate or not delivered on time may present the brand badly. To manage seller risk, you must provide clear expectations and minimum standards for all sellers. You must also be able to tell customers how to contact you if they have problems with one of the sellers.
Another difficulty to keep in mind is the risk of non-compliance. When running a B2B market, especially a global one, you need to track changes in local, regional and national tax and banking regulations that affect sales. To minimize compliance risk, you need a trusted tax and accounting expert and the right software.
How to build a B2B market?
While B2B markets are becoming more and more popular, many companies are concerned that their construction can be expensive and time consuming. They often provide for long system integration projects and complex design to size. However, technology has improved over the past few years. Existing software for B2B stores gives you the opportunity to set up your own market without having to write code from scratch. In short, to create a market you need a well-developed e-commerce platform and a B2B solution that works with it. It would be best if your solution is seamlessly connected to the ERP system.
What issues to consider before creating a B2B market?
Running a B2B market is more complicated than managing a one-man e-commerce store. If you’re thinking about creating a marketplace, it’s important to develop a comprehensive strategy. It is also important to know how to face many challenges. From the introduction of the seller, through tax services, to compliance with legal regulations.
Preparation of the strategy will rely on certain assumptions that you should have set from the very beginning. First of all, you need to know who will sell at your supermarket. It is also important to consider the issue of providing a platform for your competition for mutual assistance. If your market allows buyers to compare competing products, it must be equipped with the right features. You need to know in advance the total number of salespeople you will work with and what part of the process will be automated. Sellers’ rights are another issue – what control will they have over the product inventory and will you allow sellers to offer different shipping and return policies? The issue of local, national and cross-border taxes is also important. When it comes to finances, you should always consider the scale of sales.
If you think your business can benefit from building a B2B market, now is the best time to get started. As this segment of the B2B market develops, it will be more difficult to attract high-quality sellers and gain their loyalty. If you manage to set up a B2B market before the competition, you can gain a lot!