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The Post-Covid world: the role and relevance of B2B marketplaces

The Covid-19 pandemic was spreading around the globe, businesses and customer habits are affected, which has fueled the use of marketplaces. Companies were able to continue operating during the pandemic because of their products and services. Consequently, B2B marketplaces have experienced increased growth, but they are also facing increased pressure from B2C marketplaces since customers’ expectations have also risen. Since the pandemic’s start, more than 50% of B2B buyers and users prefer to make work-related purchases on B2C websites.

The accelerated use of marketplaces

B2B marketplaces have seen rapid growth over the past few years, and they continue to expand. While B2B marketplaces have experienced rapid growth in Asia, they are also going strong in Europe and the US, although they are not as mature as B2C marketplaces. As a result, markets like Amazon and Alibaba are now bitter rivals of incumbent global generalist players in Europe. In addition, the Covid-19 pandemic has contributed to the accelerating growth of B2B marketplaces. But, in particular, B2C marketplaces have benefited from the pandemic’s sharp digital acceleration, growing 81% year over year during the last quarter of 2020, double the e-commerce growth rate.

Covid-19: rising expectations

This is driven by B2C first and foremost, where an easy to use a digital process and an overall customer journey has long been identified as critical competitive features for online marketplaces. In addition, B2C marketplaces have emphasized the services they offer, such as day-of-delivery, payment methods, and installment plans. 

B2B customers become less inclined to go through complex or fragmented processes, wherein they might have to call different vendors in succession to obtain a quote and order a part, for instance. Despite operational challenges, B2B marketplaces may encounter compared with their B2C counterparts, such as offering highly complex, technical, and specialized products, 80% of B2B buyers now expect a similar buying experience to B2C websites. 

The crucial role of omnichannel models

While omnichannel models had already been a developing trend these past few years, the Covid-19 crisis has sharply accelerated their growth. From an operator perspective, the omnichannel model allows a 360 degrees vision of the client’s online and offline purchasing behavior. It also represents an opportunity for retailers to enjoy in-store purchases from clients to retrieve the goods they bought online.

Uneven growth across industries

B2B marketplaces have reached heterogenous maturity across industries. However, within B2B, there is still a clear predominance of MRO, food equipment, and automotive marketplaces. B2B marketplaces will thus continue to grow strongly albeit evenly, with automotive marketplaces leading the way in particular.

Despite these differences, five key factors determine the success of B2B marketplaces across the board:

  1. Providing an extensive product range through a wide range of vendors
  2. Providing critical services for both customers and vendors
  3. Providing an efficient online payment
  4. Ensuring visibility on stocks and logistics through an accurate knowledge of stock availability
  5. Relying on a dedicated organization through efficient vendor management

B2B marketplace strategies: digital generalist natives and incumbent B2B players

The B2B rise of leading generalist marketplaces and its limits

Leading generalist marketplaces such as Amazon or Alibaba have increased their pressure on B2B specialists. They have emphasized branding and online user experience to attract and retain customers and technical prowess to offer unrivaled logistics efficiency and services. Amazon has identified Artificial Intelligence (AI) as a critical growth pillar and competitive edge through virtual assistants (Alexa) and deep learning tools via AWS (AI as a service). These digital natives have first developed a horizontal marketplace model for their B2B customers, starting with a core offer of products. Amazon has accelerated its growth through acquisitions, with no less than 26 purchases in the past three years. It has been recently adding healthcare and financial services as additional strategic targets.

Generalist marketplaces are now also developing vertically integrated marketplaces by moving into the world of services. They aim to provide a seamless customer journey. But, as non-specialists, their search engine architecture, catalog, and identification system are less deep and more prone to errors than those of specialist marketplaces. They are also less able to adapt their customer journey and services to specific clients. Finally, they may encounter significant technical or legal barriers to entry on some complex, highly controlled, tightly regulated markets.

A path of development for B2B sector specialists

The inability of marketplaces to offer specialized services represents a clear strategic interest for B2B sector specialists to develop their marketplaces. B2B incumbents tend to benefit from an ecosystem of players in their respective industries. They can rely on a trustful network of selected vendors and enjoy the trust of end-users. On their own marketplace, they are thus able to go beyond mere intermediation services to provide relevant, targeted B2B services.

B2B incumbent players enjoy key assets to also develop vertically compared to their generalist rivals. For example, in specific time-sensitive sectors, they can mobilize their physical network to provide needed services or parts in a matter of hours. This path of development thus represents a key opportunity for B2B specialists against their generalist counterparts by offering diversified specialized products and services on difficult-to-access markets.

Several hurdles that a marketplace must overcome to be successful

1. Strategic hurdles: defining the right end-customer segment and the relevant products and services, selecting the vendors, harnessing the necessary B2B or B2C experience

2. Implementation hurdles: developing the capacity to carry out the on-boarding of vendors through a comprehensive screening, selection, insertion, watch, and monitoring process, attracting end-customers, ensuring smooth technical implementation

3. Day-to-day operational hurdles: maintaining adequate pricing, ensuring the reliability of the supply chain and logistics services, providing efficient payment and e-invoicing tools, maintaining client satisfaction, develop new services matching B2C innovations, regarding payment tools, for instance, and analyze customer data to improve both product offering and customer experience.

Over to you

As a result of the pandemic, B2B marketplaces are poised to grow. By integrating vertical services and diversifying their product offerings, B2B specialists can successfully compete against or ward off the leading generalist marketplaces in specialized, protected markets.

There are some industries which are trailing behind in terms of market penetration, however. The gap could continue to widen as specific sectors, such as the automotive and food industries continue to lead the way for B2B marketplaces. The growth of B2B marketplaces is expected to continue accelerating in the next few years, but there are still hurdles to be overcome. Nevertheless, marketplaces will prosper once these hurdles are surpassed.