The risks and rewards of B2B marketplaces
Strategic approach is key to successfully launch a B2B marketplace
Increased competition and challenging economic conditions have placed significant pressures on B2B businesses. As they look to mitigate their risks and identify opportunities, post-pandemic, organizations are seeking new ways to expand their offerings and engage their customers – with many looking to B2B marketplaces as their golden ticket.
40% of business buyers now purchase at least half of their organization’s goods and services on marketplaces. And 67.1% of buyers also are purchasing somewhat more, to significantly more, products on commercial and vertical industry marketplace platforms.1
The attraction of B2B marketplaces
The attraction is obvious – for sellers, for buyers, and for those wishing to build the marketplace itself:
1
Sellers
Sellers get access to new customers and increased online revenue opportunities from a captive audience who are looking to buy.
2
Buyers
Buyers have a destination for a wide range of procurement needs, with competitive pricing and access to promotions for products and services they are actively considering, while the need for complicated negotiation processes are removed.
3
Marketplace owners
Marketplace owners gain increased stickiness for their current customers, the ability to offer a wide range of complimentary products and services as part of their offering, and access to a whole new customer base – along with a revenue cut from marketplace sales.
The boom in this type of ecosystem, and the potential returns involved, has led to a rush of organizations looking to launch B2B marketplaces.
Proceed with caution
While the upsides can be significant, it is not for the faint of heart. Get it wrong, and the downsides can be substantial:
- The wasted cost of investment in technology and people if the venture fails.
- A loss of focus on what has made you successful to this point could lead to decreased revenues and market share for your traditional business.
- Though these potential hits on revenues and debt can be large, they may pale in comparison to the potential reputational damage that could occur if things go wrong.
A strategic approach is key
Although there are risks, the reason that so many organizations are looking to launch B2B marketplaces is that, if you get it right, the upsides are significant – the potential revenue streams and growth opportunities are substantially higher than traditional eCommerce channels.
The mistake that many organizations make is a lack of understanding of the complexity involved in launching a successful marketplace. A belief that a technology platform, a strong business model and a thought-through go-to-market approach will suffice, they fail to take into account the enterprise-wide considerations required to improve their chances of success.
Although all three of these aspects are absolutely important, they are just three of what I believe to be the eight crucial elements that need to be considered for any B2B marketplace.
Successful marketplaces are led by cross-functional teams that have an enterprise perspective, and who equally consider each of the elements above during strategic planning, at each step of the journey – from conception, through implementation, to launch, and beyond.
Opportunity awaits
Launching a B2B marketplace is complex. Getting it right takes an enterprise-wide, strategic vision and execution. Provide a great experience to vendors and buyers alike, however, with a marketplace that keeps them coming back for more, and the rewards will be more than worth it.
If you’re considering a move into this space, I urge you to start by asking yourself three key questions to determine if a B2B marketplace is the right choice for you:
- Can you offer the products and services being demanded by customers in your market?
- What sort of experience do you want to provide for vendors, buyers, and employees?
- Can you make money and manage it effectively?
If you’re clear on the answers to these questions, fully understand the capabilities of your businesses, and are realistic about what help is required from elsewhere, then opportunity awaits.
Recommendations
If you do decide that launching a B2B marketplace is for you, then I would recommend the following considerations are addressed up front, and throughout the product lifecycle:
- Have a clear business model and shared vision
- Recruit and onboard strong resources early
- Choose and manage vendors wisely
- Relentlessly track flow of funds
Concentrate on these focus areas, proceed with an enterprise-wide approach, and keep all eight crucial marketplace elements at front of mind throughout your journey, and you will improve your chances of reaping the rewards.
To find out how KPMG can help with your marketplace planning, implementation and launch, please get in touch.
Footnotes
1Source: B2B Buyer’s Survey, Digital Commerce 360, November 2022
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