Online marketplaces – Threat or opportunity for B2B vendors?

Since launching a fulfilment service in 2006 that allows other companies to sell through the site, Amazon has rapidly grown to become the world’s largest online retailer and marketplace, selling anything and everything – typically at the lowest cost with the fastest delivery. In Asia, the Alibaba-owned Taobao and Tmall platforms have followed suit. 

Collectively, these marketplaces make no secret of their ambition to control the entire customer journey, from purchase, inspiration search, transaction and ultimately fulfilment.

And they have an already huge and still growing share of ecommerce, not only in B2C but B2B.

Their success has spawned a flood of B2B marketplaces in the last five years, numbering in the hundreds in Europe. With B2B commerce covering everything from stationery and office supplies to raw materials and complex machinery, industry-specific consolidator sites have launched in sectors as diverse as chemicals, machinery, electronics, food and aerospace. Leading companies such as Airbus, Thales, Siemens and Tetra Pak to create their own marketplaces that brings producers and customers together.

It didn't come as a shock to anyone when the latest B2B Vendor Series guide revealed that buyers found marketplaces more convenient than individual supplier portals. But the extent of that preference was a staggering 96%, with 3 out of 4 B2B buyers expecting to shop through Amazon Business in the future.

As a business looking to grow in digital commerce, should B2B brands be concerned by the competitive threat from these leviathans disrupting global industries and established vending models?

Or are they an opportunity, an alternative model of commerce entirely, which is setting the benchmark for what digital commerce can achieve?

Raising expectations for commerce experiences

The ease and convenience provided by leading marketplaces – topping consumer polls on every measure of performance – raises the bar across the ecommerce spectrum and sets an expectation of receiving a similar experience elsewhere, even in B2B procurement.

Buyers frequently abandon visits to supplier portals, citing long delivery waits, a lack of product information and items out of stock as the key reasons. They’re also looking for greater product choice and easier returns.

Marketplaces offer a combination of a powerful platform and multiple vendors, allowing organisations to overcome the pain points and effortlessly satisfy buyers’ modern day demands.

Favoured throughout the purchasing journey

It’s not just the transaction and the fulfilment stages where marketplaces excel, they are increasingly favoured by B2B buyers as places to provide purchase inspiration at the start of a journey.

In countries where it is available, 51% of buyers use Amazon Business for inspiration and search. In China, for Tmall and Taobao it is a dominant 81% who start their purchase journeys on these sites.

Testament to the convenience of the marketplace experience, these high numbers tend to carry through to purchase, particularly so in China where 78% go on to complete a transaction. 

An antidote to the pandemic

Unsurprisingly, the last two years have seen disruption within supply chains as businesses hurriedly switched suppliers to try and keep trading throughout the pandemic.

Once again, giant online marketplaces like Amazon, being both accessible and convenient, picked up the slack. Their own economies of scale allied to the huge roster of smaller vendors and allowed them to keep overall stock levels high throughout.

We have certainly seen a partial return to pre-pandemic buying habits, but this increased exposure to marketplaces during a time of crisis has also led to permanent shifts in B2B buying behaviour. Nearly half of buyers say they will not go back to the old ways; many suggesting that their lives will be easier with better access to alternative suppliers – something inherent in the marketplace model. 

Unbeatable?

B2B buyers have been turning to the likes of Amazon for years and the importance of marketplaces in a vendor’s commerce planning cannot be overstated. However, they are not a universal solution and engagement with them is not without its downsides.

Let’s not forget that whilst they allow vendors to tap into a large audience and provide a ready-made, streamlined buying experience, they do this at the cost of vendor margin and by having control of all data on the customer and their behaviour.

We all know how important CRM is for B2B, to follow where a customer is in the buying journey so that our contacts with them can be timely and relevant. Switching to a marketplace typically breaks that chain and we lose the continuity.

As dominant as they appear, Amazon and Alibaba have just 18% and 20% share of B2B spend respectively in the small number of territories where they are available, so there is still plenty more business to be won outside of their current reach.

Play to your strengths

Key to capturing some of this remaining market will not only be to provide a slick, end-to-end buying experience within owned commerce channels, but also to service needs that unspecialised marketplaces cannot meet.

B2B buyers rate the ability to find, specify and order complex, customised products as the most important capability when it comes to online purchasing – way ahead of an easy checkout process or fast delivery; a specialist vendor channel can provide this much more easily.

Also, the sheer size of the big marketplaces means that they cannot establish an offline personal relationship to guide brand values, advise buyers and buy teams in the same way that a vendor can when selling direct.

Balanced Channel Approach

Marketplace experiences have become the established norm in consumer-facing commerce, and 9 out of 10 B2B buyers also now expect the same levels of ease and convenience.

Marketplaces – like any other sales channel – work best for B2B vendors when they form part of a bigger ecosystem to provide a seamless, consistent commerce experience.

We would always advocate considering marketplaces as part of a balanced omnichannel approach to commerce.

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