Sellers must think strategically to unlock the power of these powerful new ecommerce technologies.
The pandemic sparked a surge in online selling — and not just by DTC brands serving customers while they were hunkered down at home. The B2B digital commerce space has also seen massive growth over the past two years, a trend that has only been accelerated by the rise of enterprise marketplaces.
What is an enterprise marketplace? Well, we’re all familiar with online marketplaces such as Amazon, Etsy, or eBay that focus solely on connecting buyers and sellers. An enterprise marketplace does much the same, but it’s typically run by an organization that wants to sell its own products and services to customers, and creates a marketplace to offer complimentary products, strengthen its partner networks, or create a better experience for its customers.
The world of enterprise marketplaces is remarkably diverse, including multi-vendor marketplaces, procurement-focused marketplaces, and branded marketplaces. In all cases, though, the enterprise marketplace approach is a powerful paradigm that’s changing the way that organizations sell online. Let’s take a closer look at some of the key benefits that well-run enterprise marketplaces deliver for their operators, vendors, and customers:
1. New revenue streams. Subscriptions, transaction fees, and value-add services or support charges enable marketplace operators to collect revenues without managing their own inventory or building out warehouses. Frankfurt Airport, for instance, invested in an online marketplace, and now collects membership fees from airport retailers who list products and offer promotions to passengers.
2. Customer experiences. Marketplaces are a great way to expand from B2B into B2B2C, or D2C models while still delivering engaging experiences. Andikem, the chemical fulfillment marketplace, achieves this by providing supply-chain transparency and fulfillment efficiency, keeping prices low for buyers.
3. Elimination of pain points. Marketplaces can offer solutions to customer headaches in areas such as supply chain and fulfillment. DOZR set up its WebStores marketplace to address an unmet need by helping construction contractors to rent equipment more easily, and now connects 15,000 suppliers with hundreds of thousands of customers.
4. Smarter procurement. Marketplaces are a perfect solution for complex procurement scenarios, helping buyers such as large companies or government agencies to coordinate across multiple divisions, subsidiaries, or business units while maintaining strict ordering processes. SupplyCore, the logistics solutions company, achieves this with a digital platform that manages complex orders without manual input, enabling customers to track order status from quote to delivery.
5. Streamlined purchasing. Marketplaces can support complex B2B purchasing arrangements, improving efficiency and lowering costs for everyone. Tundra Restaurant Supply, for instance, has built a flexible marketplace that allows it to offer customized experiences, discounts, and free shipping even for big buyers such as Chipotle.
6. Better franchise relationships. Franchise businesses can use an enterprise marketplace model to create a collaborative environment, maintain visibility into franchisor-franchisee relationships, and improve outcomes for customers. French retail franchise V and B does this well: their cloud-first marketplace centralizes inventory and streamlines operations for HQ, franchises, and suppliers.
7. Expanded product offerings. With competition growing, mass-market retailers are increasingly creating marketplaces to grow their product offerings. Walmart Marketplace, Amazon’s biggest US challenger, now uses its 5,000 brick-and-mortar stores as a value-add: vendors get a chance to sell in-store, and shoppers get access to a far wider array of products.
8. Better use of existing assets. Organizations with a large distribution footprint can maximize their assets with a marketplace. Target, for instance, leverages its distribution and store network to power its invite-only Target Plus marketplace, and promotes hand-picked brands across its Target.com and mobile ecosystem.
9. Better product information. Enterprise marketplaces can elevate product presentation — a valuable proposition for B2Bs with large SKUs and complex offerings. PartsBase, the world’s largest aircraft parts marketplace, delivers value by maintaining detailed product information for 15 billion parts spanning 100,000,000 inventory lines.
10. A stronger ecosystem. Businesses with large partner networks can use marketplaces to centralize and enable collaboration. Toyota Material Handling achieved this by gathering over 200 certified dealers on its platform, delivering a more engaging partner experience and ensuring a better product selection for end-users.
Unlocking these benefits doesn’t happen all by itself. Organizations need to think strategically about their enterprise marketplaces in order to get the most bang for their buck.
That starts with building out the operational infrastructure you need to succeed, including clear purchasing processes, fulfillment workflows, and payment systems. You’ll also need to communicate clearly with all stakeholders, including your outside partners and your own employees, in order to make sure that everyone understands the strategic goal of the marketplace and is committed to pulling in the same direction.
Operators also need to go into the process of building a marketplace with clear eyes, and an understanding that creating a successful marketplace requires committing serious resources. From building out digital infrastructure to retraining employees and engaging with partners, you’ll need to invest if you’re going to build a successful marketplace — and the amounts needed can be a dealbreaker for brands that aren’t sufficiently mature or ambitious.
Finally, you’ll need to develop the right toolkit. Fortunately, that doesn’t mean building everything yourself: these days, there are a wide range of marketplace management platforms to choose from. Many marketplace tools are designed to support conventional marketplace operators, though, and don’t include the features needed for enterprise operations. Be sure you do your due diligence, and select a marketplace solution that’s designed to support the specific needs of B2B and enterprise operators.
Plan for success
The bottom line is that enterprise marketplaces are changing the way that businesses of all kinds buy and sell online. That’s potentially a lucrative opportunity for operators — including manufacturers, distributors, retailers, franchisors, and even government actors.
The more crowded the enterprise marketplace grows, though, the more competitive the space will become. That means new and existing operators will need a careful and measured strategic approach in order to gain a foothold and build a successful marketplace.
When you’re thinking about the potential benefits of running an enterprise marketplace, then, it’s important to plan ahead. Focus in on exactly what you’re hoping to achieve — and develop the strategy, partnerships, and toolkit you need to achieve your own specific goals.
Yoav Kutner is the CEO and co-founder of Oro, Inc, which has created OroCommerce, the No.1 open-source eCommerce platform built for distributors, wholesalers, brands, and manufacturers. Yoav previously co-founded and served as the CTO of Magento.