According to Statista- the market size of B2B eCommerce totaled around $14.9 trillion in 2020. It was five times bigger than the B2C market. And this market size is expected to reach $25.65 trillion by the end of the year 2027.
Undoubtedly, B2B eCommerce marketplaces have been playing a key role behind the scenes. It allows a wonderful platform for interested enterprises to meet each other and find business scope.
You will learn from this article why B2B eCommerce marketplaces are booming and how they can contribute to your business growth. Also, you will learn the challenges involved with this business model. Let’s get started!
What is a B2B eCommerce Marketplace?
B2B eCommerce marketplace is a website where different types of businesses join to sell goods and services to other businesses. It can be of different kinds: trading platform, multi-vendor marketplace, B2B portal, directory, catalog, etc.
In such a marketplace, brands, manufacturers, wholesalers, and suppliers are the sellers. Retailers, resellers, and privet label brands are the buyers/customers. And the overall business process and transactions are monitored online by marketplace admins.
Why B2B eCommerce Marketplaces Are Booming
B2B marketplaces have become popular business hubs over the last few years. It is the reason why numerous enterprises have got a way to flourish economically. Check out the reasons why B2B eCommerce marketplaces are growing globally.
1. Expands Business Reach
B2B businesses usually have limited customers compared to B2C. Because the financial figure of each order is quite big here. This is why only a 5% increase in customer base can greatly impact your revenue department.
So, you shouldn’t miss out on any opportunity that can expand your business reach. The brick-and-mortar store limits your presence locally. But an online presence can make your shop available to more potential buyers.
It lets customers view your products even when you sleep or your store is shut for a storm. It will allow them to send you a message or ask for quotations if they are convinced with the products. Isn’t it wonderful?
2. Buyers’ Behavior is Shifting
According to GE Capital Retail Bank, 80% of buyers search for products online before they go to a store. Whereas half of them conduct their product research in marketplaces, from a study conducted by.MarTech
In the past, people had to visit multiple stores individually to find out their desired products. B2B marketplaces have made it easy for them. It allows them to conduct product research in one single place which saves their time a lot too.
3. Take Pre-Orders
B2B eCommerce marketplaces are now a great way for manufacturers to take pre-orders before going to mass production. If you visit Alibaba, you will find sellers and manufacturers taking pre-orders.
It helps them verify the demand for any product before going into mass production. Besides, customers get a way to customize their products as they want and keep the buying price low. It saves the ends of both parties.
4. Access to the Global market
Earlier it was seen international buyers had to have documents like import-export licenses and L/C to buy any product. But it was much hassling for the small enterprises. So, they had to rely on local wholesalers and importers.
But today, there are many B2B eCommerce marketplaces that offer international shipping and don’t require you all these documents. Alibaba was the pioneer to introduce this system. Courier companies do all these at their own responsibility.
It has brought about a massive revolution in the global trading system. It has empowered small and medium size enterprises to fight the big players.
5. Promote Multiple Brands Under One Company
If you are a big manufacturing company, owning a marketplace will allow you to promote all your brands under the same umbrella. Unilever, Nestle, Mars, and GSK have hundreds of different brands. Only Nestle has 2,000+ brands alone worldwide.
Suppose, Nestle owns a popular B2B marketplace that receives huge traffic every day. Could you imagine how effectively it will contribute to its business growth and branding?
Indeed, it will take time initially to popularize the marketplace. But once it gets solid ground, it will continue to exponentially.
Who Can Make the Best of B2B eCommerce Marketplaces
While it is possible to be a B2C seller overnight, things are quite different in B2B. There are many basic differences between these two business models in terms of order volume, transaction, customer intent, branding, order fulfillment, and shipping.
This is why the following types of businesses work best with the B2B marketplace model.
Manufacturers produce large-scale finished goods using machines, manual labor, and raw materials. Afterward, they sell these items to retailers, wholesalers, resellers, and other manufacturers.
Just look at the automobile industry. An entire automobile is rarely made in a specific factory. Parts (windshields, tires, seats, etc.) are usually made or sourced from different factories and combined in one place.
So, parts manufacturers can join or create a marketplace where automobile companies can come to purchase their products. Also, they can sell products to retailers, garage companies, and car showrooms.
Wholesalers buy goods in large volumes, usually from manufacturers and distributors. Then, they sell it at a lower price to retailers. This business model is available in all industries. Such as food, medicine, grocery, fashion, and others.
In B2B eCommerce marketplaces, wholesalers can display their product descriptions, business information, and minimum order quantities. Buyers can reach out to them through the chatbox, email, and phone number. Thus, sellers get a way to create a long-term relationship with retailers for recurring sales.
Suppliers play an important role in every product lifecycle. Not necessarily they keep inventories like other business models. Rather they source necessary raw materials and finished goods from different sources for whoever needs them.
For example, they can help manufacturers get raw materials at cheap costs. Also, they co-operate with private label brands to get the finished products following requirements before the deadline.
4. Private Label Brands
Private label brands refer to the products manufactured by a company but selling under a different brand name. You will find many fashion brands, foods, and electronic brands following this business model.
In the B2B model, private label brands get a large volume of products manufactured by other companies and then sold in small quantities to retailers and resellers.
Bonus: Challenges in B2B eCommerce Marketplace
The B2B eCommerce has recently seen a massive upsurge, especially since the beginning of the Covid endemic. Today, almost every industry is trying to get some sort of digital presence. Yet not all B2B farms are inclined to join this platform.
Actually, there are some challenges. If they are solved, B2B marketplace will flourish more. Let’s explore the challenges involved in this industry.
1. Pricing for Bulk Order
Pricing in B2B eCommerce largely depends on the number of products buyers want to buy. The more products they order, the lower becomes the price. This means you have to offer multiple quotes to different sets of customers according to their order volume.
You can display various built-in pricing models according to order volumes. But you should use the previous purchasing history of the buyers to offer them specific quotas. Finally, automated discounts and filters can be used to offer personalized pricing.
2. Complicated Order Management Process
When someone tries to confirm a B2B order, lots of paperwork involves. Several types of certifications (trade licenses, commercial permits, NID) and agreements need to be verified. This is why it becomes lengthy and time-consuming to process an order.
Marketplaces must use a content management system to track and store information on legal papers and documentation of each buyer. Once someone uploads his papers, after verification, they will be allowed to shop recurringly till their papers expire.
3. Shipping Management
B2B industry deals with freight shipping as they have to handle bulk orders. When many orders come together, it becomes difficult to hire news freight. If order volume falls, freight loading takes considerable time to be filled. So, the fastest delivery at cheap costs is difficult to ensure for always in this industry.
If possible, build a logistic company of your own or partner with some other companies. Alongside, specify mandatory minimum order quantity, least shipping time, a range of shipping quotes, and authority to amend shipping time on short notice.
4. Multiple Payment Options
B2B trading usually involves a big volume of financial transactions. This amount can be up to $100,000. But yet, not many people have the confidence to transact this volume of financial transactions online. Even many gateways don’t allow users to cross particular amounts in every transaction.
B2B eCommerce marketplaces must ensure multiple payment options to let buyers find the best one. Payment methods you can use here are cheques, cash-on-delivery, card payment, bank transfer, electronic fund transfer, and e-wallet. Today, you’ll find many marketplaces accepting cryptocurrencies.
Try to include most of them in your eCommerce marketplace. If buyers start gaining confidence in your payment systems, it will give you competitive advantages.
5. Data and Cybersecurity
The Chinese technology giant Alibaba intercepts 300 million hack attempts per day, claimed by Jack Ma.CNBC news
On 6th October 2021, some unknown hackers leaked sensitive information from the Amazon database. Actually, the more successful your website is, the more likely it becomes a target of cyber attacks.
To ensure trust and cybersecurity, implement a robust data storage plan with powerful anti-spamming software. Frequently change passwords of your data protection system and regularly update your software. Finally, create a professional cybersecurity team.
6. Return and Refunds
Staggeringly, 30% products ordered online are returned compared to 9% of returns in brick-and-mortar stores.invesp
This is why over 60% of buyers review the return and refund policies before they confirm purchases from an online store. In B2C eCommerce, most buyers love to get a refund in less than 5-7 days and are free to return their products.
But since B2B eCommerce deals with freight shipping and a large volume of products, this is quite impossible to offer B2C-like services here. Complicated return and refund systems disinterest buyers.
This is really very difficult to complete the return and refund issues in B2B industry in a week. Because it takes time to check if the buyer’s claim is legit and then ship back the products. You must look for other ways to cover up these problems.
Specify easy-to-understand return and refund policies with clear explanations. Make sure your return policy doesn’t affect much on your revenue stream. Finally, use your own logistic system or partner with an agency to quickly ship back those items. Thus, you can clarify the refund request in the quickest possible time.
Are You Ready to Join B2B eCommerce Marketplace?
Now is the time to take your business to B2B eCommerce marketplaces. Still, if you limit your businesses to offline, you will surely miss out on many potentials in local and international markets.
Joining B2B marketplaces not only gives you an online presence. It helps your reach out to more audiences than isn’t possible with the brick-and-mortar store. You will continue to lose competitive advantages if you don’t feel the necessity to get your business online.
Indeed, B2B eCommerce marketplaces haven’t reached their ultimate growth yet. There are still many challenges ahead. But with the advancement of eCommerce technologies, it will be easier to overcome these challenges.
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