How much control over supply chains do B2B marketplaces need?
B2B marketplaces can have a lot of control over all aspects of the supply chain. But how involved do you need to get to ensure quality and superb service?
In June we hosted leaders of B2B marketplaces at VC firm Northzone’s offices. The conversation revolved around common challenges and opportunities facing leaders in the category. Our expert panel included Sam Freedman from Curate Beauty, Jina Kwon from Ankorstore and Erez Mathan from Rooser.
Our CEO and Co-Founder Anil Stocker got the conversation flowing with topics from customer acquisition to navigating current uncertainty and our audience kept the questions coming. In a series of blogs we’re exploring our panellist’s responses to these questions to paint a picture of how best to scale, fund and run a B2B marketplace. If you’d like to learn the tricks and tips they swear by in scaling different sides of their marketplaces, check out this blog. For all matters supply chain, stick around on this page…
End-to-end control over your supply chain
There’s a lot that sets B2B and B2C marketplaces apart. One difference we’ve observed is that in a lot of consumer marketplaces, the platform simply matches the participants, leaving logistics and execution of orders to the sellers. In the B2B space, marketplaces have more control over all aspects of the process, from vetting the sellers to delivering the product.
Deciding how involved your platform should be in all stages of the supply chain is very important to manage quality and narrow down your value proposition. It’s tough to be all things to all customers. We heard from two leaders with different levels of involvement.It was valuable to see how two different approaches can work, depending on the marketplace. Hopefully their perspectives below can help you figure out where your business falls on the hands-on or hands-off approach spectrum.
Do you want to act as a middleman?
Rooser is a global seafood network connecting seafood buyers and suppliers. They play a very active role in ensuring the quality, funnelling all fish into their warehouse in France before sending it to the buyer. Erez, COO and Co-Founder, finds it crucial that they play an active role in the process, explaining:
“In seafood what the supplier cares about, as you guys can imagine, is that stuff is rotting away as soon as it leaves the ocean, so you need to push it through the chain as quickly as possible. So what suppliers care about the most is making sure that they sell the fish quickly and that they get paid on time. And then for the buyers the more important bit is finding the fish that they're looking to buy, but then getting them at the right quality and at the right time. And that's been a massive pain.
I think that where we meet it as consumers is that you show up to a restaurant, you look at the menu, there's a fish there that you really want and then the waiter comes and says ‘we don't have it today’. That’s mainly because of the supply chain challenges that are occurring.
So the key thing for us was to create something in the middle where we ensure that the quality is exactly what was promised to the customer and the logistics run on time. We don't own any of the logistics, but we make sure that the trucks leave on time and if someone is not getting their fish because the boxes miss the connection, we will replace them.
So that's quite big for us: to build trust in the industry.”
The seafood industry is built on long-lasting relationships – you can read more on that here. Gaining trust, although time consuming, is instrumental to Rooser’s success. So it makes perfect sense that they want to stay in control to ensure both the quality of the product and the experience is top-tier. Effectively, their marketplace works as a middleman between the buyer and seller.
If you’re in a similar position, think carefully about which parts of the process are critical and develop quality-checks along the way. This might mean more time and capital needs to be initially invested, but the trust you gain will be priceless in the long run.
Is your marketplace more of a matchmaking service?
Curate Beauty is an online marketplace for independent beauty brands and retailers. Sam, their Founder and CEO, explains they have taken a different approach to Rooser when it comes to their involvement in the buyer process:
“We’re not very hands-on. We’ve stopped managing the shipment, so we don't touch the actual stock anymore.
I guess for us, our hands-on service is more at the beginning stage, and then recommending and sharing samples so that they can actually see products before they buy. And then from that stage, once they try it and they love it, they make the purchase and then we don't want to touch the stock.”
Curate Beauty is completely hands-off once the transaction takes place. But that doesn’t mean they don’t add value in other ways. Their quality control process takes place at the beginning as they carefully vet the participants ensuring high quality of the stock. This helps in building trust as buyers will know that if a seller is on the platform, they are trustworthy and their products are of high quality.
A key point Sam made is that the beauty industry is very tactile. Buyers need to touch, smell and examine the products in person to truly understand the selling points. Curate Beauty’s expertise is part of their value proposition – buyers know that only high quality products are listed at the site.
If you’re in a similar position where handling stock once the sale is made isn’t necessary, it’s important to be clear on how else you can add value before that point. You can start by making the recommendation process highly personalised and give buyers confidence in the product by sharing samples.
What approach should you take?
The answer to that all depends on your industry, capacity and preferences. You might need to get a bit more involved in the beginning, before trust is built. Or you might need to be hands on throughout the process, dealing with buyers and stock. Always keep ways that you can add value front of mind, and have a clear understanding of what makes you different from your competitors.
Being completely hands-off might not be the ideal to aim for, as B2B marketplaces are built on trust and relationships. But there are many different stages between sellers listing their products and buyers receiving physical stock. Decide when your expertise can make the most impact and take your industry by storm!
Hear it directly from the speakers
Interested in what you’ve read? Check out the full clip below to hear it directly from our speakers:
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