Disrupting traditional industries: B2B marketplace roundtable
September 2, 2022
We welcomed B2B marketplace leaders to discuss ways to succeed in traditional industries. Here are our key learnings from VP Commerical, Richard Blakeborough.
B2B marketplaces are booming. Sectors from construction to luxury gemstones are being disrupted by new technology to connect buyers and suppliers, and make transactions and logistics simpler by allowing buyers to transact online more simply. However, for a lot of online B2B marketplaces, challenges in the communities they operate have presented blockers for their stellar growth.
Let me elaborate. With an accelerated shift to e-commerce in the consumer, particularly in the B2B space, it makes sense that online marketplaces are beginning to service most sectors. Although the idea of being able to buy raw materials your business needs to complete a project online seems convenient, there are factors that need to be considered. Relationships, specifically working with suppliers you know (or perhaps your family has known) for years is tough to give up. So what can B2B marketplaces do to overcome this by being another attractive option for buyers, or even enhance these relationships?
Recently we hosted an informal discussion at our offices so that B2B marketplace leaders could share their experiences of working in “traditional” industries. These are sectors where buyers and suppliers rely heavily on long-established relationships and are slow to adopt a new way of doing business. So what did we learn? It’s about knowing and showing your marketplace's value to both suppliers and buyers. Read on to find out more.
Some relationships will always come first
It’s worth saying this immediately and moving on. Accept some relationships between suppliers and buyers are there to stay and you must focus on who you can work with. A traditional industry is not going to be traditional forever, and you’re part of that change. Acquire new customers, a more tech savvy cohort perhaps, those that are open to new innovation. Understand what they value and how they can make the most of the technology you’re offering to improve their businesses.
Come for the network. Stay for the convenience.
The marketplace model can offer buyers the most cost effective, high quality products available and encourage healthy competition. You do not, however, want to facilitate a race to the bottom amongst suppliers! Your suppliers won’t want to be associated with the lowest costs and everyone’s margin would be impacted. So think about what else you can offer and why. If a buyer’s supplier is more expensive than those available on your marketplace, why do they keep going back? If you can’t replicate their relationship, what else can you offer that is as valuable as the safety of a long standing business relationship?
Offering a best in class customer experience for both sides, from first click to delivery is a great way to start. Does your site have features that allow your suppliers and buyers to track their orders more precisely, or understand their customers’ needs better? One of our attendees made a great point that having added visibility and reporting helps break down relationship barriers through transparency. These things can enhance your digital relationships with both sides of the transaction.
Showing the added value your marketplace offers
As a marketplace operator, if you rely too much on being ’the last resort’ for your buyers, you will struggle to grow as quickly as you like. For example, think of Uber. You never take a driver’s card in the hope that they’ll be available the next time you want a lift. You use Uber because of the ease of use, reliability and speed the platform provides.
More than just price or flexibility, one of our attendees suggested thinking about logistics and transport. This is often an area where people need help and crucially, it’s something you may be able to offer a better service on than a smaller supplier.
A perishable goods marketplace, saw another way they could add value. Instead of letting excess food stock go to waste, they worked with a well known charity to help their suppliers offload it sustainably. And for both their customers and suppliers, the ESG (Environmental, Social, and Governance) benefit is an added bonus that they could market. These value adds can mark you out from regular individual suppliers.
For the benefit of suppliers, you’re providing them with a platform to introduce them to new buyers. This is an important new customer acquisition tool and can be extremely effective in a crowded market. Essentially, you’re taking out a lot of marketing and discovery work for them.
Focus on what matters and be available when needed
The goal of a successful marketplace is that suppliers can sell their goods and every buyer gets exactly what they want. To achieve that you need to get the right suppliers and the right buyers. What attracts a supplier vs what attracts a buyer is different.
In industries that are more traditional or that tend to operate offline, a well designed website may not even register as important. In fact, one attendee told the group that when their site was at its most basic they saw some of their most impressive sales figures to date. Working on the fundamentals of price, fulfilment and service will help you hold onto the customers that do come to you. They may not come to you immediately again, or for all their jobs, but show them value and help them when they really need it, and you’re halfway there.
A lot of your buyers might initially find you because they desperately need something. Their regular supplier might have let them down or they need goods urgently and nobody can service their request quickly enough. Your marketplace might just have the buyers with stock they need to keep business moving.
Own the transaction
To make transacting on your website more attractive you might think about the different payment options you could offer. Traditional, offline industries are used to offering and using Trade Credit. For one construction marketplace, being able to offer MarketPay at checkout is a key reason their customers choose to buy with them. For another building materials platform, MarketPay helped them achieve the largest single transaction they’d ever taken. There are a lot of ways to incentivise a purchase, but helping businesses with their cash flow, particularly now, will mark you out from the crowd.
Know your customer
SMEs won’t spend as much as larger businesses but they’re faster to add as new buyers. On the flipside, large companies don’t always start spending immediately – and they take longer to onboard. It’s important to make sure your platform can work for every party but be conscious about who you need to target and how long it can take to see orders coming through.
Having a rich network is very important within the industry your marketplace operates. This is especially true in an offline industry where individuals can make or break an order. For many of our attendees, working with commercial stakeholders – ie. those controlling budgets and financial KPIs – is critical.
Relationships need maintenance — but they are transferable
Marketplaces thrive in times of volatility. That’s when customers need things more urgently and their regular suppliers may not be able to help. With current pressures, it’s potentially a time to convert more “traditional” customers who could start to have fewer choices.
Ultimately, you can win the market once both sides have bought in and see value in your marketplace beyond price. Remember to think like a consumer, because your buyer will. Ultimately we’re all consumers, whether we’re buying for ourselves or a business. Making life easier for your customers is the best value you can offer, and those important relationships can be owned by you.