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Why B2B marketplaces are booming

January 28, 2020
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Twenty years ago, the B2B marketplaces we know today were nearly unrecognisable. Then, they were known as “exchanges”, and businesses found it faster to turn to big paper item catalogues, making calls to multiple providers to find the best prices. Slow internet, inadequate delivery options, and lack of trust in online shopping were just some of the reasons why “exchanges” were not a success in their time.

The B2B marketplaces being used and launched today offer B2B buyers an opportunity to buy multiple items all in one place. In addition, online price transparency is saving businesses time as they can see which items are most economical and recommended by other buyers. Marketplaces continue to grow as more businesses choose to discover all the benefits of shopping for their niche products on specialist marketplaces and getting some top deals from the market leaders.


Those who have been in the eCommerce industry for a long time will remember when B2B marketplaces were called “exchanges”. Twenty years ago, these exchanges were popping up all over the place, and many collapsed spectacularly.

It is unsurprising that the early B2B marketplaces did not succeed, considering in the late 90s and early 00s, there were not enough people online and purchasing products on the internet was something people were not yet used to. The payment infrastructure was also lacking, so many suppliers were reluctant to sign up to the early exchanges. There was then the headache of B2B fulfilment - which was more complex than a simple B2C sale.

Despite their early failings, B2B marketplaces have made a major comeback and are now reaching record numbers. It is estimated that one-third of all US business flows through eCommerce, and 63% of that through a marketplace. This article looks at why B2B marketplaces are more viable today and the reasons behind the boom.


There are many reasons why marketplaces are more viable today than two decades ago. Much of it is down to technology, but there is also the fact that we are all more familiar and comfortable with buying online. Here are a few of the major trends which have resulted in the surge in marketplace popularity:

  • Internet speed – Back in the 00s, download rates were about 69 kbits/s with “high speed” at around 200 kbp/s. In 2020, a reasonable average was 230,000 kbits/s, which is approximately 3,300 times faster than the average speed twenty years prior. In addition, it is now 1,150 times faster than the best service available in 2000 – which means it was quicker and easier to look items up in a catalogue and call up an order than it was to buy online.
  • Delivery expectations – What distributors once viewed as important has changed hugely. They were once fixated on trying to find ways to combine their shipments from multiple distribution centres or branches into a single delivery. Using a marketplace would just make that dilemma worse. It would involve numerous distributors working together to try and set particular locations to attempt to consolidate the shipment. Buyers no longer expect or long for consolidated deliveries making the marketplace a more attractive option.
  • Mobile innovation – The introduction of the first Apple iPhone in 2007 and 4G technology rollout in 2011 swiftly made it easy for people to access, browse and shop online from a mobile device. It was also the first time companies were allowing their employees to access their networks via their mobiles. This combination of changes suddenly made it easy and practical for businesses to shop online and use marketplaces to sort out business inventory.
  • Countless options – For decades, distributors would pride themselves on being able to source hard to find items that customers could not locate themselves. However, in the world today, it is possible to find any item online. Buyers can simply go to a marketplace like Amazon or search on Google to find an array of suppliers for almost anything. This makes online shopping incredibly satisfying for many customers and has driven costs down due to the amount of distributor competition.
  • Shopping enjoyment – There have been numerous studies into the dopamine hit people get from shopping, and it is now understood that this “rush” is not at the point they physically receive the ordered products. It is actually more about the anticipation of receiving the package. So, although business buyers are not shopping recreationally, they can still experience the excitement of buying a new item. Human brains are wired perfectly for online shopping as we get a more significant rush from waiting for products to arrive.

The pandemic also drove millions to work from home and buy online. Post lockdown has also seen little decline in the trend towards marketplaces. Marketplace distributors must rapidly improve their eCommerce maturity to keep up with consumer demand, including B2B customers.


The disruptions brought about by the Covid-19 pandemic contributed to the surge in online marketplaces. It has been the B2C marketplace sales which saw the most significant digital acceleration due to the pandemic, with a growth of 81% year-over-year in the last quarter of 2020. However, due to the various lockdowns and restriction measures, B2B customers also turned to eCommerce to maintain their operations.

Even with lockdowns easing across much of the world, supply chains remain a huge issue. However, gaining access to multiple suppliers via B2B marketplaces is helping businesses to continue trading and reducing their dependence on their original limited sources.

Covid has reinforced the high expectations of the marketplace experience. It started with B2C marketplace shopping experiences, where the customer journey has been honed to be as enjoyable and convenient as possible. This has had apparent repercussions for the B2B marketplaces, which largely remain hard to navigate, complicated delivery options, and lack of inclusivity of products. It has even resulted in some B2B customers turning to B2C marketplaces to meet their needs.

It is estimated that 80% of B2B buyers now expect a similar convenient shopping experience as that of a B2C site. This is resulting in B2B marketplaces upping their game and new marketplace emerging to offer an improved experience to those already established.


The modern B2B marketplace is not one size fits all. The majority of marketplaces fall within two categories – niche players and market leaders. The niche marketplace is for distributors that cater for a particular industry or community of users. Whereas the market leaders are businesses which already have a substantial customer base, a lot of organic web traffic, and intend to grow even larger by offering their customers more choices.

Perhaps the main reason why businesses are setting up their own marketplaces is to attempt to stay ahead of the competition. For example, in early 2019, only 56% of B2B companies had eCommerce sites, and only 11% had marketplaces. This resulted in many companies seeing this as an opportunity to take advantage of the window.

However, this window of opportunity is still very much open – especially for the wholesale and distribution sectors. Businesses in these sectors are historically known to be slow to adopt new digital strategies. It is understood that innovative strategies often deliver higher returns than risk-averse ones. The three-year revenue growth of companies that make an early move with digital strategies is nearly twice that of companies that are more reserved in response to digital competition.

Another reason for companies launching their own B2B marketplaces is to retain their existing customers and attract new ones by offering them what they want. Many customers want the ability to buy multiple products in one easy to use online platform. In addition, B2B buyers like the fact there is price transparency on marketplaces. They would have to call up multiple suppliers to get quotes in the past. Comparing costs was a time consuming and challenging task. It only takes a point and a click to compare prices on a marketplace.

Establishing a B2B marketplace is also a great way for businesses to earn additional revenue without adding new products to their portfolio. If the people behind the marketplace are talented at data analysis, they will also be able to test the demand for new products. Being able to study sales trends and identify product categories that perform exceptionally well, marketplaces can grow into successful revenue-generating platforms.


Businesses would have to pay for goods using cash, check, or credit cards in the past. However, there is now a much larger variety of payment options with developments in embedded finance in eCommerce. In addition to credit cards and bank account transfers, buyers can now pay via PayPal, Apple Wallet, and many other finance options.

Although some businesses still use credit cards to build up their company credit, they can be inflexible at times. Many B2B customers would prefer to stay away from the inconveniences of credit cards and instead look to buy now pay later (BNPL) options. This opens the online marketplaces to more buyers, especially those that fall within the start-up or seasonal category.

In addition to allowing buyers to access inventory for the business when cash flow may be slightly low, online payment systems also remove the need for one payment source to be shared across all transactions. Instead, a company can stock up when needed and pay back BNPL providers in instalments to split the cost.

For businesses that are interested in online currency, some marketplaces also offer cryptocurrency as a payment method. Cryptocurrency uses blockchain technology to decentralise payments. While investment is a viable option for a business that can handle the ever-changing crypto markets, some choose to use them to pay for their regular transactions – such as those that take place on B2B marketplaces.


The most significant challenge for B2B marketplaces is upgrading their legacy systems. They are aiming to deliver a more B2C-like shopping experience for new and existing customers. To compete in the world of eCommerce and with the booming array of online marketplaces, suppliers need to ensure they have the best systems in place.

Many established businesses are making the mistake of upgrading their systems on an as-needed basis. This can make it difficult for new technologies to be integrated, leaving them back where they started – with an inefficient, outdated marketplace system. Instead, forward-thinking marketplace owners embrace digital strategy and use it to guide their overall business vision and goals.

Marketplaces need to invest in their eCommerce platform technology. Some of the most important areas to consider when mapping out a digital transformation include:

Robust security that sellers and buyers can trust Integrates easily with other business systems Can personalise online shopping experiences Decent product information management (PIM) tools

Not all eCommerce platforms are the same, yet many B2B marketplace system providers offer a one-size-fits-all solution. There are now some fantastic SaaS eCommerce solutions on the market that allow B2B marketplaces to stand out from the crowd and provide their B2B buyers with a pleasant shopping experience. In addition, these systems are not overly expensive and have the features needed to support the complexities of B2B.

One of the main areas a marketplace can help stand out from the crowd is to have a sleek and easy to access review section for each of its products. With so many options available online, buyers rely on the reviews of past buyers to give honest opinions of their purchases. Many modern marketplace systems have automated feedback facilities which makes collating these precious reviews less arduous for marketplace owners.

The key functions to look for when using a top-quality B2B marketplace platform include the following:

  • Multi-vendor capabilities – a core function of a decent B2B marketplace is its capability to allow organisations to control their page and information. Businesses on the platform should be able to manage and customise their profiles, product information, contact details, pricing, and general role management.
  • Self-service functions – Many B2B buyers prefer to place their orders themselves rather than use a customer service representative. Modern marketplaces should have robust features to allow a self-service model should they choose one. eCommerce systems need to be highly responsive and intuitive to provide an efficient shopping experience.
  • Security functions – Perhaps the most essential part of a marketplace is the level of security it can provide. With any digital platform, data and information security and confidentiality are necessary to make businesses feel secure and comfortable using the marketplace. The last thing they want to worry about when shopping and selling are data breaches.
  • Search navigation – If buyers cannot find what they are looking for quickly, it can put them off using the same marketplace in the future. Therefore, searching and filtering products and vendors are essential for a modern B2B buyer. The most successful marketplaces have search functions that allow buyers to filter by brand, highest rated, price range and various other refinements.
  • Flexible workflows – Markets and industries can change quickly, and eCommerce is no different. B2B marketplaces need to be able to keep up and adapt, so flexibility is crucial for long term success. Buyers and sellers need to rely on the systems to be flexible and customisable to allow for tailored onboarding strategies, changes in orders, processing practices and replenishing supplies when required.

As can be seen from above, the system requirements of a B2B marketplace are vast. The best technologies will also be able to work alongside the vendors existing tools. This means that not only will the primary focus be on the buyer experience, but also the seller’s software solution needs.


B2B buying behaviour differs hugely from that of B2C. For B2B marketplaces, there is no one single dominant supplier – there is no Amazon like there is in the B2C industry. Instead, there is plenty of room for lots of mini Amazons for wholesale and distributor companies to serve the niche markets.

This is not to say that the shift for any company wanting to start a marketplace does not come with some challenges. The systems required to provide the security buyers expect from a marketplace are complex. There is then the additional requirement for the system to check availability, update pricing, and factor in currency exchange rates.

Offering increased product choice is a sure-fire way to grow a business, and marketplaces will continue to be huge post-2022. However, those in the eCommerce space and not looking at marketplaces will likely be left behind.


How does a B2B marketplace work? A B2B marketplace is a digital platform that facilitates companies to connect with other organisations and conduct business in one place. They are similar to the B2C platforms online shoppers use every day. However, B2B marketplaces are used by companies to buy and sell products – usually in bulk. B2B marketplaces also offer a place to build a community of sellers and buyers. This is especially true to niche marketplaces that offer solutions for specific industries.

What are the main features of a B2B marketplace? There are several features and functions of B2B marketplaces, with each platform attempting to differ slightly from the next. However, the most successful marketplaces all have one thing in common – understanding their competitive advantage and utilising digital infrastructure to maintain it. While eCommerce businesses differ hugely online, the best functions of B2B marketplaces tend to show some similarities. At the core of all popular marketplaces is the desire to create a satisfying and enjoyable experience for B2B buyers, focusing on ease of use and strategic advantages.

Are marketplaces the future of B2B retail? Marketplaces are fast replacing multi-brand retailers, which were once a very convenient way for B2B shoppers to source their supplies. Marketplaces offer sellers the opportunity to reach a more comprehensive array of customers than they could via their own sale channels. They are places where buyers visit to make purchases, but it also provides crucial customer insight. By understanding buyer behaviour, B2B sellers can adapt to give customers what they want.

What makes a marketplace successful? There are three primary things that make a B2B marketplace successful. Firstly, the marketplace will need to create adequate liquidity on both the selling and buying sides. Second, they will need to encourage participation to create a high level of trust and transparency. Lastly, there must be a reactive and proactive mechanism for addressing the inevitable issues that will arise between sellers and buyers.

Which is the best type of marketplace to sell on? The best type of marketplace to sell on will depend on the company’s marketing and sales strategy. Once this has been ascertained, there is a massive array of marketplaces to choose from. Some will offer almost everything you can imagine, and others will be more niche, specialising in products for particular industries only. The three different types of marketplaces include:

  • Global – sells everything to everybody
  • Vertical – sells products from many different providers but all of one type
  • Horizontal – sells many different products but shares similar characteristics

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