Marketplace Growth is Among the Strongest B2B eCommerce Trends

Marketplace Growth is Among the Strongest B2B eCommerce Trends

The B2B eCommerce market has been growing steadily for many years. It’s currently estimated to be worth around 8 trillion dollars and its value will more than double by 2026, according to an article published on GlobeNewswire based on a report by leading market research company Facts and Factors.

The report highlights how B2B is no longer dominated by members of the Boomer generation (who prefer personal and face-to-face business interactions) but rather by members of Generation X and Millennials, who tend to be much more willing to use the internet not only to conduct B2C transactions but also for B2B purchases and sales.

Members of this generation tend to have a much stronger trust in the internet’s potential to provide potential buyers with sufficient data and communication means to make informed business purchasing decisions or to better serve clients from a seller’s perspective.

This also means that creating and optimizing websites, social media channels, and various platforms that facilitate the search and analysis of data, as well as the evaluation of alternatives, feedback, and post-purchase support for clients, has become one of the biggest priorities for providers of B2B goods and services.

Ignoring or minimizing the importance of the internet, and eCommerce in particular, can be a fatal mistake for a B2B entrepreneur who wants to thrive in 2022.

In this article we will explore the current B2B eCommerce trends before focusing on B2B marketplaces.

Traditional vs eCommerce B2B Purchasing Process 

When purchasing goods and services, businesses usually go through a series of stages. The length and importance of each stage depend on the industry and specific buying situation but in general, the stages are:

  • Recognition of a need or problem – The businesses recognize that there is a need or problem that can only be satisfied or solved by purchasing a good or service from outside the organization. This need or problem may be recognized by the user of the good/service or by other agents within the organization, including the top management.
  • Definition and quantification of the need – During the stage, a group of agents within the organization is tasked with determining the type of good/service that is needed, its characteristics, and the necessary quantity. For complex goods and services, this stage involves the definition of the product’s technical specifications. The agents involved in this stage are usually a combination of final users and technical evaluators.
  • Search for qualified suppliers – This is the stage during which purchasing agents look for data on the products they need to buy and collect information on different suppliers before shrinking the number of potential suppliers to a smaller pool that meets certain qualifications. This selection is not only based on whether suppliers sell a certain product but also on other indicators such as financial stability, acceptable geographic distance, and so on.
  • Request for proposal – The suppliers that are selected at the end of stage 3 are sent a so-called request for proposal (RFP). Such RFP should include all the information the buyer needs to make an informed purchase decision, such as the product’s technical details, the level of quality, price, delivery method, post-purchase assistance, and so on.
  • Proposal evaluation and supplier choice – During this stage, the agents tasked with evaluating the different proposals will determine which supplier best meets the business’ needs. This evaluation process will differ greatly from business to business. Some businesses may care more about certain technical details than the overall quality of the products while others may be more interested in the price or the level of post-purchase assistance. If the business plans to buy products from a supplier on a regular basis, the supplier’s financial stability and reliability may prove crucial, and so could the supplier’s past records with previous clients.
  • Supplier selection – After careful analysis and comparison of all proposals, the business will then select the supplier. The choice may fall upon a single supplier, that will be the only one selling that product to the business, or upon multiple suppliers. Both options have their advantages and disadvantages. Dealing with one supplier makes it easier to obtain volume discounts and to develop a relationship of deep trust between buyer and seller but it also means that things could go sour if that supplier doesn’t mean the reliability expectations. Buying from multiple suppliers reduces the risk but at the same time, it may create technical issues if there are minor differences between the products provided by each seller.
  • Product order – This is the stage during which a purchase order is sent to the supplier. It’s also the stage during which a purchase routine is defined in those cases the business plans to buy that product on a regular basis from the supplier.
  • Post-purchase evaluation and feedback – During this stage, the business determines whether the product is in line with the expectations and terms agreed with the supplier. The supplier’s behavior is also evaluated. Were the products delivered on time? Where the buyer’s personalized requests taken into account? It’s also the stage during which the buyer provides feedback to the seller. This can help the seller adjust its performance to the buyer’s expectations in the future. In some cases, this is the stage during which the buyer decides that the seller is not able to perform according to expectations and goes back to stage 3 to look for another supplier.

The process tends to be longer or shorter based on whether the purchasing situation is a new buy (the business is buying that product from that seller for the first time), a modified re-buy (the business has already purchased that product from that seller but it’s modifying certain elements of the order) or a straight re-buy (the business is simply repeating the same order without any modification).

As the internet became an increasingly valid channel through which searching for information, comparing different suppliers, filling in orders, and communicating with suppliers before and after the transaction, the term e-procurement became widespread. Such a term indicates the process of obtaining the goods and services that a business needs for its operations through the internet.

The use of the internet affects different parts of the B2B purchasing cycle:

  • The definition and quantification of need also involve using online sources to determine the type of product the business needs.
  • The search for qualified suppliers involves using online data and resources to detect the sellers of such product
  • The request for proposal can be done using internet communication channels (email, social media, online business networks, etc.)
  • The proposal can be received online, and the internet can be used as a supporting source to evaluate the different proposals and make an informed decision
  • The order can be processed online
  • The post-purchased feedback can be given online
  • The request for post-service assistance can be transmitted online and sometimes received entirely through the internet

The Advent of e-Procurement Software

To help businesses optimize and streamline the e-procurement process, dedicated software applications have been created.

These cloud-based apps provide automation and digital tools that allow a business to find, purchase and manage purchases of B2B products exclusively though the internet.

They take into account both the transactional and strategic elements of the procurement process, meaning that they help both streamline operational tasks like order generation or catalog maintenance and help the business develop productive relations with vendors, as well as reduce risks.

The biggest benefits e-Procurement apps provide are an overall increase in productivity, improved cost management, and a lower error rate.

Kissflow and Coupa are some of the best e-Procurement software applications available on the market today.

E-procurement software has very clear and undeniable benefits but not all businesses can afford it, especially smaller ones.

E-Procurement through online B2B marketplaces can be a valid and less expensive alternative.

An Overview of B2B Marketplaces 

B2B marketplaces can help businesses optimize their purchasing process thanks to a number of features:

  • Their API-driven architecture allows them to offer updated, complete, and accurate multi-vendor product catalogs
  • A personalization engine allows them to recommend relevant products to the marketplace users
  • Pricing and promotion apps allow them to offer user-based custom pricing.

Some of the most popular B2B marketplaces include Alibaba, currently the largest B2B marketplace for goods, Global Sources, Amazon Business, and TradeKey.

B2B Marketplaces Are Increasingly Popular

Based on data published by Digital Commerce 360, B2B marketplaces are currently growing at a rate 7 times higher than B2B eCommerce businesses in general are the fastest growing digital sales channel.

It is estimated that, by 2024, 30% of all B2B transactions will be done through B2B marketplaces, for a total value of 3.6 billion dollars.

This growth represents an opportunity for all actors:

  • marketplace operators, who are seeing unprecedented growth levels
  • sellers, who can access an increasingly wider base of potential buyers
  • buyers, who can now streamline and optimize their purchasing process

They also make it possible for multiple businesses to cooperate and define or improve their supply chain in the interest of all parties involved.

Some sellers are reluctant to join a marketplace because they fear that this may weaken their identity and the level of control theyhas over their activities. That’s why they should take additional steps to select a marketplace that effectively aligns with their business’ identity and features. They can also consider the option of using multiple B2B marketplaces, by taking advantage of tools (such as seller integrators) that make it easier to connect a seller’s system with those of such marketplaces.

B2B marketplaces offer numerous other advantages to B2B sellers, including:

  • reaching potential clients well outside their regional or national boundaries
  • gathering many more leads at much lower costs
  • obtaining deeper and more accurate insights into potential buyers
  • communicating more easily with clients
  • easily adjusting their prices as a result of changing demand and market conditions
  • easily updating their catalogs and the current availability of each product
  • simplifying payments
  • saving on marketing and promotion costs
  • analyzing the competition more easily and shaping their offerings accordingly
  • gathering many more leads at much lower costs

As for B2B buyers, rather than scouting the web for information from several dozens (if not hundreds) of supplier websites, B2B marketplaces allow them to access tens of millions of products on the same website, minimizing the need for expensive e-Procurement software.

The list of benefits obtainable by buyers using B2B marketplaces is significant.Such benefits include:

  • heavily reducing the time needed to find sellers that meet the buyer’s needs
  • increasing the chances of finding products that meet exact buyer’s specifications
  • easing the process of comparing prices, delivery times, and other terms offered by different sellers
  • speeding up the process of sending inquiries and requests for proposal
  • unifying the purchasing process in one place without having to use multiple channels and sources
  • choosing between a larger variety of payment methods, including the most recent payment systems
  • keeping better track of spending
  • estimating the cost of potential future transactions with a higher degree of precision.

Current B2B eCommerce Trends

The B2B eCommerce environment is not only growing but also changing and evolving year after year. As both competition and client expectations increase, we see various trends taking shape.

The increasing use of marketplaces by both sellers is one of the main trends of B2B eCommerce in recent years. There are also other trends that may define the future of both B2B eCommerce in general and B2B marketplaces in particular.

One of such trends is self-service, that is, the ability for potential clients to obtain all the information that is necessary to complete a transaction without having to interact directly with the seller, thus eliminating problems like waiting a long time for a reply or being unable to reach the seller on certain days and at certain times.

Then there is an increasing trend towards personalization, that is, the ability of sellers to increasingly adjust their offerings to the buyer’s specific requests. Personalization may also refer to better communications between buyers and sellers, with regards to the type and depth of information and content that businesses can provide to their clients.

For marketplace operators, it is vital to take these trends into account in order to improve the overall level of service they can provide to both buyers and sellers.

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