B2B Marketplaces Will Be the Billion-Dollar Industry for eCommerce Startups

Today, we are living in a highly competitive digital world. Businesses across the globe are moving towards digitization of their operations, and the B2B eCommerce marketplace is one of the examples of this tech move. B2B marketplace is an online marketplace where one business sells services and products to other businesses.

The parties (vendors) involved in this are often distributors or wholesalers. In B2B eCommerce, there is a webshop that is generally utilized as a platform for placing orders, and the payments are done in the invoice to invoice and in other B2B transactions.

Indeed the colossal pressure of technological acceptance has coupled several businesses to operate online, and this trend has achieved tremendous growth in the recent time due to the COVID-19 pandemic. For online purchase, sell, marketing, and other essential operations are done through the online mode.

Before the COVID pandemic, B2B marketplaces were predicted to achieve $3.6 trillion in sales by 2024. It is a massive growth as compared to the market size of $680 billion in 2018.

B2B marketplaces were already getting rapid growth than other business models like B2C etc., and when the pandemic hit the market, this trend developed at rocket speed.

According to Digital Commerce 360, 20% of purchasing managers spent on marketplaces, and 22% spent more during the COVID pandemic.

There are no boundations on B2B marketplaces as it is limitless and can't be fixed to a specific platform. However, some businesses are still in a dilemma to get into the way of the web. Those who are innovative and indulged in marketplaces will achieve more growth in a few years.

So what to do to develop or not develop a B2B eCommerce marketplace?

If you decide to own a marketplace, the first question that hits the mind is should you build it or not? Both options are available for you. You can either develop your own B2B eCommerce marketplace or use others to trade your products and services.

Several software-as-a-service marketplace and marketplace-as-a-service solutions are available that can assist you in running your business quickly. Those who want to implement the B2B marketplace as a growth strategy must develop their own marketplace.

This path seems adaptable initially; however, it is not budget-friendly for all business sizes because building from scratch needs development expertise and cost. That's why several businesses use the third-party B2B eCommerce marketplace, especially startups.

However, some experts predict that online marketplaces are a win-win case for all. If you have a good budget, it is best to start with an eCommerce marketplace.

But, having good capital is still not sufficient as you also need professional developers to create a dedicated and highly functional marketplace for your business. Moreover, competitive dynamics and timing are also vital to scale up your marketplace.

According to Digital Commerce 360 survey 2020, 85 business buyers found that 89% of buying managers and vendors buy at least the same or vitally more on the B2B eCommerce marketplace since the pandemic shutdown started, and 57% spend more on other marketplace sites.

Why are B2B transactions unique?

1. Payment Methods:

There are many methods to make a B2B payment: online fund transfer, credit-debit cards, paper cheques, and ACH transfer. Almost 50% of the B2B payments are made through paper cheques; however, digital transactions also increase quickly.

Let’s check the B2B payment methods:

Cheques and Cash-On-Delivery (COD)

Cheque payments are one of the B2B payment methods serving the industry for decades. They are not always convenient but are a widely used payment method. COD or cash on delivery works only in the eCommerce industry where vendors (sellers) and buyers do transactions in some amounts.

Bank transfer and card payments

Payments via credit card or debit card and wire transfers are the most popular B2B payment methods used for online purchases of goods and services. Bank transfer takes 2 to 5 days to complete, and card payments are done instantly.

E-wallet Payments

Several B2B e-wallets work as a payment gateway, removing the requirement to connect a third-party payment gateway to an end-user e-wallet and payment processor. The E-wallet payment method offers instant funds transfer and even enables businesses to make international transactions in seconds.

Some widely used online payment processors or e-wallets for the B2B marketplace are Amazon Payments, Authorize. NET, Adyen, Alipay, WePay, PayPal Payments Pro, Payoneer, and Stripe.

2. Financing:

It is the traditional method of B2B transactions to pay with net 30 or net 60 specific terms. It is getting a line of credit to the business buyer that assists them in making transactions after delivering services or products. Dynamic discounting and supply-chain financing are two methods used in B2B transactions to settle the invoices with suppliers within the timelines.

3. Bulk Discounts:

B2B marketplaces also offer significant discounts on high-volume orders. It is not limited to the B2B model; custom volume or negotiated discounts can make the checkout process typical.

4. Contractual pricing:

It is also a way of B2B transactions. In some B2B niches, like the market of the veterinary product, there is a lack of transparency and consistency in terms of the market price of any product; rather, every buyer pays a settled price fixed in the agreement between the parties.

5. Insurance:

Many vendors often buy insurance as a vital part of their transactions, especially in large volume verticals such as pearls, jewelry etc. Insurance is intended to safeguard you against any damage to the goods in case of theft or transit.

6. Compliance:

In few industry verticals, mainly those involved in chemicals and healthcare, there is a huge compliance load to ensure the goods are sourced and transited properly. The seller must follow all compliance to transport all goods irrespective of its type and size.

Takeaway

B2B marketplaces have changed the entire dynamic of how the products and services were sold and purchased globally. Now buyers are free to order the products in retail or bulk as well.

Everything is accessible with just a click of your mouse. Additionally, the B2B eCommerce marketplace introduced an advanced feature termed tiered pricing, which tends the more you order, the prices get lesser accordingly.