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B2B Marketplace: Why you need one, and 7 steps to get there

September 19, 2018 by The Bridge Solutions Group Team

B2B marketplace - sell more without having to own the inventory

A B2B marketplace lets you sell more without having to own the inventory.

The June 2018 release of Gartner’s Magic Quadrant for Digital Commerce listed five strategic assumptions. Number two was interesting: “By 2020, more than 50% of online sellers will either list their products on marketplaces or sell third-party products on their core commerce sites.”

That’s only two years from now. Do you sell your products on a marketplace like Amazon or Walmart? Many vendors do. However, not nearly as many have a marketplace of third-party products on their own ecommerce sites. But it’s a growing trend, even for B2B commerce.

In fact, Amazon Business revealed in a September 2018 blog post that third party sellers make up more than 50% of their $10 billion in global sales.

In other words, Amazon Business doesn’t own the inventory for over 50% of sales. They just take the order, and route it to the appropriate third-party vendor for drop ship. With a marketplace, you could do this too. A marketplace lets you offer an expanded assortment of products that compliment your core inventory, so you can drive top line growth at a high profit, and without the expense associated with inventory. Imagine not having to own every product you sell. What could you do with that cash?

A lot, no doubt. But the first step on your journey to that enviable position, is to set up a marketplace. Below are the 7 key steps to success:

1. Implement a marketplace platform

There are several off-the-shelf options available, or you may choose to build your own, but you’ll need a way to manage your vendors and their products and where you want them to display on your ecommerce site.

2. Onboard vendors and their product catalog

There are two ways to add a new vendors and products to your marketplace. The first, is to provide a portal where vendors input or upload marketplace item information directly. In this case, the vendor will provide item or category recommendations. The second, is using an on-boarding provider with a network of suppliers to help you onboard new vendors quickly and efficiently so you can start selling new products in a matter of days. The advantage here is that the on-boarding provider can quickly load product information with the correct and complete item data. In fact, some of them can even make vendor and product recommendations based on aggregate sales data from across their supplier network. But even if you can outsource onboarding there are some internal considerations too.

For example, you’ll want to define who will determine which products to offer in your marketplace. Will you have separate team select the assortment to be sold on your marketplace? Or will your category buyers be responsible for selecting complementary products to include in your marketplace? Addressing (and communicating) this decision up front will save a lot of conflicts in the future.

3. Integrate vendor pricing, promotions, and inventory availability updates with your ecommerce platform

Once the catalog is loaded, you’ll need additional product information such as pricing, promotions, and inventory availability, and you’ll need a mechanism for regular updates. This lets you display products from the newly loaded catalogs on your ecommerce site, and always display accurate stock information so you can avoid canceled orders.

4. Determine which fulfillment options best suit your business

Your marketplace may offer several fulfillment options to the customer. The most common is to drop ship the product(s) to the customer’s address from the vendor. However, if the marketplace item is part of a larger order, some marketplace owners prefer their third-party vendors to ship the merchandise to them for order consolidation. That way the customer receives a single package. However, this may also delay delivery, so you’ll need to think about what works best for your customer base.

5. Capture marketplace orders and send them to the vendor

If a customer places an order that includes both owned inventory and marketplace items, you’ll need the ability to split that order and send the marketplace line items to the appropriate vendor, for a seamless customer experience.

6. Track status

Just because items are shipped from a third-party vendor, doesn’t mean customers won’t expect status updates from you. Make sure you define a process to provide marketplace shipment status tracking to customers, both online, and via email and/or text. Remember the customer is making the purchase from your brand.

7. Complete the financial transaction

Once the product has been shipped, the order needs to be reconciled financially. After you receive shipping confirmation from the vendor, you charge the customer. Then you withhold a predetermined percentage of the sale as a commission, and pay the remainder to the vendor.

In summary, a B2B marketplace is a new means to drive top line growth. And with more and more products and services designed to accelerate marketplace deployment, the opportunity to expand business via the marketplace has never been better. If you’d like to learn more about launching a marketplace, please Contact Us.



Filed under: Blog, Omnichannel, Supply Chain