B2B Marketplace

The Business Case for B2B Marketplaces

Head of Marketing
Two people working on computers

Amazon, Uber, Airbnb, Walmart, eBay — B2C marketplaces make up the biggest names in the biz, and they've proven the viability of the marketplace model. So, the question is: can the same be done for B2B marketplace companies

We believe they're well on their way.  

In this post, we'll explore:

  • The B2B marketplace trend forecast
  • What's driving B2B marketplace adoption
  • Types of B2B marketplaces and B2B marketplaces examples
  • The benefits of the marketplace model for B2B companies

The future of B2B ecommerce: The marketplace model

B2C companies, namely retailers and tech, have long figured out the marketplace model’s astounding profitability potential. In 2020, marketplaces made up 53% of total B2C online sales. That equates to $2.5 trillion globally.

And sales are only predicted to go upwards from here. 

B2C online sales via marketplaces are forecast to increase to $4.7 trillion by 2025, with marketplaces capturing a 61% share of total B2C sales.

The good news for B2B counterparts? The night is young! 

Be | Shaping the Future's (BE STF) latest research indicates that B2B marketplaces only accounted for a mere 7% of total B2B online sales in 2020. 

Is this to say the marketplace model won't work for B2B companies? Or that B2B companies aren't ready to move on the marketplace model?

Absolutely not. 

It’s just that the B2B marketplace market is still in its infancy. (Fortuitous timing for entrepreneurs looking to claim their niche.)

Verticals like financial services and manufacturing are expected to embrace the marketplace model wholeheartedly. Be STF forecasts that B2B online sales via marketplaces will account for 14% of total B2B ecommerce sales by 2025 – that's an increase of 7%. Sales in this same period are forecast to jump to $4.0 trillion. 

Punctuating this prediction, research in the Optimizing B2B Payments Report by PYMNTS and American Express found that 54% of U.S. companies now place B2B orders via self-service websites, and 22% currently do so through an online marketplace.

What's more, McKinsey & Company research revealed that 79% of suppliers have built, are building, or are planning to build a marketplace.

With predictions like this, it's no wonder B2B companies see dollar signs. Our advice? It’s time to get after it. 

Download the 'Cashing in on B2B Marketplaces' Report

Download the free B2B marketplace report compiled by Digital Commerce 360
Learn More →

Types of B2B Marketplaces

Now that we've proved the marketplace model's viability for B2B, let's look at the many ways a B2B marketplace can function.

First, we can divide B2B marketplaces by business scope.

B2B vertical marketplace

Vertical marketplaces sell products in a specific industry for a specific purpose. Think of vertical marketplaces as masters of their craft. Vertical marketplaces focus on a niche market and offer a particular product category.

An example of a B2B vertical marketplace is Mabel. Mabel connects grocery stores with distributors and thousands of local and emerging brands. They're masters of the grocery supply chain. 

B2B horizontal marketplace

Horizontal marketplaces sell goods and services intending to reach the broadest audience possible. Think of horizontal marketplaces as a jack of all trades. The model’s wide reach inherently engages a broad customer base. 

You could probably correctly guess that Amazon Business would be a great example of a B2B horizontal marketplace. The company sells everything from office supplies to IT products, industrial supplies, and wholesale purchasing. And it doesn't pigeonhole itself in any one industry — it’s a jack of all products. 

Then, you can further divide marketplace models by business offering.

B2B product marketplace

These marketplaces focus on sellers that supply commodities and products, like supplies, packaging, office furniture, or equipment.

Examples of product-focused B2B marketplaces are:

  • Grainger: A marketplace for industrial supplies, safety, and facility maintenance products. 
  • Faire: A marketplace for wholesale, resale, and retail supply.

B2B time-and-materials, or contractors, marketplace

These marketplaces focus on sellers that offer freight services, travel, IT, technology, temporary labor, and facilities management.

An example of a time-and-materials marketplace would be Convoy. Convoy's marketplace matches truck drivers with shippers looking to move freight.

B2B service marketplace

Service marketplaces focus on sellers that offer services. Services can range from marketing functions, real estate, insurance, and even professional services like accounting and law.

An example of a services marketplace would be Upwork. Upwork's marketplace matches businesses looking to complete specific jobs with freelance professionals in IT, design, creative, writing, sales, customer service, and accounting. 

Why should B2B companies take the marketplace plunge?

If the trend toward B2B marketplaces wasn't enough to light a fire under your business model, consider the following advantages.

The marketplace model is built for profitability 

Who doesn't want to generate revenue in cost (and labor) effective ways? B2B companies are starting to realize the power of using partners to expand online storefronts and, thus, revenue potential. 

Leveraging partners allows you to increase:

SKU depth: The marketplace model inherently expands the number of products or services on your ecommerce website by engaging vendors that sell periphery and even competing SKUs. This means you can increase your SKU depth without creating those offerings. The greater range of SKUs you offer, the more sales opportunities you have, and the more likely buyers are to visit your marketplace as a one-stop shop for all their needs.

Increase web traffic: By virtue of Search Engine Optimization (SEO), the more products you have on your website, the more search engines, like Google, will see your site as the answer to a searcher's question. Things like the time a buyer spends on your site also contribute to the frequency your website appears in searches and, therefore, the amount of exposure your website gets. 

Customer reach: Customer reach works hand-in-hand with SKU-depth and SEO. By increasing your SKU depth, you'll reach customers by fulfilling a greater variety of buying needs. By improving your SEO and generating more web traffic, your marketplace will get in front of more buyers more often, thus attracting new business organically. 

Businesses want B2C experiences

B2C marketplaces have normalized the experience of online browsing, the habit of checking product reviews, and our expectation of inventory diversity. These same expectations are now reflected in B2B consumer decisions. 

PYMTS found that 67% of B2B buyers have switched to vendors with 'more consumer-like experiences.

This makes sense when we remember that behind every B2B purchase is an individual who's been conditioned to crave a marketplace experience via the marketplaces they engage within their personal life. We experience an ecommerce economy of plenty as consumers. So why wouldn't we expect that same convenience when we're buying for work?

What customers want, customers get. And what B2B customers now want is a marketplace experience.

Closing thoughts: The time to start a B2B marketplace is now

If you find yourself catching a case of B2B marketplace FOMO, there's good news. Now's the best time to be an early adopter. The market is young — and there are many ways to capitalize on the B2B marketplace model's profit-yielding potential. 

Whether you add a marketplace to your single-seller B2B ecommerce site or embark on a brand-new marketplace mission, building a platform doesn't need to take years or cost hundreds of millions of dollars to develop. Read on to learn how to start a marketplace in under 90 days. 

Ready to get started?