Updated On: 22nd August 2022
B2B eCommerce sector offers a sea of opportunities for aspiring entrepreneurs to attract businesses operating via offline-only sales channels with a multi-seller online B2B platform. It is a growing sector which is why there are high chances to disrupt or leave a mark by launching such a platform in your niche.
A few years ago, brick-and-mortar outlets were the only way of carrying out business activities. Fast forward to the present, most businesses have an online presence. Companies like Amazon Business and Alibaba have taken huge strides in the eCommerce arena. Their success has set a perfect example for aspiring entrepreneurs wanting to build an eCommerce marketplace based on B2B models in eCommerce.
In fact, the B2B sector posted robust growth in spite of challenges in the form of inflation, shortages of labour, and others. According to digitalcommerce360, B2B sales for manufacturers and distributors in the US grew to $14.86 trillion-up 14.5% from $12.98 trillion in the year 2022. But not all B2B marketplaces are alike, they vary depending upon which B2B eCommerce model is suited to the particular domain. In this blog, let’s analyze the various possible business models in B2B to gain a better understanding.
B2B eCommerce is complex and it’s only fair to categorize it under different business models.
To start with, let’s analyze the three different types of B2B eCommerce models based on the architecture of the marketplace.
A marketplace has three stakeholders ― Buyers, Sellers, and the admin. The architecture of the marketplace can vary depending on which of these three owns and initiates business. The following three possibilities emerge by changing control amongst these three parties.
In a supplier-oriented model, a number of suppliers collaborate to set up an online marketplace. The platform establishes an efficient channel for these suppliers to sell to a large number of businesses. The suppliers have the opportunity to set their own prices based on the buyers’ needs. On such an online marketplace, the suppliers are usually searchable by the products or services they offer. A seller-assigned admin manages the marketplace.
For such a B2B models in eCommerce to be successful, the loyalty of businesses and goodwill in the market is crucial.
A successful supplier-oriented marketplace business model has been implemented by Cisco. The company owns an online marketplace named Cisco Connection Online. Cisco invites partners as resellers or suppliers on the marketplace.
The success of the marketplace has been underpinned by Cisco’s B2B marketing strategy. Cisco first launched its website in 1994. By 1998 there was heavy traffic on the website, one million views per month. The popularity was due to businesses checking on their orders, availing of technical assistance, and downloading software. In the same year, Cisco stated that launching its online applications saved them US$363 million per annum. In fact, In 1997, it sold US$1 million worth of network (routers and switches) products to a wide range of businesses.
So the supplier-oriented model can work if multiple suppliers collaborate to sell on a marketplace, and assign an admin for management duties.
Alternatively, an enterprise-level corporation can launch a B2B marketplace to allow its distributors, franchisees, or channel partners to conduct online sales via the marketplace.
This B2B model in eCommerce marketplaces centers around the demands of individual buyers. This business model is plausible for either big corporations with greater purchasing power and high volume purchases or simply entrepreneurs considering to launch a B2B marketplace that lays emphasis on the buyers’ needs. In both scenarios, the transactions will be initiated by the buyers.
The buying businesses set up an online portal to accept quotations from various different sellers. The quotes start to flow in and after careful analysis, the buyer can decide which seller to transact with. That way, Buyer Oriented B2B model allows buyers to bring down their administrative costs and also get the best price from the suppliers.
GE’s electronic bidding site, known as GE TPN Post acts as a buyer-oriented marketplace. To use this site, the buyers need to pay a nominal fee. Post that they can share their project requirements on the website. Suppliers who can meet the requirements start making bids for the project. Once there are plenty of bids to choose from, buyers can go ahead and decide which one gives them the best bang for their buck.
Another example of a buyer-oriented marketplace is websites like UpWork or Freelancer. Businesses post requirements on the platform. Service providers respond by quoting services charges, Upon mutual agreement, the transaction is completed and the deal is closed. In addition to bringing buyers and sellers close to each other, Buyer oriented marketplace model allows both parties to expand their network, build partnerships and eventually strike more profitable deals than otherwise possible. To build a highly versatile website, the business would need 3rd party integrations. Be careful about the marketplace builder you are choosing to build your b2b eCommerce website.
An intermediary-oriented model consists of marketplaces that allow buyers and sellers to communicate and transact with each other. Marketplace owners maintain a log of buyers and sellers and the chief aim is to earn a profit from such associations. Also, understanding the top practices for b2b eCommerce is important.
A typical example of an intermediary-oriented B2B marketplace is the eCommerce behemoth Alibaba. The company was founded in 1999 as a B2B portal to connect manufacturers based in China with overseas buyers. The magic moment happened in 2012 when two of Alibaba’s portals recorded $170 billion in sales. In 2015 it created a record by racking up sales and profits far greater than all US retailers, including Walmart, Amazon, and eBay combined.
The above-stated B2B models in eCommerce are differentiated according to the architecture of the marketplace. In other words, the differentiation based on the emphasis, control, management, ownership, and transaction initiator amongst the three stakeholders – the admin, the suppliers, and the buyers.
But the business model can be shaped in addition to the above-stated considerations.
Let’s analyze how the B2B models in eCommerce can be shaped according to the industry the marketplace is built to serve.
A B2B marketplace that is based on a horizontal business model will cater to a wide variety of products and services across industries.
Alibaba is an example of a horizontal B2B marketplace.
A vertical B2B marketplace focuses on a specific industry. By doing so, it narrows down its target audience making it relatively easier to purpose-drive its marketing strategies.
Vertical marketplaces in the B2B domain, are effectively operating in a niche within a niche. So it can be easier to navigate competition by narrowing down the target audience and offering them a tailored value proposition. UNI diamonds, Machinio, and SupplyHog are examples of vertical B2B marketplaces.
The B2B space varies with the B2C eCommerce industry. Since the turn of the century, manufacturers and distributors have realized the economics of venturing downstream of the value chain. The digital sales channels, including B2B marketplaces, can consider this perspective and introduce a dynamic business model in the B2B space.
Their options can be the following:
B2B marketplaces can focus on connecting the demand with the supply of products.
Depending upon the operative niche of the marketplace, offering services alongside products can facilitate the sellers in offering added value to the buyers.
In many industries, allied and after-sales services account for a larger share of the revenue.
A marketplace can consider including services alongside products to broaden the horizon of the marketplace.
India-based B2B marketplace behemoth – IndiaMart operates by connecting the buyers with the sellers. Indiamart keeps its business identity as an intermediary clear with emphasis on the sellers.
After submitting an RFQ form for a product they are interested in, buyers get a list of sellers along with contact details. This implies that the buyers can contact the sellers outside of the marketplace if they so desire. Thus, subscription is a significant revenue stream for the marketplace. Services are offered to assist in the sale and are not directly connected with what the sellers have to offer.
The reason why the networking model can be successful in the B2B space is due to the fact that small Manufacturers, Distributors, and other B2B sellers may not have the marketing capabilities to reach a wide audience. As demonstrated by Indiamart’s success, networking B2B marketplaces have immense potential in connecting such businesses with an extensive user base.
In addition to networking marketplaces, legacy B2B sectors like finance, crowdfunding, real estate, and outsourcing are transcending digitally, on services-exclusive B2B marketplaces as well.
Suggested Read: Top 5 B2B eCommerce Platforms to Build B2B Online Marketplaces
The B2B space is distinct and laden with complexities. Purchase decisions are research and ROI-driven – with longer sales cycles and an emphasis on business relations between the buyer and the seller.
Furthermore, curating apt pricing strategies across sales channels is an art most businesses are learning to master.
But, the digitization mandate – exploding opportunities in the online space, makes digital sales channels both lucrative and imperative for businesses.
And – unlike the B2C space, digital sales or procurement is an added requisite skillset that legacy businesses have to add.
Therein lies opportunities for marketplaces.
For instance, Cisco follows a hybrid business model that serves both businesses and end consumers on the same platform.
Also, as discussed, Indiamart has garnered success by primarily being a networking marketplace, especially at the start.
There are multiple such examples wherein B2B space is transitioning with a fresh perspective by coalescing and evolving business models to align with the transformative shift in the industry.
Thus, the future of B2B eCommerce is likely to be innovation-driven – both technologically and operatively.
To benefit from the rising opportunities, new B2B marketplace prospects will need the requisite versatile tools. This is where Yo!Kart B2B comes into the picture.
Purpose-built for B2B-specific requirements, Yo!Kart B2B has been developed with years of core industry experience – collaborating, analyzing, customizing, and delivering B2B marketplaces that have given results.
The customizable solution extends the following key competitive advantages:
B2B deals need negotiations. Yo!Kart B2B comes with an in-built RFQ module that allows two-way negotiations between buyers and sellers. The software allows direct communication between the buyers and the sellers.
To allow sellers to stay open for negotiations and have a client-driven pricing strategy, there is an option to hide prices. Also, to aid in high-value transactions, a B2B imperative, Yo!Kart offers features like Minimum Order Quantity, Bulk order discounts, and more.
Business APIs allow marketplaces to enhance the scope of the marketplace by forging third-party partnerships.
Yo!Kart B2B offers multiple business APIs and payment gateways pre-integrated with the system, offered out-of-the-box.
With the availability of multiple revenue channels in a marketplace system, the business model can be tailored accordingly to suit operational requirements.
With Yo!Kart B2B, revenue can be earned via commissions, customizable subscription packages, PPC, hosting advertisements, and more.
Yo!kart B2B can host services with products, either bundled or exclusively, facilitating marketplace owners to implement various business models, as per their strategy.
And, of-course Yo!Kart B2B has been loaded with core eCommerce features:
Individual – customizable vendor storefronts, versatile product catalog, access to in-depth analytics, exclusive marketing features, and abandoned cart management, for the sellers on the marketplace.
Customers get a clean UI and conversion-driven UX, resulting in pleasant buying experiences.
The admin of the marketplace can manage the marketplace efficiently with nifty functionalities – all available from a unified dashboard.
A significant advantage with Yo!Kart B2B is the availability of end-to-end Agile customization services that allow startups, or existing marketplace owners to customize the marketplace in line with their business strategy.
B2B marketplaces need to be reliable for all stakeholders. Business deals can often be of high value and are usually part of a cyclic process, implying dependence of the buyers as well as the sellers on the marketplace.
Marketplace solutions need to be reliable and should allow the stakeholders to confidently plan the future of the business keeping the solution at the center.
Yo!Kart B2B is inherently scalable, secure, and built to offer high performance.
Moreover, it has features like multilingual and multi-currency that can help in scaling the business.
Significantly, it is self-hosted, comes with source code ownership, a one-time license fee payment for a lifetime of ownership, no hidden or any transactional charges, and reliable after-sales support.
The B2B space is opening up for new opportunities. Entrepreneurs or enterprises can analyze the possible B2B eCommerce model variations mentioned in this blog and strategize their launch.
Each model is designed to address some very specific needs of B2B businesses in 2023 and the years to follow. For instance, the buyer-oriented model allows buyers to set up their own website, post their requirements, and initiate transactions.
On the other hand, in a supplier-oriented multi-vendor marketplace, the suppliers set up the website to establish an online sales channel. An intermediary-oriented marketplace model is set up by an intermediary connecting a large number of buyers and sellers. The owners of this model earn profit from successful transactions.
So it’s clear that each B2B eCommerce marketplace model is designed with a purpose. Instead of wondering which B2B marketplace would reap the maximum profit, the question entrepreneurs need to consider is what type of role would best suit the identified industry.
For most popular B2B eCommerce models, the versatile Yo!Kart B2B can be an ideal solution to power your business idea.
Q1. How to pick the best-fit B2B model in e-commerce?
Response: The most suitable B2B model for eCommerce marketplaces depends on the needs of participating users (sellers and buyers), scope & scale of the marketplace, existing competition, nature of products or services to be hosted on the platform, and other factors.
All these questions can be best answered by analyzing the market to identify gaps and also using market surveys to get data.
Q2. Is there any readymade software available for B2B needs?
Response: Yes, there are readymade software available in the market to launch B2B marketplaces, although these vary among themselves with their own strengths and best uses.
For instance, Yo!Kart B2B is a purpose-built solution to launch a B2B marketplace with key B2B features to drive success.