E-commerce emerged as a winning formula during the pandemic, providing the convenience of self-service and shipping a wide array of products, from books and groceries to beauty products and wine. Most online stores or marketplaces, however, primarily serve as digital channels for existing linear “sell to” business models. This undoubted popularity among the born-digital generation, coupled with advancements in automation, cost efficiency, and SG&A reduction, is now rapidly extending into the B2B Marketplace sector.
A substantial opportunity lies in combining digital sales (a marketplace) with revolutionary platform-based business models. This can create new competitive advantages, such as network effects, enhance customer intimacy, and increase profit margins. By upscaling from a simple “sell to” business model to “sell through” and “sell with” B2B2X platform models, companies can achieve significant growth and efficiency.
Understanding the Concept of a Digital B2B Marketplace
Traditional linear business models centralize power and decision-making. For instance, a company that makes socks buys wool, defines standard products and prices, and then sells to customers (B2C) using direct sales and paid marketing campaigns or wholesale (B2B). Adding a digital sales channel merely shifts this process online. However, competitors can easily offer similar products, prices, and marketing strategies.
Platform-based business models are fundamentally different. From a business perspective, a platform features a multi-sided model capable of generating powerful network effects. Think of Amazon’s “flywheel” effect: increased volume generates economies of scale, an expanding partner ecosystem offers more choices for customers, and this, in turn, attracts more customers, driving further volume and scale gains.
As platform solutions typically have near-zero marginal costs of growth (e.g., Airbnb adding new rooms), increasing volume delivers economies of scale. This allows for price reductions, which secure more volume, and customer recommendations, which drive down customer acquisition costs (CAC).
From a technology perspective, a platform brings extensibility and portability—it overlays and extracts the existing IT landscape and can be continuously built on with compelling customer experiences via APIs. Multi-sided business models are particularly powerful for digital solutions, making them a perfect fit for B2Bs, as demonstrated by numerous hyperscalers and startups.
Roles Within a Multi-Sided or Platform Business Model
A multi-sided business model involves four key roles:
- Platform Owner: Orchestrates the value needed to solve customer problems, bringing together producers, providers, and customers.
- Producers: Partners who own capabilities.
- Providers: Partners who own customer relationships.
- Customers: The end-users of the platform’s services or products.
These roles can overlap, and the platform owner might also be a producer and provider or solely focus on orchestrating the ecosystem to address customer needs.
Benefits of Digital Services and Ecosystem Partnerships
Digital services can be combined to create tailored solutions that meet specific customer needs, such as integrating 5G, edge computing, AI, robotics, software, and data into a pay-as-you-manufacture model. Unlike physical products like socks, digital services can be continuously supported and upgraded, providing new value. An ecosystem partner model supports this better than a traditional linear acquisition model.
Transitioning from Project-Led to Product-Led Solutions
To succeed in a B2B marketplace, businesses must shift from being project-led to product-led. This means designing repeatable solutions that customers can discover, evaluate, purchase, and scale online. Solutions should offer a full range of configurable options within the shopping cart, enabling customization to meet precise needs. Standardization creates scalability and reduces support and upgrade costs.
Automating End-to-End Processes
Multi-partner digital solutions can be complex, necessitating end-to-end automation of every step and partner in the value chain. The platform plays a pivotal role in orchestrating value based on complex business rules, dependencies, and trigger events. While a linear business model is transactional, platform business models focus on continuous customer engagement to build trust, intimacy, and community.
Building a Minimal Viable Community (MVC)
Creating a B2B marketplace involves more than just technology; it requires strategic business decisions. Companies must determine what to sell, develop a solution portfolio, define compelling customer journeys, and create a minimal viable community (MVC) where network effects can be triggered.
A B2B marketplace is about selling highly repeatable solutions online, building volume, providing choices, and reducing prices while maintaining continuous customer engagement. This engagement builds trust and a community, leveraging network effects to lower CAC and increase customer lifetime value. By automating processes end-to-end and managing a higher volume of partners, businesses can provide a seamless service experience, driving growth and efficiency in the digital age.
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