Considering their features and capabilities B2B marketplaces are still quite underused. However, the trend is changing and many companies started to realize the immense potential these promising online channels store. Now the common view considering adoption of a marketplace as a sales or purchase channel will change the way a company handles its sales and procurement bringing improved productivity and sustained profitability to its bottom line.
What is a B2B marketplace?
Business to business marketplace is an online venue where buyers and sellers come to communicate, collaborate and do business transactions. A B2B marketplace handles a large number of participant companies as a community. The main objective of a marketplace is to organize a business platform filled with features that allow members to conduct various business processes over the Internet and increase company productivity.
Two primary indicators of company productivity are Increased Revenue and Cost Saving. Both of these two indicators will show improved result if a company incorporates marketplace features in possible fields of its business operations.
Let’s check out some compelling reasons why companies should start using B2B marketplace without hesitation:
1. B2B marketplace is a large community of buyers and sellers
By becoming a member of a B2B marketplace companies get instant access to thousands of prospective buyers and suppliers. An average B2B marketplace has over 100 thousand members. This gives an opportunity to expand business by finding new customers and suppliers from this new community. Working closely with the members of the new community companies get every chance to increase their businesses dramatically.
2. Real time marketplace allows buyers to take quick decision
Buyers can study, compare and research a product offered on a marketplace without leaving it. This ability of a B2B marketplace to give key information necessary to make a purchasing decision helps buyers to take a faster buying decision.
Study shows that a full 47 percent of the buyers visit a site without having all the necessary information needed to purchase a product. Products offered on a marketplace are integrated with the eCatalog and seller’s Web Store. This helps to increase buyer conversion rate significantly.
3. Sophisticated eCatalog helps display comprehensive product features
An eCatalog is an Online product content management solution with powerful user interface which provides efficient navigation, searching and integration capabilities to organize and publish product information and enable real-time handling of business processes related to buying and selling.
It stores product content in a single database and organizes product information under a predefined categorized hierarchy. It also has sophisticated search capabilities so that buyers can locate products easily.
Studies show, in many cases, buyers are unable to take conclusive procurement decisions due to poor content of the product resulting lost business opportunity for companies. To avoid this all B2B marketplaces adopt one kind or another advanced eCatalog system which delivers a compelling value proposition. As a result, companies can expect increased revenue, better customer satisfaction, and shorter sales cycle.
4. Sales solution expedites selling process and reduces overhead costs
The sales chain integrated into a B2B marketplace covers every stage of selling process including quotation, negotiation, billing and shipment tracking. Electronic sales process considerably reduces sale’s cycle enabling lower processing costs. Electronic sales solution also helps minimizing document errors often associated with paper based systems.
5. eProcurement solution makes buying easier
Electronic procurement is the method of conducting transactions between buyers and suppliers over the Internet. An eProcurement system is an integral part of a B2B marketplace. Procurement through a B2B marketplace has many undisputed advantages. Transaction costs get reduced thanks to streamlined transaction process. It saves time and stops rogue spending by employees.
Aberdeen Group estimates that automating procurement activities will save midsize companies $ 2 million per year. And that’s not to say anything of the cost savings resulting from better supply chain collaboration.
6. Web Store brings new opportunities to company’s retail business
While through the marketplace you can tap into the wide range of B2B buyers, B2B marketplace feature that allows participant companies to build their web store using the same eCatalog gives a magnificent opportunity to target a totally different market segment. This by itself is a unique opportunity as recent studies showed that an increased number of small companies with less than 20 employees are making more than 25 percent of their sales online.
There are other benefits that a company can receive from participating in a B2B marketplace as well.
For buyer participants a B2B marketplace offers:
- Lower transaction costs – streamlined transaction processing.
- Access to new suppliers – B2B marketplace participation removes geographical barriers and provides access to new suppliers.
- Time savings – provides for faster approval, ordering processes and delivery tracking.
For suppliers, it offers:
- Reduced inventory costs – Clearer visibility and forecasting ability allow companies considerably reduce inventory keeping costs.
- Access to new buyers and markets – B2B marketplace provides a new sales channel which opens up many new opportunities for suppliers.
- Increased sales – with access to a wider market, suppliers have the potential to increase revenue.
- Reduced overhead costs – Thanks to streamlined supply chain overhead costs can be reduced up to 30 percent.
- Reduced order processing costs – The supply chain solutions of a B2B exchange may allow sellers to reduce order processing cost significantly. Studies show that cost of processing a purchase order can be reduced from US $ 70 down to US $ 6 only.
- Reduced sales and support costs – By automating sales and customer support processes companies can reduce over head costs around 25-30% easily.
B2B marketplaces are one-stop business solutions for many of the company’s needs. Usually a marketplace offers a huge range of features and functions. Participant companies can select required functionalities, use them effectively and reap all the benefits mentioned above.