Growing your B2B marketplaceEntrepreneurship
This is the third in a series of posts summarizing our speakers’ insights from the V1 marketplace meetup on October 20. Check out other posts detailing Andrew Chen’s (Uber) fireside chat on growth strategies and Anthony Marino’s (ThredUp) talk on managed marketplaces.
When we talk about marketplaces, we’re usually referring to B2C companies – eBay, Uber, Etsy, etc. But as anyone who is involved in B2C marketplaces knows, the dynamics governing B2C and B2B marketplaces are poles apart.
The key factors in a B2C marketplace are typically availability and price. For consumers, there’s minimal risk if a transaction goes bad; for example, maybe you never receive your product and the marketplace reimburses your payment. But with B2B, the stakes are much higher: a bad transaction can hurt the business and reflect poorly on the purchaser.
That’s why we were so pleased to have Mikhail Ledvich, Head of Marketing at Shippo, discuss the unique dynamics and growth strategies for B2B marketplaces. Shippo (a portfolio company) powers shipping for businesses. They help companies compare shipping rates, print discounted shipping labels, and track shipments, with the goal of making shipping easy and affordable for everyone.
In his talk, Mikhail offered three key bits of advice for B2B marketplaces:
1. Remember that not every business is the same
Marketplaces need to segment their customers and approach each segment accordingly. Enterprise customers require account management; these are the players that move the needle. The SMB/long tail should be self-served. These groups keep the marketplace liquid and allow you to scale up to work with enterprises later on. You also need to be ready to deal with a wide spectrum of buyer knowledge.
Mikhail wisely noted that there’s a different dynamic here: in B2C marketplaces, power sellers often evolve from individual sellers who find success in the marketplace and then grow their business. But, in B2B marketplaces, large sellers are already present from the start.
2. Add value to the transaction on both sides
Marketplaces need to create the right policies and services that add trust and authentication for both sides of the transaction. B2B buyers are worried about unknown vendors (because again, there can be serious repercussions should a B2B transaction go bad). B2B vendors are concerned about cash flow, since payment cycles tend to stretch. If you can guarantee payment cycles, suppliers will line up to sell on your platforms.
3. Standardize transactions
Mikhail also emphasized the importance of standardizing transactions…ensuring that both parties feel they’re involved with a professional transaction rather than something conducted on Craigslist. Specifically, he recommended to make it easy for anyone to access information and recommend the best products/services to meet a customer’s needs. B2B marketplaces should also take advantage of the data they already have to eliminate steps (and friction) from the process.
These are important words of advice for any B2B marketplace; thanks to Mikhail and everyone who participated in our marketplace meetup.