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November 1, 2022

B2B marketplace platform:
Pros and Cons

Author i95Dev Marketing
Category Blog | eCommerce Marketing |

Building a B2B eCommerce website from scratch isn’t everybody’s cup of tea; thus, many enterprises look towards B2B marketplaces to expand their horizons. B2B marketplace platforms are convenient, scalable, and cost-effective tools for established and new brands. However, B2B marketplaces have their fair share of downsides. Therefore, businesses need to weigh the pros and cons before investing their time, money, and effort into nurturing their presence in a marketplace. In this article, the growth experts at i95Dev have compiled an exclusive list of pros and cons to help you make the right decision regarding using a B2B marketplace platform. Let’s get started:

Pros of using a B2B marketplace platform

1. Being visible to business entities looking forward to rethinking their supply chain

The world economy is facing one jolt after another, beginning from the Covid-19 pandemic, followed by the silicon chip shortage, the Russia-Ukraine war, the US-China trade wars, and overall change in socio-political preferences. While this has caused inherent turbulence for businesses, it is the need of the hour to upscale the visibility of your organization, and a B2B marketplace can be the easiest, quickest way to do so. This way, you can boost your visibility to severe buyers that want to restructure their supply chains and find alternate vendors at a faster rate when compared to SEO and other digital marketing tactics. This also reflects in the fact that the B2B eCommerce marketplaces are expected to register an 18.5% CAGR between 2022 and 2030:

2 Creating an alternative, secure revenue stream

Another reason for signing up at a B2B marketplace is to quickly create an alternative, secure revenue stream in unexplored territories and customer segments. While risks like infringement and counterfeit products continue to stay alongside the platform subscribing to such tactics like in the case of Amazon, it is a worthy tactic if used wisely. It is sometimes necessary to be present on a locally trusted B2B platform since it serves the customers’ research journey and helps you benefit from the platform-mediated transaction security.

How to improve your B2B eCommerce business model and bottom line?

3. B2B marketplaces reduce technology costs and technology debt

Reducing technology costs and debt are among the most underrated benefits of joining a B2B marketplace platform. Running an IT infrastructure on your own and ensuring that it is updated to meet technology and security advances is highly expensive. Instead, by joining a B2B marketplace, a business can better function on its core operations and expertise while enjoying the world-class, enterprise-grade security and technology services that are ingrained in the B2B marketplace platform.

4 Access to customer data analytics

Despite many customer analytics tools and talent available, many businesses fail to gather and make sense of customer data. Most B2B marketplaces offer extensive customer data analytics and insights on the seller account that is faring on the platform. These inputs can improve business strategy and marketing campaigns off the platform. Thus, customer analytics data from marketplaces can be a cost-effective yet reliable solution for many B2B organizations.

5. Outsourcing non-core operations with greater ease

It is becoming increasingly necessary for businesses to offer a well-rounded experience to their customers, and any flaws in the non-core business processes can potentially tarnish your image. This includes logistics, after-sales services, administration, and marketing operations which may consume significant resources. A B2B marketplace, on the other hand, is the most efficient way to outsource non-core business activities to the platform directly or to its partners, freeing up your time and resources for core activities.

Cons of using a B2B marketplace platform

1. B2B Marketplace rules and regulations may contradict your brand’s values

Like every other organization in the world, your organization has its own set of values and rules which set you apart from the rest. However, they may contradict the rules and regulations of a B2B marketplace as they have to accommodate many B2B sellers and buyers. For instance, a B2B marketplace might mandate sellers to process refunds as soon as the customer initiates the return. Still, your organization might want to confirm and validate the reason before doing so. Thus, you must know the B2B marketplace-specific rules and regulations and ensure it is a good fit for your brand. Furthermore, given that B2B marketplaces are set to touch USD 18,771.4 billion by 2027, one cannot rule out that they will leverage the volume to skew things in their favor.

2. Many marketplaces also sell leads, leading to heightened competition

Having your competitors crammed in the same screen real estate as you on the listing page and your product pages is not at all comforting. However, there’s something even more concerning: many B2B marketplaces sell qualified leads to relevant users. When a buyer logs in, they are asked if they are satisfied, and inquiry data is solicited, which is, in turn, sold to the highest bidder/multiple vendors at a flat rate. This can put heightened pressure on your sales team and bottom line.

3. An excess of transparency might concern both B2B sellers and buyers

Unlike business-to-business transactions, transparency and data risks heighten significantly when duplicate transactions are made through a third-party marketplace. For multiple reasons, many B2B companies prefer keeping their transactions and partnerships away from public access. However, doing so isn’t feasible in the case of the B2B marketplace as all data can be accessed by the B2B marketplace employees, while a potential data breach can’t be ruled out either. This makes B2B marketplaces less viable for businesses in strategic sectors with heavy compliances.

4. Lack of control over the sales process and customer service

Most B2B portals require sellers to maintain a pre-designed product catalog to standardize the platform. Unfortunately, the ‘one fit all approach’ isn’t likely to ‘fit well’ with each seller, and hence you might have to come up with unnecessary data or strip down your crucial marketing assets to meet the platform standards. Also, maintaining product catalogs across different B2B marketplaces can be expensive and time-consuming, but API-based data syndication can help ease the situation.

5. B2B marketplaces pose a threat to budding and stealth projects

One of the biggest concerns shared by B2B organizations is the fact that excessive visibility of competitors erodes brand presence and makes it less likely that a customer remembers their brand. However, a contradictory threat also exists: activities like testing a new product’s demand and running stealth projects in new segments/territories may come under competitors’ radars. Thus, despite the reach and technical feasibility, B2B marketplaces might not be the best avenue for testing new products or carrying out stealth projects that aren’t protected by laws, i.e., IP rights and patents.

Wrap Up

Make it a point to weigh the pros and cons of each B2B marketplace concerning your short-term and long-term goals, as well as what is negotiable and what isn’t. Do you need expert advice on going ahead with B2B marketplaces?

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