A Guide to Launching a B2B Multi-Vendor Marketplace

Even if you’ve never heard the term multi-vendor marketplace before, chances are you’ve used one. Whether you’re hailing a ride with Uber or ordering a book from Amazon, multi-vendor marketplaces are hard to ignore.

Unlike single vendor commerce, these digital marketplaces bring together multiple vendors to sell products or services. The most visible examples today tend to be business-to-consumer (B2C) or consumer-to-consumer (C2C), like Etsy and eBay — but it’s not for lack of opportunity on the business-to-business (B2B) side.

In fact, 73% of B2B buyers use digital channels, yet just 11% cite digital as their preferred purchasing method. And according to McKinsey & Company, 70-80% of B2B buyers prefer digital self-service to in-person interactions due to the added convenience and speed. The takeaway? Companies do want to buy online. They just aren’t satisfied with many of the options that are out there right now.

This provides a unique opportunity for B2B companies to digitize their own processes with a B2B multi-vendor marketplace platform. If operators create an attractive multi-vendor marketplace model for B2B, they’ll capture that pent-up demand for better online-buying experiences between businesses.

3 Reasons Why More and More Companies Are Leveraging the B2B Multi-Vendor Marketplace Model

Operating a multi-vendor marketplace may be a nascent model for B2B, but companies that are leveraging one have already begun outperforming their less-innovative peers. 72% of B2B companies that established a marketplace saw their market share grow in the past two years. Among businesses that did not, only 42% showed growth over this period.

Here are three reasons why operating a company-owned B2B multi-vendor marketplace works so well:

1.  Increased Product Depth and Breadth

The multi-vendor marketplace model is collaborative commerce at its best. A B2B company that launches a marketplace doesn’t have to manufacture new products or services to fill gaps in its catalog. Instead, the marketplace operator can take on more of a curatorial role.

Marketplace operators can add products that are related to — but sometimes outside of — their core businesses by partnering with like-minded companies. Doing so is a lot cheaper than manufacturing and warehousing products and allows for nimble responses to ever-changing buyer demands.

2. Increased Customer Reach and Web Traffic

By offering products from other vendors, the marketplace owner has the potential to get more eyes on their own listings as buyers scan the website. The platform operator shares its buyer network with other vendors and, in exchange, gets to connect with each vendor’s unique audience.  

The flywheel effect explains how this multi-vendor relationship eventually drives self-perpetuating growth. In theory, a marketplace with more products appeals to a greater number of prospective buyers, who in turn encourage additional sellers to come on board. This leads to another wave of new customers, continuing the growth cycle.

3. Enhanced Customer Experience

Don’t forget that B2B buyers are also retail consumers. How they shop when they’re off the clock shapes their expectations for business purchases, too. The rise of Amazon has naturally stoked demand for analogs in the B2B realm.

With a B2B multi-vendor marketplace platform, customers enjoy an Amazon-like experience — which is what most business buyers really want. Operators can give customers both more choice and a personalized experience by harnessing user data.

Why the B2B Marketplace Trend Will Continue

By 2023, the B2B ecommerce market is expected to reach $1.8 trillion, or about 17% of all US B2B sales. Globally, further growth is anticipated. Worldwide online B2B sales are projected to more than double — to upward of $18 trillion — within the next five years.

Several key trends support interest in B2B multi-vendor marketplaces and will continue to bolster B2B ecommerce in the coming years:

• Everyone from retailers to distributors see marketplaces as an opportunity to handle more transactions without increasing overhead expenses. By launching a multi-vendor marketplace, an operator gets a cut of sales from other vendors without needing more physical warehouse space.
• The dominance of Amazon Business (the company’s B2B marketplace), Alibaba, and Faire — alongside automated distributors like Grainger — is driving other players toward new models and innovation.
• When joining a multi-vendor marketplace, smaller operations split the cost of advertising with other vendors. They can get their products in front of more eyes by joining a network, which translates to better value for their ad spend.
• For manufacturers, the traditional model of working with wholesalers to unload products is beginning to wane. Manufacturers want to own their brands and inventory as well as gather more customer data, and operating a B2B multi-vendor marketplace lets them accomplish all of this and more.

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How Companies are Building B2B Marketplaces Today

By now, the path to establishing a first-party ecommerce store is well traveled. Best practices have emerged. The vast majority of B2C retailers opt for an in-the-box solution, like Shopify. About 90% of stores rely on a single-vendor ecommerce platform, which sees retailers pay a subscription fee for software.

The B2B marketplace space is another animal. B2B marketplaces are an emerging trend. Companies are still taking a variety of approaches to launching them. They’re figuring it out as they go along, with fewer models of success to follow.

1. Custom Builds

Some companies decide to build their own stacks from scratch. This approach gives the marketplace operator complete control of the platform, what it looks like, and how it functions. It also brings debt with the first line of code that’s written.

Costs keep mounting through the development process, and if the platform does reach the release stage, the trouble isn’t over. As technology evolves, companies that have developed their own stacks must continually update them — that is, if the custom solution doesn’t become obsolete altogether.

A custom build is a costly and slow path to validating your B2B marketplace.

2. Bolt-ons to Existing Ecommerce Platforms

For companies that are already selling directly to consumers online, it’s tempting to try and build B2B marketplace capabilities into their existing ecommerce platforms. And why not? Ecommerce platforms can certainly manage the buyer experience and customer service, and they’ve also got built-in cataloging and inventory-tracking capabilities.

Well, ecommerce platforms may do all of that, but they’re also fundamentally incompatible with the multi-vendor marketplace model. At their core, they’re designed to do one thing: handle transactions between one seller and a pool of buyers. Marketplaces require platforms to process transactions for multiple vendors.

Ultimately, building a B2B multi-vendor marketplace on top of an ecommerce platform is going to lead to scaling problems.

3. Nautical Commerce's B2B Multi-Vendor Marketplace Platform

Increasingly, marketplace operators buying software instead of building it, and turning to Nautical. That’s because it’s the only end-to-end platform for companies seeking to launch — and scale — a B2B multi-vendor marketplace. By choosing an on-demand multi-vendor marketplace platform, operators can focus on what they do best: building buyer and seller networks — not developing software.

Time and again, ready-made third-party tech has proven to be the best choice in the long run. Just look at CRM (customer relationship management) software. Companies used to think they needed to build their own CRM software. The list of failed attempts at homegrown CRM solutions is long, and it’s littered with staggering losses in the tens of millions of dollars.

Nautical was Built with the Complexities of B2B Transactions in Mind

A B2B multi-vendor marketplace is where fintech, logistics, and ecommerce converge. With experience and expertise in each of these areas, the Nautical team has built a platform purpose-built to handle the unique needs of B2B marketplaces.

Nautical has identified three core problems facing B2B companies as they shop around for a multi-vendor platform.

1. Complexity of B2B Sales

Managing a B2B multi-vendor marketplace is complicated, largely because of the variety of transactions and the nature of B2B-vendor relationships.

A multi-vendor platform must disperse payments to vendors including suppliers and distributors (and in their preferred method), support multi-vendor checkout so customers can purchase products from more than one merchant at once, and ensure everything is compliant with sometimes-murky international regulations — but that’s not all.

The platform needs to track existing contracts and agreements among buyers and sellers. Say a manufacturer has been offering a preferred rate to a specific wholesale buyer before joining the marketplace—the system needs to handle such transactions accordingly.

2. Establishing Trust in the Marketplace

The high average order value (AOV) of B2B transactions means that there is a significant level of trust required between the marketplace and their buyers. This is one of the main arguments used by those reluctant to switch from manual processes to online B2B transactions. However, buying items online does not erode trust. In fact, when done well, enabling businesses with technology allows them to offer better customer service and vendor support.

Nautical understands that trust is a vital aspect in any B2B marketplace and has built-in features to ensure vendors are properly vetted, onboarded, and managed. Contract handling, marketplace SLAs, and vendor integrations allow marketplace operators to carefully curate the vendors allowed on their marketplace.

3. Accessibility of B2B Marketplace Tools

Some B2B companies have undertaken the costly, time-consuming development of their own multi-vendor marketplace platforms simply because they haven’t come across any good alternatives.

There are popular ecommerce solutions who have added B2B features lately. And although the B2B functionality on ecommerce platforms is slowly improving, serious limitations remain in terms of marketplace functionality. These range from caps on catalog sizes to the number of addresses you’re able to ship from. These restrictions that can throttle the expansion of a B2B multi-vendor marketplace.

How Nautical Solves Core Problems for B2B Multi-Vendor Marketplaces

Operators who launch a B2B multi-vendor marketplace with Nautical can avoid the limitations of a bolt-on solution and the high cost (and inherent risks) of a homegrown platform.

Unlike popular ecommerce solutions that were built for single sellers, Nautical was engineered with more advanced inventory-management capabilities for the B2B segment. In B2B, where bulk volumes and broad product catalogs are the norm — and a single order may involve more than one stakeholder — a dynamic and flexible ecommerce platform is a must.

A Nautical-powered marketplace can manage unlimited products and variants, split orders between vendors, and ensure fintech compliance. Launching a marketplace on Nautical’s purpose-built multi-vendor platform will reduce the friction to sell, buy, and operate your B2B marketplace. Leaving you to focus on your business, and not on marketplace infrastructure.

Connect with Nautical to Launch a B2B Multi-Vendor Marketplace Without Wasting Time

Build for the future of commerce and launch your marketplace quickly with Nautical's B2B multi-vendor marketplace platform. Contact our team for more information on how to begin leveraging this modern B2B ecommerce model.