Everything You Need to Know About Marketplacification: Interview with Ian Heller

We talked to Ian Heller for Navigating Commerce Magazine about how he sees marketplacification coming into play this year and how distributors can deal with the obstacle of becoming a marketplace. 

Ian Heller, Founder and Chief Strategy Officer at Distribution Strategy Group (DSG), began his career as a truck unloader for Grainger — 15 years later, he was their VP of Marketing. From there, Ian went on to lead marketing and ecommerce for several distributors. Around three years ago, he founded DSG to offer strategic guidance to distributors in the face of disruption. 

If you follow Ian on LinkedIn or have heard him speak, you may know he speaks a lot of “marketplacification.” Ian sat down with us to share insights on the significance of marketplacification and how distributors should be thinking about marketplaces this year. 

What does marketplacification mean and how does it impact distributors?

Marketplacaification is a term I coined to help businesses understand there’s no binary state between having or not having a marketplace. It's a journey to expanding assortment through ecommerce. 

A lot of distributors ignore the marketplace concept altogether because they think there’s no way they could ever run their own marketplace.

But you need to start down the path to expanding the assortment on your website. You can do this through several avenues, including: 

• Dropship from suppliers online (like MSC Industrial Supply does)
• Partner with another distributor and share SKUs on each other’s websites
• Invite a small number of third-party sellers to your website

What you can’t do is ignore where the market is going. You need to break the paradigm that your business is only about the products you have in your four walls. 

How do you foresee marketplaces coming into play this year?

Three things are going to help distributors build their own marketplaces.

One, there are more technology options, like Nautical. And they’re getting better —easier to integrate and manage.

Second, several solutions are popping up for last-mile delivery, which will enable B2B marketplaces to meet customer demands. The LTL (less than truckload) carriers are doing a better job providing the type of reporting we get from smaller carriers, like UPS, so customers can stay updated on the delivery status of their goods. 

Last but not least, distributors’ view of marketplacifcation is changing. There’s less fear around it and more understanding of the benefits of and need for marketplaces.

What are distributors’ biggest hurdles to building marketplaces?

Lack of technology expertise. Distributors have tended to be behind the curve on tech adoption, which is hurting them now. They need to find the right talent and the right partners to formulate a long-term strategy and execute it well. 

Do you have any advice for distributors who are looking to leverage the marketplace business model?

Talk to experts.

It’s hard to keep up with all the writing. A few great resources and thought leaders I’d recommend following include:

• Alex Moazed, Founder and CEO of Applico
• Marketplacepulse.com
• Digital Commerce 360 
• Distribution Strategy Group
• Nautical Commerce

There are a lot of great resources out there. But first and foremost, you need to have the expertise. This means at some point you need to hire people who know what they’re talking about. 

Being a distribution CIO right now is a tough job and the great ones are expensive. But I would find the best CIO and CMO I could and bring in a third-party strategy and development company to help support marketplace strategy development. 

Do you have any parting thoughts? 

At the very least, start moving down the road of marketplacification. The first step on that road is talking to the right people. The next step is questioning false assumptions you may hold about building a marketplace. Each marketplace is unique, and Amazon and Zoro aren’t the only models for success.

I’ll end with one of my favorite sayings:

“People explaining why something can’t be done are often interrupted by those doing it.” 

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