February 13, 2023

By: Surbhit Arora and Tushar Sehjpal

Ecommerce paves the way for Digital Marketplaces!

Even before the pandemic, it was evident that online retail would continue to grow steadily.

However, in 2020, customers went all-in, and the global online market increased two to five fold, according to the e-commerce growth tracker published by Euromonitor and McKinsey Global Institute analysis.

Businesses re-defining their strategies have re-positioned e-commerce from a three to five year plan to an immediate 12–18 month plan, creating this paradigm shift.

Businesses have invested $10 billion in e-commerce in just over three months through investments, partnerships, and acquisitions, according to a 2020 EY report (from May to July 2020). These investments included logistic capabilities to enable last-mile, asset-light approaches like ghost kitchens (only takeaways) and dark stores (exclusive online shopping). Additionally, the investments focused on blockchain and AI capabilities.

These events led to a Unified platform-based approach or Marketplace model. Businesses are leaning toward serving the customers’ needs with capabilities spanning Customer Experience, Commerce, Operations, and Analytics (AI/ML ready).

Digital Marketplace serves not just B2C customers, but also B2B.

Following these instances, some businesses have attempted to modernize the established initiatives. Additionally, some enterprises have evaluated how they manage customers’ requirements in the direction of digital e-commerce.

The global online Marketplaces such as Alibaba, Amazon, eBay, and Rakuten and their competitors accounted for fifty percent of online retail sales in 2021. This share is forecast to grow to about two-thirds in the next five years.

Marketplace-led digital and multichannel sales platforms have emerged to meet the demands of digital-savvy customers. They steer them toward more confident decisions with minimal human touchpoints, whether in B2B or B2C context.

According to the yStats.com report, two-thirds of “connected” consumers/shoppers begin their product search at a marketplace compared to an all-purpose search engine or retail shop website. The significant drivers for shoppers worldwide turning towards marketplaces are the availability of product variety and price transparency. The marketplace space is shared by other platforms, including eBay, Etsy, Wish, Rakuten, and others, despite Alibaba and Amazon being the industry leaders in this trend.

Further, traditional brick-and-mortar retailers such as Walmart and Sears are expanding their marketplace options online. Various regional and country online retail platforms such as Mercado Libre, Flipkart, Allegro, and Jumia contribute to the forecast growth.

Are you thinking about building a thriving B2B Digital Marketplace?

To create a B2B Marketplace, you need to think bigger than just e-commerce. Business leaders should focus on the transformational potential of the customer experience rather than the investment (in terms of time, effort, and money).

This way of thinking is closely related to cultural change for companies with a business strategy built around a physical location.
The B2B customer experience quickly evolves from being based on intricate transactional procedures to being grounded in long-lasting, meaningful relationships.

The owner of a Marketplace/platform needs to create an interwoven journey relevant to our target customer base. We should structure the ecosystem such that Commerce, distribution, finance, and IT provide value along that journey.

Here are some of the core questions to help define strategies and marketplace operational model, leading to the optimal investment requirements:

• Do we have an agile, adaptive technology infrastructure to support an online Marketplace platform that can cater to complexities across my customer journey?
• Is our organizational structure free of silos — which isolate Commerce, order management, operations, supply chain, marketing, finance, and IT — interrupting the experience?
• Have we considered our assortment congruity across customer base — owned v/s competitor brands and the logic behind channel exclusivity?
• How can we be price-competitive and still maintain margin?
• How to orchestrate the customer journey across the Marketplace value chain, catering to users of distinct sizes and buying power?
• And finally, how do we keep the experience at customers’ doorsteps?

Solutions to help build a B2B Phygital hub

As per Gartner Report 2021, a best-in-class B2B buying platform should have five essential capability layers. The digital experience layer includes personalized customer experience, search engines, and content management. We traverse through the Core Commerce layer, followed by Commerce operations, Supply Chain and Integration, and finally, Master Data Management/Systems of record.

Given standards and our experience with various clients, a robust B2B Marketplace platform should have below four capabilities:

1. Seamless Commerce capability
2. Intelligent Order Management System
3. World-class Customer experience (CX) capability
4. Strong Platform Foundation

Conclusion

With the advent of Unified Commerce, customers use an increasing number of channels throughout the buying and owning stages. The Unified Commerce approach to building a Digital Marketplace platform offers consistency across channels and a continuous experience, personalized in the value chain throughout the customer journey. The four pillars above are a foundation for an efficient customer experience model. In the following article, we shall dive deep into the art of building a B2B Digital marketplace using these structural elements. Stay tuned!

References:
https://www.gartner.com/en/newsroom/press-releases/2020-09-15-gartner-says-80–of-b2b-sales-interactions-between-su
https://www.gartner.com/en/sales/insights/b2b-buying-journey
https://www.gartner.com/smarterwithgartner/future-of-sales-2025-deliver-the-digital-options-b2b-buyers-demand
https://www.gartner.com/en/newsroom/press-releases/gartner-predicts-65–of-b2b-sales-organizations-will-transition-
https://gotransverse.com/blog/2021-the-year-of-the-b2b-marketplace