Rise of Enterprise Marketplaces & Challenges Businesses Must Navigate

E-commerce has completely changed how buyers and sellers interact, from the emergence of online stores to the rapid expansion of digital marketplaces. The most successful segments in this market have been B2B2C.

Post-pandemic selling efforts heavily shifted towards offering an omnichannel experience and personalized service tailored to customers' wants and needs. One of the sales trends becoming prominent is how quickly organizations embrace digital marketplaces to reach a wider audience cost-effectively.

Still, the e-commerce industry is set to experience a significant disruption with the rise of the Enterprise Marketplace. In 2022, while global e-commerce sales growth slowed to single digits, enterprise marketplaces saw a 38% YoY increase. (Source: Mirakl)  

Given the success of some of the most prominent e-commerce players, this new model will likely bring about significant changes in the e-commerce world.  

The digital marketplace landscape is far from one-size-fits-all. It's a vast area of opportunities where businesses of all sizes must continue to adapt to changing market dynamics and customer preferences. In recent years, enterprise marketplaces have emerged as key indicators of innovation and potential for long-term growth. But first, let's explore the differences between these distinct types of marketplaces.

What are the different types of marketplaces?

1. Traditional E-commerce Site

Traditional e-commerce sites are digital stores that sell products and services directly to customers. These websites are responsible for every shopping aspect, from selecting and displaying products to fulfilling orders and providing customer support. They operate as a single platform for a particular brand or retailer, ensuring a regulated shopping experience. Think of Apple and Shell's official selling websites.  

2. Third-Party Marketplace

Third-party marketplaces connect multiple sellers and buyers like Amazon and eBay. These platforms act as intermediaries, facilitating transactions between sellers and buyers. Although these marketplaces also offer their products, managing individual stores rests solely with the sellers. The marketplace operators act as mediators for seller transactions, and these marketplaces operate on a distribution model.  

3. Enterprise Marketplace

Enterprise Marketplace is disrupting the digital business market with its innovative approach to e-commerce. These marketplaces are unique because they are usually operated by organizations that have traditionally functioned in the physical world but are now venturing into the digital platform business model. They typically offer a mix of in-house and third-party products, with the latter becoming more important as the marketplace matures. Organizations aiming to create a digital business have much to gain by exploring enterprise marketplaces. This has been extremely. successful for companies like Alston, which developed StationOne, a marketplace that connects rail operators and suppliers. Similarly, Volkswagen has RIO for logistics providers and fleet operators to manage their fleet more efficiently. 

Why do businesses prefer Enterprise Marketplace?  

Expanding into a digital business is vital for organizations already paying third-party e-commerce transaction fees, potentially affecting their profit margins. Here's why you should consider creating an enterprise marketplace:   

1. For Embracing innovation with new ways of doing business  

The emergence of enterprise marketplaces has revolutionized the traditional business model. In the past, businesses only focused on selling their products, but now they act as intermediaries between customers and third-party sellers.  

As the importance of these third-party sellers increases, organizations must adapt their operating models by recruiting and engaging with channel partners and taking charge of the day-to-day operations themselves.  

This new way of doing business is proving to be more efficient. Examples of this shift can be seen in Walmart Marketplace and Best Buy Canada.  

2. To Create a wider ecosystem for organizations  

In traditional commerce ecosystems, the suppliers and distributors are the primary players. However, enterprise marketplaces expand beyond these boundaries and welcome new participants such as technology vendors, developers, and financial service providers.  

This expansion transforms organizations into more comprehensive platforms for businesses, as demonstrated by examples such as DNV GL's Veracity, Frankfurt Airport's shopping portal, and Volkswagen's RIO platform. 

3. Investing in new capabilities for success  

To create an enterprise marketplace, it's not enough to just set up the technology. It requires the development of new operational capabilities, including sourcing partners, improving service levels, and continuously creating offerings that enhance the platform's value.  

Organizations such as Sourceability's Sourcengine and Alstom's StationOne are notable examples of those who have evolved their capabilities to excel with this business model.      

4. Identifying new sources of revenue  

Enterprise marketplaces provide more than just an expanded range of products and services. They also offer numerous revenue-generating methods, such as commissions, service fees, advertising, technical assistance, logistics, and payment processing.  

These marketplaces create multiple opportunities for businesses to increase their income, marking a new era in revenue generation.  

What are the benefits of setting up your own Enterprise Marketplace?  

1. Enhancing efficiency and reducing costs in enterprise marketplaces

Enterprise marketplaces can help organizations streamline their B2B buying and selling processes. By bringing together buyers and suppliers on a single platform, these marketplaces create transparency in procurement and allow organizations to manage procurement costs and compliance more effectively. This results in increased efficiency and cost reduction.   

2. Exploring new channels to reach a wider audience

They can offer organizations new ways to reach customers. This primarily benefits businesses that provide digital commerce services like payment, credit, and logistics solutions. Using an enterprise marketplace allows these businesses to expand their customer base and promote their products and services more effectively while improving their financial position.  

3. Safeguarding for the future by expanding the business 

Enterprise marketplaces have the potential to drive business growth by connecting organizations with more partners, expanding their product offerings, and accessing new channels. Organizations can quickly increase their product selection and customer base by collaborating with third parties that offer complementary offerings. This ensures that businesses maintain their status while actively expanding and adapting to market demands. It also allows organizations to future-proof operations and succeed in the digital landscape.  

4. Elevate the digital business with an enterprise marketplace

These disruptive marketplaces are not only a way to generate revenue, but they also help organizations advance their digital business efforts. Creating an enterprise marketplace is a strategic decision that enables organizations to transform their business models, develop new capabilities, and generate new sources of revenue. To adapt to the ever-changing digital landscape, businesses must embrace enterprise marketplaces, which provide a pathway to harness the power of ecosystems. These marketplaces represent the evolution of traditional business models and promote digital innovation.  

5. Improve customer and partner experience for success

A seamless and convenient experience for customers and partners is everything in enterprise marketplaces. This unified platform attracts and engages both parties, offering a wide range of products and services from multiple sellers. This increases usage and transaction volume, benefiting the organization and strengthening relationships. Customers have more choices and add convenience by offering personalized recommendations and a seamless shopping experience. This enhances customer satisfaction and loyalty, which is invaluable in the competitive world of e-commerce.  

The three challenges businesses face in scaling an Enterprise Marketplace:

Organizations that want to transition to digital business may encounter challenges. Although enterprise marketplaces offer various products and personalized experiences, issues can hinder business growth. Here are three challenges to be aware of: 

Challenge 1: Supply Chain Challenges 

Scaling up is a top priority for digital enterprise marketplaces, but supply chain challenges can make it difficult. With a vast and diverse audience, managing inventory, orders, and deliveries can become increasingly complicated.  

These challenges can lead to stoppages, delays, and a failure to meet customer expectations, which results in decreased customer satisfaction, potential loss of business, and damage to the brand's reputation.  

To avoid these issues, businesses must invest in efficient inventory management, order fulfillment processes, and delivery mechanisms. Failure to do so can significantly hinder growth and break customer trust. 

Challenge 2: Optimizing Multi-Product Lines 

Enterprise marketplaces have the difficult task of offering a wide variety of products to cater to the diverse needs of their customers. It can be challenging to optimize this multi-product landscape. For businesses to remain competitive, they must continually adjust their product offerings.

This requires setting achievable sales targets, analyzing emerging competition, and shifting focus according to product trends. Failure to adapt to changing market dynamics can result in static growth and loss of market share. A mismatch between product offerings and customer demand can lead to inventory issues, decreased revenue, and reduced profitability.  

Organizations that employ data-driven strategies to monitor market trends and customer preferences can ensure that their product portfolio stays in sync with evolving market dynamics. 

Challenge 3: Identifying Customer Buyer Behavior   

A deep understanding of customer insights and putting them into practice is essential for any business to succeed in today's competitive marketplace. While it may be challenging to pinpoint individual buyer behaviors, it presents an excellent opportunity for organizations to boost customer satisfaction and increase their revenue by offering personalized experiences and cross-selling opportunities.  

Failing to understand the significance of customer experience and tailored services can result in reduced customer loyalty and a higher churn rate. Also, not analyzing and acting on customer insights will have businesses missing out on valuable cross-selling opportunities, which can significantly increase their bottom line.    

Organizations have to unearth valuable insights and translate them into tailored experiences and profit-generating cross-sell strategies to stay competitive. Businesses can achieve this by investing in a sales intelligence system equipped with guided selling technology.  

Case Studies   

To better illustrate this concept, let's explore examples of businesses that have successfully embraced enterprise marketplaces:

Walmart Marketplace   

Walmart, one of the largest retailers in the world, has expanded its business by venturing into the enterprise marketplace. Through its platform for other sellers, Walmart can offer a more comprehensive selection of products, attracting more customers and boosting its revenue.  

The marketplace has been a tremendous success, with over 150,000 sellers registered, representing a 66% increase compared to the previous year.  

Best Buy Canada       

Best Buy Canada, a leading electronics retailer, has also created their marketplace. By collaborating with third-party sellers, Best Buy Canada has been able to diversify its product offerings, ultimately driving business growth. Best Buy Canada stands as the most popular and frequented multichannel retailer in the country, attracting an impressive annual count of over 400 million visits.

Best Buy Canada tripled their assortment and boosted online revenue by 30% in the first year after launching the marketplace. This strategic move also enabled them to deepen customer relationships, making it easier to tailor recommendations and fulfill customer requirements without overwhelming them. In 2022, their revenue amounted to $651.7 million.  

Sourceability's Sourcengine   

Sourceability established Sourcengine to accelerate the quoting process for original equipment manufacturers (OEMs). It has over 2600 merchants in the marketplace and features more than half a billion products. Their streamlined approach replaces the time-consuming method of finding individual suppliers for various components, providing quick quotes for entire Bills of Materials (BOMs) that meet technical and commercial requirements.  

Moving forward   

To wrap up, embarking on the journey of establishing an enterprise marketplace is undoubtedly an enticing strategy. Enterprise marketplaces have become increasingly popular among organizations across various industries. They offer an intelligent way to optimize operations, expand product offerings, and enhance customer and partner experiences. In today's digital world, creating a thriving ecosystem by building a digital network of partners and customers is an essential strategic move for organizations.  

However, it's crucial to recognize that this isn't a quick fix but a long-term strategy. There's a lot to consider, including technology infrastructure, vendor selection, revenue models, and marketing strategies. As you step into this realm, remember that success hinges on continual innovation and adaptability. Delivering an exceptional customer experience is key to staying ahead of the curve. 

The world of enterprise marketplaces stands on the cusp of a significant transformation. As technology advances and customer expectations evolve, the opportunities in this space are expanding. Whether you're a business seeking growth, a consumer seeking a diverse marketplace, or an entrepreneur looking to join the ranks of successful marketplace creators, a world of potential is waiting to be explored.  

Are you intrigued by the possibilities of enterprise marketplaces? It's time to dive deeper, explore the complexities, and devise a comprehensive strategy that aligns with your long-term business aspirations. 

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