In an increasingly competitive environment, B2B marketplaces play a crucial role in modern business transactions. These platforms connect sellers and buyers in different industries, offer a seamless shopping experience and increase business on the merchants’ side. This article sheds light on the development, models and future prospects of B2B marketplaces as well as the importance of innovative marketplace payments options.
Development and importance of B2B marketplaces
Since the early 2000s, e-commerce has grown significantly and changed the way companies do business with each other. Facts & Factors predicted that the global B2B e-commerce market will more than double from 7.35 trillion dollars to 18.57 trillion dollars between 2021 and 2026.
Online marketplaces play a central role in the B2B sector by connecting merchants and buyers from different industries, offering a seamless shopping experience and promoting the merchants’ business. In recent years in particular, more and more B2B marketplaces have become established.
Slow adaptation in the B2B sector
However, development in the B2B sector is slower than in the B2C sector. B2B relationships are often characterised by a personal component and traditionally develop offline. They are based on trust that is built over time as buyers and sellers get to know each other. It has taken a while for B2B companies to recognize the opportunities of digitalization and implement new solutions to fully exploit the potential.
Comparison with B2C relationships
In contrast, business-to-consumer (B2C) relationships have changed radically over the last 20 years. B2C customers now expect a first-class shopping experience, which has prompted merchants to implement appropriate technologies. These expectations are now being transferred to B2B buyers, who expect the same convenience from B2B platforms. The COVID-19 pandemic has accelerated this trend as many B2B merchants have been forced to switch to e-commerce.
Differences between B2B and B2C transactions
Despite increasing digitalization, there are significant differences between B2B and B2C transactions. These differences relate to order quantities, delivery and aspects of cash flow, among other things. The question therefore arises as to how a B2B marketplaces must be designed in order to meet the needs of both buyers and merchants and offer them equal benefits.
B2B marketplaces in Europe – what models are there?
Before we look at improving payment solutions for buyers and merchants, let’s take a look at the different types of B2B marketplaces. While there were only a few dozen online marketplaces ten years ago, there are now several hundred in Europe alone. These marketplaces are particularly prevalent in the retail, engineering, construction, professional services, transportation and logistics industries.
Conventional marketplaces
A conventional B2B marketplaces is an e-commerce platform that connects buyers and merchants directly. This model accounts for around two thirds of all B2B marketplaces. Well-known B2C companies such as Amazon and Alibaba have also set up B2B marketplaces that offer a wide range of products for various industries. However, conventional B2B marketplaces are often vertically oriented and offer goods and services for specific industries or customer groups.
SaaS-enabled marketplacesÂ
SaaS-enabled marketplaces extend the traditional marketplace model with software components such as management tools. These tools support merchants with order tracking, product marketing and inventory management. SaaS-enabled marketplaces are particularly common in the construction, transportation and logistics, commodities and food sectors.
Marketplaces with initiation
Marketplaces with initiation are platforms on which the prices for products are not listed. Potential buyers must contact the merchants directly before making a purchase. This model combines the B2B marketplaces with the personal touch of relationship building from the offline world. Marketplaces with initiation are primarily found in the areas of transportation and logistics as well as raw materials.
Payment options and customer preferences
With the emergence of B2B marketplaces, competition between these platforms is increasing. A decisive factor here is how well the marketplaces succeed in improving the buying experience for customers and increasing revenue. One of the biggest opportunities lies in the area of marketplace payments processing.
Current payment options
The majority of B2B marketplaces offer marketplace payments options via their platforms. Credit card payment is one of the most frequently offered options. However, this method can prove impractical due to the often high order values in the B2B sector.
Only around half of the platforms offer invoice payment, although this payment method is by far the most popular for offline transactions. Even fewer marketplaces enable modern solutions such as BNPL, although some of these providers have developed their own internal offerings for this.
Customer preferences
Nearly three-quarters, or 72%, of B2B buyers prefer merchants that offer their favourite payment method, and more than half say that net terms are their preferred payment method, according to a survey of global B2B buyers. There is a clear discrepancy between what customers want and what the platforms currently offer.
This gap represents a great opportunity for B2B marketplaces, which can use new technologies to better meet the marketplace payments preferences of their customers.
Industry examples and specific requirements
To better understand the diversity and specific requirements of marketplaces in B2B, let’s look at some examples from different industries. Each industry has its own challenges and needs that can be addressed through customised solutions and payment options.
Agriculture industry
This industry is characterised by larger baskets of goods, which represents a higher risk and requires merchants to manage their cash flow responsibly. These are generally smaller companies with limited ability to perform sophisticated risk assessments.Â
Only around a third of marketplaces in this sector accept invoice payment, which opens up enormous potential for higher conversion rates and basket sizes. One prominent example is E-FARM, a marketplace for used agricultural equipment, with an average basket size of 40,000 euros.
Transportation and logistics
These marketplaces are generally very complex, as it is quite common for merchants to require proof of delivery before payment. For this reason, there tends to be more regular customers here, and invoice payment is somewhat more common. Examples of online marketplaces in this area are Forto and InstaFreight.
Retail marketplaces
These B2B marketplaces, like Orderchamp, are most similar to B2C platforms, with checkout and payment via online platforms being standard. Nevertheless, most marketplaces prefer card payment to invoice payment.Â
Although each of these industries serves different customer needs, they can all benefit from the greater flexibility offered by purchase on account and BNPL.
How can B2B marketplaces offer BNPL?
Mondu’s buy now pay later solutions (BNPL) increase revenue and customer loyalty, driving repeat purchases and growth. Merchants can offer their customers preferred marketplace payments options without having to worry about the complex operational burden of risk assessment, settlement and dunning. Mondu also improves the cash flow of wholesalers and sellers, thanks to upfront payments, allowing them to focus on their core business.
Learn more about how you can scale your marketplace with Mondus BNPL solutions: BNPL for B2B marketplaces
