While the world has been eagerly following the 2024 Olympic Games in Paris over the past two weeks, we looked back at one of the biggest sporting revolutions ever to take place at the Olympics: the Fosbury flop. At the 1968 Olympic Games in Mexico City, Dick Fosbury introduced a completely new technique in the high jump. Instead of jumping over the bar in the traditional scissor jump, he jumped over it backwards and won gold. This innovative method enabled athletes to reach greater heights and prevailed despite initial resistance.
But before we take a closer look at the Fosbury flop and its parallels with the use of modern BNPL solutions in B2B e-commerce, let’s first take a look at current market developments and highlight some of the challenges facing merchants and marketplaces in online commerce.
B2B e-commerce: an unstoppable trend?
Although B2B e-commerce is not yet as developed as the B2C market, it has already doubled in size. And with an annual growth rate of 40%, it is also developing much more rapidly, meaning that it is expected to be three times as large as the B2C segment by the end of 2025.
One of the main drivers of this growth is the ongoing digitalization of B2B purchasing processes: A large proportion of B2B buyers now start their purchasing journey online and take advantage of digital platforms, which include the availability of information and seamless connectivity. At the same time, a new generation of business customers is increasingly exhibiting consumer-like buying behaviour, expecting online-based information, transparent prices and a convenient checkout process.
In addition, leading B2C platforms such as Amazon, Allegro and ManoMano are accelerating the growth trend by increasingly investing in special B2B offerings. We also see a boom in vertical, industry-specific marketplaces that precisely address the needs of sellers and buyers in their respective industries.
Rise of B2B marketplaces
Specialised B2B marketplaces offer tailor-made solutions for their respective industries and specifically connect companies and business customers, such as brands with merchants, restaurants with wholesalers or farms with suppliers. The number of such platforms has literally exploded in recent years – but what is driving this rise?
Industry focus
Every industry has its own standards and practices. Specialised marketplaces are evolving to tailor their offerings precisely to the needs of companies and their customers in their respective sectors. This customised approach makes them particularly attractive.
One-stop shop
The central concept of a marketplace is to connect many suppliers with many buyers. On the supply side, this means that B2B customers have a wide range of products at their disposal. A large assortment ensures that buyers can always find the products they want in the quality and quantity they need.
International reach
It has never been easier for buyers to access an international supplier network and for companies to sell their products across borders. This global network makes buying and selling more efficient and convenient.
Thanks to these factors, B2B marketplaces have been able to gain importance incredibly quickly and give B2B e-commerce an additional boost.
Challenges for B2B marketplaces
Despite the great potential in B2B e-commerce, there are also some challenges to overcome. In addition to the fundamental peculiarities of B2B commerce, such as the often higher complexity of the products, the requirements of traditional invoice processing and the comparatively high order volumes, B2B marketplaces face further hurdles that can affect their scaling and growth potential.
Role as a mediator
As an intermediary between sellers and buyers, the marketplace has the advantage that it does not take direct responsibility for the products sold on its platform. This usually favours rapid growth in transactions and sales volume on the platform. However, the marketplace also experiences restrictions in this role, for example in the provision of certain services such as invoice payment. As the marketplace itself does not act as a seller (merchant of record), it cannot usually offer such additional services easily.
Building long-term customer relationships
To successfully secure market share, marketplaces need to build a loyal base of returning buyers and sellers. This requires the establishment of close customer relationships on both sides, some of whom have different needs. This allows network effects to be promoted and synergies to be realised.
Monetization of the transaction volume
The initial acquisition of sellers and buyers is a challenge for every platform. It is even more difficult to generate platform commissions, but this is necessary in order to generate positive contribution margins and build a sustainable business model. After all, the development and operation of a platform incurs considerable costs that need to be covered.
A revolution in the high jump: the Fosbury flop
To better understand the parallels, let’s take a look back at the 1968 Olympic Games in Mexico City, where the world experienced one of the greatest sporting revolutions.
Imagine the following scene: It’s 1968, the elite high jumpers are gathered in the warm midday sun, and an athlete named Dick Fosbury is preparing for his jump. He stands in front of the high jump bar, takes a running start, but instead of jumping with a scissor-like leg movement and looking down like everyone else, he does something completely unexpected. He approaches the bar in an arcing run, arches his back and crosses the bar facing the sky.
This unconventional method was initially met with scepticism in the high jump community. But the results spoke for themselves: Fosbury won the gold medal and set a new Olympic record. The so-called Fosbury flop revolutionised the high jump and replaced the limiting scissor jump technique as the new standard.
Fosbury flop and B2B e-commerce
And to return to the world of B2B commerce: Much like the Fosbury flop in high jump, the use of modern buy now, pay later solutions has the potential to fundamentally transform B2B e-commerce. This is because many of the challenges that companies face in B2B e-commerce are closely linked to outdated invoicing processes.
Traditional invoicing in B2B
For ages, paying invoices has been an essential part of B2B transactions. The ability to pay later has always been an important tool for companies to manage their cash flow and make payments only after goods or services have been received and accepted. Even though B2B transactions are now increasingly conducted online, the option of invoice payment must remain an essential part of the shopping experience. New processes can significantly speed up the onboarding of new customers, limit assessment and receivables management, creating a convenient online purchasing experience.
BNPL: A game changer for B2B e-commerce
BNPL solutions enable merchants to exploit the full potential of e-commerce without having to bear the associated risk. By assuming the risk of non-payment through the BNPL provider, merchants can achieve better conversion rates, higher average basket sizes and thus greater sales growth without burdening their liquidity.
For buyers, BNPL offers more flexibility in terms of payment terms and thus also protects their cash flows. These benefits are particularly relevant for B2B marketplaces to counteract the challenges already explained.
Solutions for B2B marketplaces
As mentioned, the challenges for B2B marketplaces are many, from dealing with their role as intermediaries, to building a recurring base of buyers and sellers, to monetizing their platforms. Modern B2B BNPL solutions can help overcome these hurdles.
- Customised KYC: Many BNPL providers enable smooth onboarding of new buyers and sellers thanks to flexible KYC/KYB processes. Marketplaces can thus bring new customers onto the platform quickly and with little friction.
- Flexible fee structure: BNPL providers are increasingly offering marketplaces the opportunity to implement flexible fee structures. This means that fees can be split between buyers, sellers and the platform. The platform may even be able to monetize additional payment flows through surcharges on BNPL services.
- Additional payment and financing options: Some BNPL providers go one step further and provide additional integrated services such as deferred payment options for supplier invoices. These can further strengthen platform dynamics by giving suppliers additional financial leeway and thus enabling them to bring more supply to the marketplaces.
Advantages of BNPL for marketplaces
The use of BNPL solutions therefore offers B2B marketplaces numerous advantages that can promote their growth.
- Value creation: One of the key benefits of BNPL for B2B marketplaces is the ability to effectively capture payment flows. By integrating BNPL, marketplaces can deepen their involvement in the entire B2B transaction process. This helps to ensure that orders are not processed outside of the platform once the connection between buyer and seller is established.
- Platform retention: BNPL can also increase platform retention by improving overall buyer and seller satisfaction. By offering flexible payment options, such as instalments, marketplaces can better cater to the needs of business customers and thus attract returning buyers.
- Revenue stream: Furthermore, BNPL has the potential to become more than just a cost factor for B2B marketplaces – it can actually turn into a profit centre. By offering BNPL as a payment method, marketplaces can generate additional revenue, whether by sharing in the fees on instalment payments or providing additional integrable financial products. This can help solve the monetization problem that these platforms often struggle with.
Conclusion
BNPL enables merchants and marketplaces to exploit the full potential of e-commerce without having to bear the associated risk. For marketplaces in particular, BNPL offers decisive advantages such as easier customer acquisition, flexible fee models and additional payment and financing offers. This enables marketplaces to increase their added value, better control payment flows and better serve business customers.
The use of BNPL solutions in B2B e-commerce can therefore provide a decisive competitive advantage – just like the Fosbury Flop in high jump, which successfully challenged and revolutionised established approaches.
“I adapted an outdated style and modernised it into something efficient.” Dick Fosbury
