To Build and Operate a New Marketplace
B2B marketers should align on a broadline industry-centric or niche offering. The economic model should be based on transactions (commission) or on-access (subscription), or some combination of the two. Next, they must ensure the end-to-end experience for both buyers and sellers is superb, otherwise one side of the supply/demand scale can tip out of favor, muting or destroying the flywheel effect.
To build and operate a new marketplace, consider these key questions:
- Should it be an extension of the existing brand, a new brand or a cooperative brand with others?
- How will sellers be courted, onboarded and subsequently managed? How can the operator make it efficient to recruit new vendors and be scalable enough to maintain a consistent level of quality among them?
- How will catalogs be integrated and managed? Who will own product data, attributes, categories and overall catalog assortment?
- What about pricing? Discounts? Shipping and freight?
- Are there geographic restrictions or will the platform be global?
- How will orders be managed? Which internal and external systems are affected and which is the system of record in the process of orchestrating orders?
- How will payments be handled? And what about financial reconciliation between sellers and the marketplace operator?
- How will customer service be handled? Who will be responsible for addressing inquiries pre- and post-purchase? How will returns or exchanges be managed and who will manage them?
- Is the organization ready to support a marketplace? Are the right talent, documented processes and enabling technology in place?
There are multiple paths to consider when building marketplace capability:
1_Bolt-On Marketplace Platform Solutions now exist that productize and operationalize many of the unique business requirements in a marketplace model. Platforms like Mirakl have matured to the point of enterprise scale with purpose-built functionality and integrations to major technology platforms that reduce time-to-value without creating unnecessary risk. Most licenses are offered SaaS and involve an access fee with a scaled percentage commission of each transaction.
2_Extend Commerce More and more B2B players throughout the ecosystem are deploying e-commerce platforms, although few have maximized their potential capability. While this may require more heavy lifting (versus bolting on a productized marketplace solution like Mirakl), some have extended platforms like SAP Hybris, IBM WebSphere or Oracle ATG with marketplace-like features and related business processes like seller management, catalog integration, order orchestration and customer service.
3_Go Custom The option to develop a bespoke solution blending technology and business process from the ground up may be viable for some, but the implications across commerce, supply chain, finance and customer service systems and teams—and the time horizon to do so—must be carefully calculated before wading into deep water.
4_Partner or Buy Is there an existing industry partner with which to consider combining forces in some way? In a competitive counterstrike to Amazon, Walmart recently acquired Jet.com for $3.3B after just one year of operation, securing Jet’s dynamic pricing engine and smart cart in the process. Jet will eventually assume leadership of Walmart’s e-commerce operations and leverage talent and realize scale in the process.
To join and sell on an existing marketplace, consider these key questions:
- Which marketplace platform(s) best reach the target demographic?
- Which provide the optimal value proposition in terms of access vs. transaction costs?
- Which product lines are best suited for this channel?
- Should we launch a new brand or extend the existing brand?
- How should we price the marketplace assortment?
- Are there sources of channel conflict? If so, how can we mitigate them?
- How can we maintain product data in a timely and scalable way?
- Should we retain or outsource fulfillment and customer service?
- Do we have the right team, business process and support infrastructure?
Think Big, Start Small, Move Fast
From their humble origins to their sophisticated capabilities today, marketplaces offer manufacturers, brands, distributors and wholesalers more options than ever to thoughtfully augment their channel strategies. As the connected economy matures and shoppers in B2C and B2B continue to exhibit preferences for one-stop shopping and consistently low prices, marketplaces will play a role in accelerating shifts in existing channel relationships, causing marketers to ask how and when they should respond.
Enterprise entrepreneurs will undoubtedly face challenges along the way, but the opportunities presented by the Marketplace (R)evolution offer solutions to those who thoughtfully strategize and carefully execute. Leaders who deliver stellar customer and stakeholder experiences while staying true to their purpose for charting a new channel direction—be it growing satisfaction, revenue, margin, insights or retention—will win the day.