Future B2B Ecommerce WP

© 2015 Mirakl All Rights Reserved

Summary

FOREWORD . .......................................................... 5

1. MARKETPLACES AND B2B: A LONG HISTORY
................................................................................ 8

1.1 B2B marketplace : definitions and models .................................... 8
1.2 Marketplaces and B2B: 30 years of innovation ............................ 15
1.3 The players in the value chain ..................................................... 38

2. MARKETPLACES AT THE CORE OF NEW E-‐‑
COMMERCE CHALLENGES . ................................. 44

2.1 B2B e-‐commerce: a booming market undergoing transformation 44
2.2 … The marketplaces are the main driver of this transformation… 49
2.3 … Since they are sources of growth, innovation and profitability 59

3. LAUNCHING A B2B MARKETPLACE:
CHALLENGES AND GOOD PRACTICES . .............. 68

3.1 5 essentials pillars ....................................................................... 68
3.2 Establishing good organization .................................................... 79
3.3 Succeeding with the technical project ......................................... 83

CONCLUSION . ...................................................... 86

Marketplace: the future of B2B e-‐‑commerce

FOREWORD
In the view of Archana Vidyashankar, senior research analyst for the
consulting firm Frost & Sullivan's Visionary Research Group, 'many to
many' marketplaces, bringing together a large number of buyers and
vendors, are set to be the main driver for the growth of B2B e-‐‑
commerce. The giants Amazon and Alibaba have initiated this
revolution, and many players have followed suit. B2B e-‐‑commerce is
experiencing hyperbolic growth, and marketplaces are the main driver
of this revolution.
Several factors explain this migration of B2B buyers towards e-‐‑

commerce. In businesses, the increasingly natural digital behavior of
new generations is driving them to replicate their personal purchasing
behavior in the professional sphere. Nevertheless, the movement is
largely the result of a structuring of the offering. By investing in the
optimization of purchase processes on their websites and offering more
and more services around the sale, large B2B retailers are managing to
convince their customers to source their supplies through the Web
alongside, or instead of, the traditional channels (catalog, phone, fax,
branches, sales forces on the ground).
Like B2C e-‐‑commerce, the growth of B2B e-‐‑commerce is already driven

by marketplaces. These are commercial spaces where hundreds of
thousands of buyers and vendors around the world can exchange
millions of products. Whether they are generalists or specialize in a
particular business sector, they are fueling the rise of B2B markets
because they give them an unprecedented arena and unprecedented
liquidity. By aggregating thousands of vendors and buyers and
automating transactions and quality control, these platforms allow
unparalleled breadth of choice for buyers, a dramatic increase in
1.1 B2B marketplace: definitions and models -‐‑ 5


audience and sales channels for vendors and a reduction in transaction
costs for both parties.
Vendors, even small businesses, can now tap into an audience of buyers
that was previously inaccessible. This is far from being a neutral
statement, given that the B2B market in an area such as the United
States represents an audience of over 5 million businesses, 57% of
workers in organizations with less than 100 employees. Buyers are also
put in a winning position, gaining access to an extremely wide range of
supplier catalogs and products, with a customer experience that is
becoming ever closer to B2C standards.
Distributors and manufacturers cannot ignore this phenomenon,

especially when faced with the growing power of Amazon in this sector.
In April 2015, Amazon, the worldwide leader in e-‐‑commerce, opened
Amazon Business, a marketplace where professional buyers can pick
from a catalog of several million items with the same level of ease as the
mainstream consumer website. This new platform ended the short
career of Amazon Supply, the B2B e-‐‑commerce site launched in 2012
where the products were all listed, stored and marketed by the Seattle
giant. This change is far from trivial. Over the last three years, Amazon
has become a convert to the idea that opening up its channels to third-‐‑
party vendor is also profitable in B2B (broader offering, streamlining of
stock, delegated customer relations, etc.). Indeed, a study by the
research and consultancy firm Accenture, conducted in 2014 in the
United States on 500 professional buyers with an annual budget of
more than 100,000 dollars, reveals that “around 1 in 5 buyers uses
Amazon's services for companies and professionals to make at least one
purchase per quarter.”
This format would appear to meet the strategic objectives of

distributors, manufacturers and pure players, who are increasingly


starting their own marketplaces. Improving service, differentiating the

offering and retaining customers are priorities for all players wishing to
position themselves on the Web. Solutions that simplify procurement
by applying the rules that prevail on B2C sites have every chance of
pleasing their customers. The second argument given is the
improvement in productivity and decrease in costs. Here once again,
the ability to create a single transaction crossroads, allowing customers
to avoid a plethora of point to point relations, should increase support.
Lastly, distributors see the digital arena as a tool for winning and
retaining new customers. WeMarket, Kinnek, Retif, Staples, ... the
creation of general and specialized marketplaces is growing all around
the world, accelerating the digital transformation of B2B.
However, operating a Marketplace is a new profession and there are

challenges to be met on several levels: strategic, organizational and,
above all, technical. Aware of these issues, and drawing on more than
10 years of experience developing marketplaces, we wanted to consider
how best to support future Marketplace operators and thus fully
participate in this ongoing revolution.
This paper sheds light on marketplaces, their central role in the growth
of B2B e-‐‑commerce, the main principles of their operation and the keys
to a successful Marketplace.
To take this further, we created the company Mirakl with a view to

supporting our clients in their Marketplace projects and providing
them with a scalable turnkey technical solution to maximize their
chances of success.


1. MARKETPLACES AND B2B: A

LONG HISTORY
1.1 B2B MARKETPLACE: DEFINITIONS AND MODELS
DEFINITION
An electronic marketplace is a secure online space where buyers and

vendors meet to carry out transactions of goods and/or services.
Managed by an operator, the marketplace provides the various parties
with a transparent, secure framework that they can trust. Its tools and
services ensure the flow of trade: online payment system, catalog and
stock management, authentication of listed vendors and buyers, various
guarantees, etc.
The nature of the services and tools offered depends on the strategy of
the marketplace operator and on its degree of verticality.
The main selling mechanisms found on marketplaces:
• The set price: traditional sales model where the vendor sets the
price of the product.
• The auction: a product is put up for sale for a limited period of time,
during which buyers submit successive bids. At the end, whoever
has submitted the highest bid gets the product.
• The reverse auction: this is the opposite of an auction. The buyer
posts their request online (a product and quantity) and it is up to
the suppliers to bid with increasingly lower prices. At the end of the
reverse auction, the supplier who has offered the lowest price wins.


This model was predominant on B2B marketplaces in the late

1990s.
• Request for quotation (RFQ, RFP, RFB1): the buyer sends a
request for a quotation to one or more suppliers, who reply with
their proposals.

PROCUREMENTS MODELS AND MARKETPLACE MODELS
B2B marketplaces are platforms on which manufacturers, suppliers,

distributors and exporters trade with companies wishing to provide
raw materials, finished products or services. Buyers can search by
product type or directly using the supplier listings.
The great promise of B2B marketplaces is to simplify everything

related to procurement. In business, this is often a complicated
process going back and forth several times between buyers and
vendors with constant negotiations. All this requires countless e-‐‑mails,
phone calls and face-‐‑to-‐‑face meetings: very time-‐‑consuming at the end
of the day.
By centralizing supplier offers and company demands on a single

marketplace, the operator brings transparency to the process, making
the exchanges flow more effectively. A company's procurement
center can thus search for and compare suppliers more easily. As
for the providers, they see the marketplace as a good window to make
themselves known to a wider business audience and open up to new
markets.

1 RFQ : Request for quotation / RFP : Request for proposal / RFB : Request for
bids


The B2B marketplace is not only a framework offering unprecedented

transaction liquidity. It is also a safe space. The traditional functions for
rating by customers (speed of delivery, condition of products, customer
relationship) and the marketplace operator, based on the number of
disputes, their resolution rate, age, and customer portfolio, are there to
support their choices.
We can distinguish between two major types of B2B marketplaces

according to the type of purchases made:
• Matching marketplaces, where the main value offered is through

services making it easier for suppliers and vendors to get in touch
with each other;
• Transactional marketplaces, which are closer to the 'off the shelf'
model used in B2C, where the purchasing process is designed to be
as smooth as possible, from searching for the product to payment
and order monitoring.
SOURCING AND MATCHING MARKETPLACES
Here, the purchaser attaches great importance to the choice of supplier.
Putting him in touch with various providers will allow him to sign
contracts with the vendor most able to meet his criteria in terms of
capacity, product, price and quality of service. In this type of purchasing
process:
• The products are usually purchased from providers subscribing to

particular characteristics (specialized manufacturers, specific
geographical location, necessary certification, etc.)
• The delivery terms are sector-‐‑specific and sometimes involve a
dedicated supply chain.


• The contractual negotiations can be complex and require a

number of exchanges between the parties to finalize a commercial
agreement.
• Transaction costs (sourcing, supplier control, contract negotiation,
financial terms) can be high.
The role of the marketplace is to offer services that optimize the

process of bringing together suppliers and buyers. Since the
transaction is not generally carried out on its platform, the operator
will base his business model on the tools he makes available to the
parties, via subscription or a package, to help them cut their
operational costs: chat systems, supplier certification, commercial
insurance, access to credit lines, goods inspection services, marketing
tools for vendors, etc.
Certification systems can be very sophisticated. On the Global Sources

marketplace, the 'Verified Suppliers' are suppliers who have received at
least three visits from Global Sources inspectors; the 'credit check' is a
financial audit conducted by Sinotrust and First Advantage, two
specialist firms in Asia, covering 13 key factors; and lastly, the 'Supplier
Capability Assessment' is an audit of the supplier's production capacity
(state of plants, performance of production lines, quality of goods
produced).
Not all matching marketplaces offer this level of certification, but the
majority of them provide buyers with the tools they need to detect the
right suppliers. This verification requires good 'business practices',
such as verifying the data and contacts provided by the manufacturer,
communicating directly with him with regard to the clauses for
returning products in the event of non-‐‑compliance, going through third-‐‑
party certification bodies etc...


Since the majority of the transactions do not occur on their platforms, it
is more difficult for matching marketplaces to impose their payment
systems upon users than transactional marketplaces. The diverse
backgrounds of the suppliers (India, China, South East Asia...) also make
it harder for marketplace operators to create their own centralized
payment systems. In the vast majority of cases, buyers and vendors
agree on what they deem to be the most practical method of payment.
Even on Alibaba, which has developed its own payment solution
(Alipay, a PayPal equivalent), customers tend to choose other means of
payment. The advice to operators would still be to use trusted third
parties called 'escrow services', that guarantee the transactions.
Among the main matching marketplaces, there are several platforms

that put western companies in contact with Asian suppliers. These
suppliers offer a wide range which most often contains a vast majority
of finished products, in all kinds of categories: toys, electronics, pet
accessories, sports equipment, office supplies, clothing, etc. Here are
the most representative examples:
• Alibaba.com: the largest B2B marketplace, initially specializing in

Asian suppliers and now also positioned as a key B2B sales channel
for Western companies wishing to address the Asian market.
• Global Sources: stands out for its very high standards in auditing
suppliers.
• Indiamart and TradeIndia: specialize in the Indian subcontinent
But suppliers from other continents also have their spaces:
• Kellysearch and ThomasNet: the most important marketplaces for

North American suppliers
• TradeKey: very well established in the Middle East
• Solostocks: focuses on the Spanish market


• ExoportPages: a German marketplace for the European market

• MFG: an American marketplace for the manufacturing industry
Many sourcing platforms have also emerged, specializing in specific

markets:
• Wabel sourcing: specializes in sourcing white label products

• JOOR: this marketplace calls itself “the professional network for
suppliers and retailers” in the world of fashion
• Kinnek: an American marketplace that connects restaurateurs and
specialized equipment suppliers
TRANSACTIONAL MARKETPLACES
So-‐‑called transactional B2B marketplaces are closer to the 'off the

shelf' model that we find in B2C e-‐‑commerce. The aim is to provide
the user with the smoothest possible shopping experience. Historically,
B2B vendors and buyers seized upon B2C channels such as the eBay
and Amazon marketplaces, before they started to offer specific tools
adapted to e-‐‑commerce between businesses. These platforms are
favored by buyers:
• when it comes to physical products, the vast majority of purchases
made on these platforms may be delivered by a traditional logistics
provider.
• for routine supplies, where the buyer's aim is to meet a short-‐‑term
need at the best possible price, for both industry-‐‑specific goods and
services (construction materials, spare parts) and more general
purchases (office supplies).
• when the contractual relationships are often short-‐‑term and the
buyer may care little about the supplier's name as long as the


quality of service, delivery time and prices are in line with

expectations.
The canonical example of a transactional B2B marketplace is Amazon

Business. Launched in spring 2015, Amazon Business is an exact replica
of Amazon.com in terms of user experience. Buyers thus find an
interface and purchasing processes in line with what they are used to as
private purchasers, but can also benefit from additional features
specific to B2B needs (multi-‐‑user account, access to the order history,
reports, modules connecting to e-‐‑procurement tools, etc.).
Staples' marketplace is also at the core of developments. Launched in

2014 on its website Staples.com, the Staples Exchange marketplace has
since been grafted onto the Quill.com website for very small enterprises
and SMEs, and on Staples Advantage for major accounts.
Transactional marketplaces are not only emerging in the wake of the

large general retailers. We are also witnessing their rapid development
in accordance with a more sectoral logic. The French marketplace
Agriconomie has thus created the first marketplace for the agricultural
sector. Its ambition? To be a 'one-‐‑stop-‐‑shop' for all the supplies
necessary to farmers.
Whether generalist or vertical, these marketplaces share a capacity to

offer:
• A comprehensive product catalog covering their whole brand

spectrum through the aggregation of vendor catalogs
• A competitive price and quality service based on competition
between vendors
• A simple, smooth buying experience like that of B2C e-‐‑commerce,
but adapted to the constraints of B2B procurement.



1.2 MARKETPLACES AND B2B: 30 YEARS OF

INNOVATION
The idea of bringing together buyers and vendors in a controlled

space does not date back to the creation of the Internet. The online
version is an extension of what we experience in everyday life: markets,
trade fairs, auctions, etc. Marketplaces are already an important part of
traditional trade. What the Internet has enabled is an explosion of this
exchange model.
1.2.1 INNOVATING TO REDUCE TRANSACTION

COSTS: THE EMERGENCE OF EDI
The world of B2B did not wait for the arrival of the Internet to
streamline its information exchanges and transactions. By the late
1960s, electronic data transfers were beginning to grow in the United
States, first in the transport sector and then in capital transfers.
The development of computerized data transfers, also called EDI

(Electronic Data Interchange), has allowed for the automation of
information processing, resulting inoutput data that is more reliable,
complete and can be made available more quickly. Other benefits of
reducing the number of human interventions: a considerable
decrease in the cost of information processing and the security of
transactions. Lastly, EDI is part of the movement towards digital,
'paperless' administration.
A company can thus manage its orders, shipping notices and invoices
via EDI, tele-‐‑transmitting standardized electronic messages to the
computers of its trading partners (suppliers, customers, banks), who
are able to automatically interpret and integrate the corresponding
1.2 Marketplaces and B2B: 30 years of innovation -‐‑ 15


data in their information systems, without the use of paper or human

intervention.
Networks of partners and key accounts were forged around EDI links -‐‑
we could see this as foreshadowing the marketplace ecosystems that
began to develop in the 1990s with the advent of the Internet. But
unlike e-‐‑commerce, exchange protocols via EDI were only accessible to
very large organizations due to the very high integration costs. In the
late 1990s, as more and more businesses flocked to Web channels for
their sales, less than 1% of European and American companies
were using EDI in their transaction processes.
EDI significantly reduced transaction costs by strengthening the

integration between players in the same sector, but they were never
able to generate network effects. They predominantly allowed for 'point
to point' connections, where a platform functioned as a 'marketplace'
by concentrating and facilitating the matching of supply and demand on
a very large scale and at a low cost, within a single space.
1.2.2 THE REVOLUTION OF THE 1990S
E-‐‑commerce in its modern form was born around twenty years ago, its
creation practically coinciding with that of the World Wide Web. The
Web was invented in 1990 by English scientist Tim Berners-‐‑Lee.
Drawing upon the network technologies existing at the time, Berners-‐‑
Lee created a mesh of 'hypertext' links, through which users could
navigate from page to page on a graphic interface called a 'web
browser'.
Shortly afterward, in 1991, the NSF (National Science Foundation)

authorized the commercial use of this new network, the Internet, thus


paving the way for modern e-‐‑commerce. The revolution that we are still
experiencing had begun. Companies immediately saw this as an
unprecedented way to reach new customers and sell their products,
both in B2C and B2B mode. By 1994, the network was slowly beginning
to be made secure for business transactions, with the first credit card
payment solutions being set up. The first e-‐‑commerce sites were
emerging.
EBAY: THE B2B MARKETPLACE LEADER
Paradoxically, it was through a B2C channel that companies first

appreciated the full potential of the Internet for B2B matching. In 1995,
eBay entered the fledgling e-‐‑commerce market. The story of the
creation of this company sums up the Internet context at that time. One
day, Pierre Omidyar, a French-‐‑Iranian engineer, decided to simply
create a Web page on which he put a broken laser pointer up for
auction. To his surprise, the auction was won by an American buyer
who bought the pointer for $14.83. The engineer sent him an e-‐‑mail
asking why he was interested in a broken object. He answered: “I
collect broken laser pointers.”
That was Omidyar's 'eureka' moment. The power of the Internet

unfolded before his eyes: the network allowed him to forge links with
anyone in the world provided they had access to a connection. Although
this story is rather anecdotal, it really illustrates the intuition of
Omidyar, an IT consultant and brilliant entrepreneur, who immediately
understood that the Internet was the perfect medium to create the
largest and most efficient marketplace in the world.
Omidyar then launched his website, AuctionWeb, for private

individuals. It was a runaway success: more than 250,000 auctions
were posted online in 1996; 2,000,000 in 1997. Barely three years after


its creation, the site which, in the meantime, had become eBay, was the
number one channel for auctions between individuals but also
between companies. The interest from the business world was strong
enough to convince the company to open a marketplace dedicated to
professionals in 2003.
The website quickly becomes a crossroads and is fast emerging as a

rival to traditional distribution channels, which once had a near
monopoly on the distribution of certain products. Being able to buy
replacement automotive parts from a revendor on the platform now
allows individuals to overcome the constraints of buying from their
dealers' point of sale.
Many professionals developed the reflex of always checking if the item
they were looking for was being sold at a knock-‐‑down price before
going to the store to buy it new. The items put up for sale were very
diverse. They ranged from small tools (drill bits) to heavy equipment
(dump trucks). In 2003, eBay's B2B marketplace recorded a business
volume of almost one billion, nearly 10% of the total sales volume
transiting the platform2.
Leading industrial players like Motorola, IBM, Hewlett-‐‑Packard and

Silicon Graphics quickly understood the potential of this marketplace
for making money out of their excess or obsolete stock. However, it was
really small and medium enterprises that fueled the growth of the
platform's B2B activities. Indeed, it did not take long for them to
understand that this window, which they had originally perceived as an
additional sales channel to reach individuals, was also a platform of
choice for their equipment and industrial product procurement.

2 http://www.forbes.com/2003/04/14/cx_pp_0414ebay.html


Unlike the scores of B2B marketplaces that failed to survive the

bursting of the Internet bubble, eBay did not first seek to build a B2B
marketplace and then recruit users. On the contrary, it was through
perceiving that B2B exchanges represented an increasingly significant
volume of transactions that the company decided to open a space for
professionals on its website.
In a 2003 article3, Forbes cites the example of a small supplier initially
based in Atlanta, specializing in catering equipment. Following the
launch of its activity on eBay, the company closed its shop to devote
itself exclusively to the sale of coffee machines on the marketplace. In
less than two years, it saw its turnover multiply by 6, going from
$500,000 to $3,000,000, at the same time significantly expanding its
customer base (both in the US and internationally).
THE “MARKETPLACE BUBBLE” OF THE LATE 1990S
The great lesson of eBay was that, thanks to the Internet and the model
of the connected marketplace, buyers and vendors around the world
could exchange all kinds of goods, making the market much larger and
more efficient. This success paved the way for a multitude of initiatives
in the world of B2B in the second half of the 1990s. On the eve of the
bursting of the Internet bubble, there were over 1,500 professional
marketplaces.
These could be broken down into 3 types:
• 'Independent' marketplaces, aiming to create disintermediation

platforms to streamline the market

3 Ibid


• Consortium marketplaces, which had sprung from joint ventures

between players in the same sector who had already formed a
network
• Private marketplaces, created by very large purchasing groups to
strengthen integration with their established suppliers and
streamline trade.
“INDEPENDENT” MARKETPLACES
'Independent', or public marketplaces were the first to position

themselves in the wake of eBay. Created on the initiative of
entrepreneurs and financed by venture capital funds, innovators such
as Vertical Net and Free Market played a pioneering role in the world of
B2B e-‐‑commerce.
These platforms were intended to be neutral, striving to create value

for both buyers and vendors, without favoring one over the other.
For them, the challenge was to reach the critical mass that would
guarantee the liquidity of supply and demand. Their main difficulty lay
in bringing enough subscribers on board. Indeed, vendors would only
sign up if many buyers were present on the platform and buyers, in
turn, would only connect if there was already a broad, in-‐‑depth offering.
Few platforms survived into the 2000s. There are two explanations for
this:
• These players arrived early within a market that was still

immature and difficult to convince. While eBay was able to rely on
its B2C audience to bring professionals to its marketplace, the Free
Markets of this world had to face up to much higher customer
acquisition costs.


• Above all, the 'independent' marketplaces were victims of their

own success. Feeling at risk of being squeezed out of traditional
supply channels, 'institutional' buyers and vendors started to come
together in consortia to launch their own platforms. The
'independent' marketplaces thus saw many of their key buyers and
vendors become investors in their main competitors, which
condemned them to being meeting places for second-‐‑tier buyers and
vendors.
“CONSORTIUM” MARKETPLACES
The first 'consortium' marketplaces appeared at the end of 1999 and

continued to grow in the 2000s. They often formed within a particular
sector, bringing together key suppliers and buyers. Some of the many
examples: Worldwide Retail Exchange (mass retail), ChemConnect
(petrochemicals), Quad rem (mining), SupplyOn (Automotive) and
Transora (mass retail).
Kick-‐‑starting supply and demand was not an issue in this configuration,
since transactions between the parties predated the creation of the
platform. Buyers and suppliers came together through a joint venture
and co-‐‑managed the marketplace, which created its fair share of
governance problems.
• Buyers and vendors often found it difficult to agree on the model,

each party seeking to promote the business model that would
benefit it the most.
• The parties involved were often direct competitors, which
exacerbated the tensions and differences in the operational
management of the activity.


It was difficult to have a system of governance when certain entities,

such as Transora (a marketplace for consumer goods), had a decision-‐‑
making process that involved more than 50 shareholders (none of
whom had a majority). This platform ended up being bought by one of
its original shareholders, UCC.net.
Nonetheless, the main barrier to the development of such marketplaces
lay in their lack of neutrality. In order to grow, they had to attract more
buyers and vendors. This target audience was, however, very reluctant
to register on a platform owned by their direct competitors, especially
when the competitors in question would receive part of the revenue
generated by the tool and, through it, be able to access all the
information it contained on the prices and products listed on the
platform.
The inability to attract new entrants to create liquidity in supply and

demand would lead the sector towards consolidation throughout the
2000s (particularly with the acquisition of Worldwide Retail Exchange
by Global Sources or the acquisition of Transora by UCC.net), without
these platforms ever managing to pick up any real growth momentum.
PRIVATE MARKETPLACES
Private marketplaces also began to appear in the late 1990s, on the

initiative of organizations with very large central purchasing
departments not affiliated with other platforms. The best example is
Wal-‐‑Mart's Retail Link. The world leader in mass retail chose to
centralize all transactions linking its central purchasing department to
its partners on a single platform. The vast majority of these
marketplaces were built in overlay on existing transaction systems such
as EDI.


The purpose of these platforms was not so much to generate new

revenue as to optimize existing supply chain processes. Beyond the
automation of transactions, the emphasis lay on strengthening
purchaser-‐‑provider integration by optimizing information sharing, both
in terms of design and in projected sales or logistics information.
Strictly speaking, it is difficult to use the word marketplace for

platforms that ultimately were merely a new supply chain tool, where
transaction processes and information sharing were defined by a single
buyer who imposed them upon its supplier portfolio.
LIQUIDITY CRISIS AND SHIFT TO E-‐‑PROCUREMENT

MODELS
Of the 1,500 marketplaces surveyed in the year 2000, only 645

were still active after the bubble burst, and less than 50 still
survive today. Apart from a few leaders, like Ariba, who were able to
draw upon EDI and IT solutions to the best effect, few platforms were
really successful in generating growth and profitability. What were the
reasons for the many failures?
• Lack of neutrality prevented consortium marketplaces from

attracting external suppliers and buyers. In 2004, GNX and World
Wide Retail Exchange carried out 16,000 and 3,700 reverse auctions
respectively, a very small number compared with the millions of
B2B transactions carried out on eBay.
• The almost systematic choice of the reverse auction model, and
its bias in favor of buyers, explains why many B2B vendors left these
platforms. This pricing mechanism can be effective as part of stock
liquidation, but not for the sale of critical products where price is
only one variable among others (product quality, long-‐‑term capacity
of the supplier, logistics excellence, etc.). Suppliers using


independent marketplaces quickly began to feel cheated. At a time

when e-‐‑commerce was far from being the undisputed channel it is
today, these suppliers preferred to re-‐‑focus on traditional sales
channels and differentiate themselves through factors other than
price. With the number of vendors decreasing, supply liquidity soon
dipped.
Paradoxically, the late-‐‑'90s B2B platforms that have survived are those
that have managed to generate recurring revenue by capturing part of
the transactions going through EDI, that is to say, drawing upon the
technological foundation that they were claiming to replace. Those who
managed this transformation include the consortium marketplaces
such as Global Healthcare Exchange (GHX), Exostar and Elemica.
ARIBA AND THE E-‐‑PROCUREMENT NETWORKS
It was not until 2010 that we saw the launch of Ariba Network, a
transactional platform hosted on the cloud, aggregating its network of
buyers and vendors, its matching tools and its business management
functions. The platform is primarily oriented toward buyers. It works as
a one stop shop where they can access the full offering from all the
suppliers in the network. From the outset, the purchasing processes
were integrated in the various bricks of the company information
system. Although the exchange modalities on Ariba Networks are
compatible with all e-‐‑procurement functions provided by Ariba
software, carrying out transactions on this platform requires users to
have invested in the company's tools. This prohibitive entry cost
explains the low proportion of small and medium enterprises that have
joined the network.
How is this different to today's B2B e-‐‑commerce marketplaces like
Amazon or Alibaba Business? Ariba is primarily a suite of software


tools designed to meet specific business needs for large organizations.
Its ability to integrate with information systems and ERP
processes has enabled it to attract many large companies with
complex procurement issues. The purchase experience on Ariba
Networks is conceived in relation to these issues. In contrast,
Amazon, Alibaba or indeed eBay are above all 'marketplaces' in the
strict sense of the word, that is to say, an audience crossroads, built
to facilitate the matching of supply and demand.
The functional wealth of this integration capability is probably less

significant within pure marketplaces, but the sourcing and buying
experience is much more fluid and intuitive. Above all, access to
marketplaces like Amazon and Alibaba is not constrained by a
company's IT architecture: suppliers and buyers can very easily open
accounts on these platforms to buy, sell and manage their businesses.
This argument is particularly applicable to small and medium

enterprises that are very sensitive to the flexibility and comfort of use
of these marketplaces, which are more open and easier to understand
(ease of navigation, price transparency, instantaneous availability of
products, ease of comparison of prices and service levels). Not
surprisingly, e-‐‑procurement solutions exclusively targeting very small
enterprises or SMEs, such as HubWork or Hubwoo, have never really
succeeded in establishing themselves.
Little by little, even buyers working for large groups end up preferring
the buying experience typical of e-‐‑commerce to that offered by e-‐‑
procurement tools. Not to worry! The producers of e-‐‑procurement
solutions adapt to the situation by offering their customers software
modules enabling them to 'switch' to e-‐‑commerce marketplaces and
compare the offers of the listed suppliers with those of the marketplace
vendors.


That said, it would be wrong to insist on pitting these two types of

platforms against each other on all levels, since they actually serve
different needs:
• The e-‐‑procurement platforms respond first and foremost to issues

of technical procurement management (ERP integration, etc.)
and monitoring (traceability, internal KPIs, etc.). As a
consequence, the customer experience is of secondary importance.
The buying processes (navigation, matching, payment, validation,
etc.) is constrained by the cumbersome nature of the IT tools.
• The B2B marketplaces (matching or transactional) focus more on
a problem of market optimization (or even market creation4).
Priority is given to the smoothness of the customer experience,
regardless of the tools used internally by the parties.

4 Ads exchanges are a good example of market 'creation'. By providing
centralized arenas for the sale of spaces, inventories and web advertising content
(videos, displays, etc.) ads exchanges have created a real crossroads where
previously transactions would take place off-‐‑market in a completely
decentralized manner.


MARKETPLACE AND MARKET LIQUIDITY
INTERVIEW WITH MARTIN MIGNOT, EARLY STAGE

INVESTOR – INDEX VENTURES
For the last 5 years, Martin Mignot has been working for Index
Venture, one of the most important venture capital funds, with
twenty years' experience supporting European entrepreneurs in
creating leading global technology companies. Index Venture has
been part of major Internet successes, such as Skype.
More specifically, Martin deals with early stage investments in

Europe, focusing on marketplaces, Software as a Service (SaaS) and
FinTech -‐‑ technology applied to finance.
Index Venture invests heavily in marketplaces, both for product-‐‑

based e-‐‑commerce (Etsy, Farfetch or NotOnTheHighStreet) or offers
of services such as labor (PeoplePerHour), finance (Funding Circle,
Auxmoney), housing (HouseTrip, OneFineStay) or transportation
(Drivy).
In an interview to mark the publication of Mirakl’s book

Marketplace: the future of E-‐‑commerce, Martin Mignot gave us
his analysis on the keys to successful marketplaces and the
reasons for the failure of platforms from the 1990s.
The main reason for marketplace failure is lack of liquidity. By

definition, a marketplace simply offers a technological tool to bring
together the two sides of the exchange. The operator of the platform
does not control its products or directly source them. This makes it
dependent on its ability to attract the right players and secure the


right balance between supply and demand. Marketplaces that have

been unsuccessful have often fallen short of solving all or part of this
equation, which is more difficult to solve within a small catchment
area (as is the case for hyper-‐‑local marketplaces for the provision of
home services, for example).
It is fundamental to create a model that is sufficiently refined (sale of
services, subscriptions, sales commission, etc.) to create value on both
sides, and to find a way to generate sufficient revenue in the midst of
all this. (…)
It is also crucial to ensure that the offering is sufficiently fragmented,
otherwise it will be meaningless. If the offering is very focused on 4 or
5 players then it might not necessarily be of interest to launch. It is for
this reason that many B2B marketplaces do not work: because there is
a real concentration on both sides. We see this in the food industry,
where a limited number of large suppliers have been matched with a
handful of large buyers who already knew each other. (…)
The more a marketplace succeeds in aggregating a fragmented

demand with a fragmented supply, the higher its value.
Next, it is a question of working out how to lock down the model to

avoid being disintermediated. For example, in the case of cars and
apartments, it is a question of offering insurance or ensuring that
payment is made online and not in cash. In other words, guaranteeing
security and simplicity. Building a reputation, especially among
vendors, through rating systems, is also an essential lockin tool.


1.2.3 THE NEW STANDARDS OF B2B

MARKETPLACES
Since 2000, two companies have been at the forefront of a

transformation of e-‐‑commerce based on the scalability of the
marketplace model.
• Alibaba has thus succeeded in establishing itself as the world's

largest retailer in less than a decade, without owning any stock or
operating any logistical infrastructure.
• Amazon has drawn on the marketplace model to establish itself as
the gold standard in terms of customer experience. The new
standards defined by Jeff Bezos' firm have become the norm in the
world of B2C e-‐‑commerce and are poised to establish themselves in
the B2B sector.

ALIBABA: GLOBAL SOURCING MADE ACCESSIBLE TO

ALL
Alibaba is undoubtedly a flagship B2B marketplace. The core business

of the company, founded in 1999 in China, is to connect Chinese
manufacturers and factories with Western companies wishing to buy
low-‐‑cost products. This is where the beauty of the marketplace really
becomes apparent, as it brings together buyers and vendors who would
not have been able to meet before. Above all, it facilitates transactions
by offering them a series of services. These include the 'gold supplier'
initiative to certify suppliers and the price comparison system to check
that the rates proposed by a supplier fall within the market average, etc.


The website interface is optimized to be as transparent as possible with
regard to vendor qualification. The flow of information between the
parties is facilitated by:
• pages dedicated to selling categories

• pages dedicated to business information (administrative
information, financial results, industry certificates, trade capacity,
logistics capabilities)
• the 'Trade Manager' application, an instant messaging system that
allows potential partners to communicate easily (with an automatic
Chinese translation function).
Like the vast majority of marketplaces, Alibaba.com puts buyers and

vendors in touch with each other without incurring the costs associated
with supply management, storage and shipping. In addition to
Alibaba.com, the company has extended this model to
• Taobao, a C2C marketplace designed for private individuals in China

(eBay equivalent)
• Tmall, a transactional marketplace for major B2C brands and
distributors wanting to address the Chinese market
• AliExpress (created in 2010), a transactional marketplace for
Chinese wholesalers targeting individual buyers and SMEs.
• 1688.com, a B2B marketplace reserved for the Chinese market.
The firm iResearch estimates Alibaba's Chinese e-‐‑commerce market

share to be 42% in the B2B sector, with its eponymous website
securing 54.6% of B2C with Tmall and 94.53% of C2C with Taobao. In
2014, the volume of transactions passing through these various
platforms reached 440 billion dollars. In September 2014, the group
broke the record for the largest IPO in history, raising more than 25
billion dollars for a market value of 231 billion dollars. In addition to


internationalizing its marketplaces mentioned above, the group

continued its international expansion strategy by adapting the model to
its new target markets. A notable example is the group's 2014 US
launch of 11Main, a transactional marketplace for small merchants and
consumers in the country.
Alibaba's success story perfectly illustrates the power of the

marketplace model to meet the needs of a market by simply facilitating
the matching of fragmented supply and demand.
AMAZON AND THE REDEFINITION OF THE B2B

CUSTOMER EXPERIENCE
CHOICE FIRST AND FOREMOST
Amazon used this model to further enhance the quality of the customer
experience offered to Internet users on its own website. While eBay
and Alibaba's position as pure intermediaries appeared natural in the
eyes of many observers, the desire of an e-‐‑retailer like Amazon to
open a marketplace behind its own storefront seemed like a crazy
idea. It amounted, quite simply, to inviting the competition to take
advantage of its own customers. At the time, many analysts were
predicting a stinging defeat for Jeff Bezos. But he persevered. He
understood very early on that without the contribution of third-‐‑
party vendors, he would never have the full 'long tail' of products
and suppliers on his website.
“Our vision was: we want to have a place with a universal selection, and
we did not believe we could do universal selection without a whole bunch
of third parties helping us.” Jeff Bezos


In 1997, two years after the creation of Amazon, he opened up the site
to third-‐‑party vendors. The key was to offer everything to customers on
Amazon to make it an essential destination. Bezos' vision turned into
reality: in September 2015, Amazon was the first port of call for US
consumer product searches, with only 11% of consumers initiating
their searches on Google5.
Amazon quickly made its marketplace a key weapon in the strategy
for winning customers and retaining their loyalty. The priority was
for customers to find what they were looking for on Amazon, almost
regardless of purchase mode, whether direct or via a third-‐‑party
vendor.
“Since we focus on profit dollars rather than margins, we are largely

neutral on whether an item is sold by us or by another vendor.” Jeff Bezos

5 http://www.l2inc.com/l2-‐‑insight-‐‑amazon-‐‑search-‐‑visibility/2015


HOW DID AMAZON OPEN UP ITS MARKETPLACE?
Although Jeff Bezos' intuition about opening up to third-‐‑party

vendors (both individuals and professionals) came very early on, his
marketplace was not built in a day. He first tested the concept of
zShops. The main difference with the current formula was the fact
that zShops was located within a completely separate space;
products from third-‐‑party vendors were not visible on the listings of
products sold by Amazon. zShops did not fully satisfy Amazon's
customers. It was finally in 2000 that the 'Marketplace' program
was born, and the format this time was right.
The successive failures of Auction and zShops were simply steps in
finding the ideal marketplace formula for Amazon.
"We launched auctions, and that didn't work. We launched zShops,

and that didn't work. And we finally launched Marketplace, which
has morphed into Merchants, and Marketplace was very successful
[…] The reason why Marketplace worked where auctions had not is
because Marketplace was convenient, it was still one-‐‑click shopping.
And our customers didn't want to do auctions. They were busy.
They wanted to come in, find what they want, buy it, and go away.”
Jeff Bezos (CEO, Amazon.com)
Now, in 2015, Amazon is the hybrid operator providing visitors with
the most choice. Millions of products are available in many
categories: cultural goods, pet products, etc. Such a choice would not
be possible without the contribution of the Marketplace. The
Marketplace vendors account for more than 52% of products sold
on Amazon and allow Amazon to claim the title of the largest online
store in the world.


ABSOLUTE CONTROL IN TERMS OF QUALITY OF SERVICE
Amazon's second decisive contribution is its services offered to

marketplace vendors and buyers. eBay has implemented the yard sale
model on the Internet. This influence is reflected in its approach to the
marketplace: little control of the products offered, no catalog system,
etc... Here, the freedom is great, but so are the risks. Amazon has gone
the other way, making its marketplace an extremely structured and
secure space. In terms of volume, on a worldwide scale, 46% of the
products sold on Amazon in 2014 were by its marketplace
vendors6.
The vendors are subject to strict rules on their responsiveness, dispatch
and product return conditions, and the payment system is entirely
controlled by Amazon. In exchange, the site offers them management
tools to facilitate their sales activities.
By positioning itself as a trusted third party, Amazon reassures its

customers. It guarantees them the highest quality of service
possible, whether they buy directly from Amazon or from one of
its marketplace vendors. By imposing this high level of service and its
own rules, Amazon really differentiates the marketplace model from
that of the classifieds websites like Craigslist or eBay.
This was a decisive step in the evolution of electronic marketplaces.

Seeing that this model works, many other online retailers have followed
this path and chosen to adopt a more controlled system. This was also a
key development for the very history of e-‐‑commerce since, with its
marketplace, Amazon, the No. 1, finally has a profitable business
model.

6https://www.internetretailer.com/2015/10/22/amazons-‐‑sales-‐‑rise-‐‑23-‐‑
propelled-‐‑service-‐‑sales-‐‑gains


AMAZON BUSINESS: THE NEW STANDARD FOR

TRANSACTIONAL B2B E-‐‑COMMERCE
In April 2015, Amazon launched Amazon Business, a new marketplace

dedicated to B2B buyers and vendors. From the start, the company
could boast a catalog of several million products bringing together
several million vendors and buyers7.
Amazon Business has replaced AmazonSupply.com, a website launched

in 2012 whose catalog contained as many as 2.25 million products, all
listed and stored by Amazon. Amazon Business also replaces the
Business, Industry & Scientific section of Amazon.com.
The third-‐‑party vendor catalog has significantly increased the number

of categories covered (more than 45 to date). In addition to an
expanded offering, Amazon Business offers B2B buyers a shopping
experience that, in every respect, reflects navigation on the B2C
marketplace. On Amazon Supply, the company had opted for a
browsing experience that was supposed to be more appropriate for the
specifics of B2B purchasing, but in the end proved more complex.
In its commercial discourse, Amazon emphasizes that, on the new

portal, we find all the strong points that account for the success of
Amazon.com (broad range, easy price comparison between different
offers, product presentation identical to that of B2C, buybox
highlighting the best deals, price transparency and direct purchasing),
along with features tailored to B2B buyers (ability to open accounts for
multiple users, B2B-‐‑specific prices, credit line service, possibility of
issuing quotes, module to facilitate integration with company IT
systems, tax exemption program).

7http://www.businesswire.com/news/home/20150428005246/en/Introducing
-‐‑Amazon-‐‑Business-‐‑Love-‐‑Amazon-‐‑Business


THE CURRENT TREND IS FOR VERTICAL

MARKETPLACES
According to Scot Wingo, CEO and co-‐‑founder of Channel Advisor,

billions of dollars of B2B transactions are now captured by eBay and
Amazon, which were nevertheless historically B2C-‐‑oriented8. The
model is now being adopted by many distributors keen to capture a
share of this market, which is estimated at over 780 billion dollars in
the US alone. Staples, one of the leading distributors of office supplies,
has thus made its marketplace, launched in 2014, a key focus of its e-‐‑
commerce strategy.
In addition to the generalists, we are witnessing specialized

marketplaces that seek to position themselves as 'one-‐‑stop-‐‑shops' for
clearly identified markets. Indeed, the marketplace is a sales model
particularly suitable for niche or vertical business areas, insofar as
it allows for extremely broad and in-‐‑depth ranges to be offered and
brings together significant communities of buyers and/or vendors.
Compared to generalist marketplaces, vertical marketplaces offer a
shopping experience that sticks to sector-‐‑specific codes. Some
examples include:
• JOOR, a marketplace established in 2010 that connects fashion

boutiques with trendy young designers
• Kinnek, a marketplace launched in 2012, specializes in equipment
and consumables for small shopkeepers and restaurateurs in the US
market
• Agriconomie, a European pure-‐‑player marketplace for the
agricultural world, distributes inputs (fertilizers, seeds, pesticides),
as well as spare parts (nozzles, filters) and farming equipment.

8 Portals to Business, Internet Retailer, 2015


FOCUS ON JOOR, A VERTICAL MARKETPLACE IN THE

WORLD OF FASHION
JOOR is a young B2B marketplace, created in 2010, which connects
fashion boutiques with trendy young designers. In just two years of
existence, JOOR has already achieved great success among designers
and brands, as well as with the boutiques. Before the creation of this
specialized Marketplace, the linkage between these two parts of the
equation was not particularly effective. Brands and boutiques would
meet at trade fairs. Salespeople would go and sell their collections to
boutiques, who would then have to rely on paper catalogs to make
their orders. There was a matching process, but it was not very
smooth.
JOOR therefore created a free marketplace for the boutiques to

browse an online catalog bringing together items from hundreds of
designers and, above all, place their orders directly via the website
in a centralized manner. JOOR makes money by charging the brands
for appearing on the Marketplace. This set-‐‑up really is a winning
combination for all three parties.
The boutiques finally have a centralized space through which they

can easily discover and order new creations. The brands have an
effective way of making themselves known among a geographically
fragmented target. The marketplace operator is making money
through bringing value to all players in the ecosystem.
Today, the marketplace brings together tens of thousands of buyers
and nearly 1,200 brands.


1.3 THE PLAYERS IN THE VALUE CHAIN

THE OPERATOR
The key player in a marketplace's value chain is unquestionably the

operator: it is he who plays the role of regulator, sets the rules of
operation and guarantees security. He intervenes on two levels: by
creating a regulated framework and by providing the various parties
with tools and services that make transactions smoother.
Not all marketplaces offer the same level of service or follow the same
sales rules. It is precisely these two elements that differentiate them.
Thus, eBay gives vendors a lot of 'freedom' as to the nature of the
products they sell, the delivery timeframes they apply and the means of
payment they use. However, this freedom poses certain problems in
terms of transaction security.
Operators such as Amazon Business or Staples impose quite strict

constraints on their third-‐‑party vendors (catalog format, limited
number of payment solutions, shipping conditions and times, after sales
service, etc.). There is also a noticeable difference in philosophy
between 'pure players' and 'hybrid' marketplaces, which have a
stand alone e-‐‑retail activity in parallel with their role as operator.
• The hybrid operators manage their marketplace while, at the same
time, selling their products on it. They can choose to set rules of free
competition between themselves and their third-‐‑party vendors (as
is the case for Amazon – a company that does not hesitate to
recommend proposals from third-‐‑party vendors when they are
more competitive), or reserve the monopoly on the sale of certain
categories for themselves (as is the case for Retif, a marketplace for
equipment for merchants).
1.3 The players in the value chain -‐‑ 38


• 'Pure player' operators position themselves from the start as

intermediaries between buyers and vendors, and only as such. They
have no sales activity that competes with the vendors on their
marketplace. Examples: Alibaba or Joor in e-‐‑commerce, Upwork and
99designs for services.
Inspiring confidence in buyers and vendors is the first task of a

marketplace operator, whatever its nature. The high throughput
matching of vendors and consumers from all backgrounds increases the
likelihood of incidents related to customer service and fraud
(unreceived goods, payment fraud, etc.). It is important to note here
that the quality of the technical platform, though often overlooked,
plays a key role in becoming a trusted third-‐‑party of the operator.
The final responsibility lies in maintaining the balance between

supply and demand. The marketplace should be a place where buyers
can easily find what they are looking for. Once again, it is thanks to the
tools put in place and the quality of the technical platform that the
operator can effectively 'match' supply and demand.


Diagram of marketplace operator’s role
VENDORS
Vendors are listed on marketplaces with a view to accessing a heavy

flow of traffic and thus reaching new customers. A marketplace is a
great marketing channel that allows them to lower the cost of:
• commercial prospecting
• partner management and coordination
• promotion, etc.


However, the benefits of a marketplace are not limited to marketing.

They also impact upon technical expenses:
• infrastructure and maintenance costs

• order processing costs
• catalog management costs
The marketplace allows vendors to do away with certain tasks

(maintaining a website, acquiring traffic, retaining an audience, etc.).
They are thus freer to devote themselves to their real business: selling.
Lastly, marketplaces are increasingly of interest to companies who do
not have a tradition of selling directly online, such as industrial
suppliers or physical retailers. These companies are now drawing upon
marketplaces to develop new sales channels and, in some cases, get
closer to the end customer.
BUYERS
For buyers, the marketplace is the best place to find a wide selection of
products offered by a variety of vendors. The main benefits are:
• simplification of product searches, which are becoming increasingly

centralized
• the possibility of centralizing their purchases on a single platform
• a reduction in order processing costs (automation)
• better management of key performance indicators (the ability to
buy at the best price, size of orders, monitoring of payment terms,
etc.)
• access to a wider choice of suppliers
• suppliers can more easily be pitted against each other
• savings through the ability to compare prices (resulting from the
free competition inherent to any marketplace)


In general, the marketplace is an extremely effective tool to optimize

the purchasing function.
Besides the cost savings, security and trust guarantees also explain why
many buyers like to go through an online marketplace.
SECONDARY PLAYERS
By secondary players, we refer to all those players that revolve around
a marketplace and act as intermediaries between buyers, the operator,
and vendors. There are several types:
• service companies, who aggregate vendor product flows enabling

them to be displayed simultaneously on multiple marketplaces
• brokers/comparison experts, to find the best products/prices
• logistics providers for vendors.
• firms and agencies specializing in supplier certification and goods
control. This is the case for AsiaInspection, Intertek and SGS, who
carry out factory audits, for example.
None of these players have the capacity to establish the technical

foundations on which to build a marketplace. They remain a tool or
service within the value chain, but are entirely replaceable.



Diagram of marketplace value chain



2. MARKETPLACES AT THE CORE

OF NEW E-‐‑COMMERCE
CHALLENGES
2.1 B2B E-‐‑COMMERCE: A BOOMING MARKET
UNDERGOING TRANSFORMATION

IMPRESSIVE GROWTH FORECASTS
B2B buyers are changing the rules of the game by now conducting
their research and purchasing online. According to Forrester, B2B e-‐‑
commerce is expected to exceed 1 trillion dollars by 2020 in the US
market alone. The agency's forecasts for 2015 totaled $780 billion,
more than double those of B2C e-‐‑commerce, which 'only' reached $305
billion9. Frost & Sullivan's estimates are even more impressive, since
the company forecasts a $1.9 trillion market for the United States in
2020, and 6.7 trillion globally (27% of a B2B market estimated at $25
trillion).
Forrester's teams emphasize that the categories set to experience the

strongest growth over the next five years will be manufactured goods,
such as spare parts in the automotive and aerospace industry,
professional and consumer electronics, industrial machinery and office
supplies and equipment.
All the B2B distributors surveyed by Forrester agreed that their main
growth driver lay in online sales and reported a 20% increase in their

9 U.S. Department of Commerce, 2015
2.1 B2B e-‐‑commerce: a booming market undergoing transformation

-‐‑ 44


online turnover. Nearly 50% of companies with an Internet

storefront estimated that more than half their client portfolio
would fully or partly migrate to the Web channel over the next
three years10. This movement is expected to accelerate with the arrival
of a new generation of procurement professionals already well versed
in e-‐‑commerce.
CHANGES IN PURCHASING BEHAVIORS
Andy Hoar (Director of the eBusiness & Channel Strategy department at
Forrester) sees this dynamic as being fueled by buyers moving from
offline channels (printed catalogs and telephone) to digital
channels. Equipment manufacturers, suppliers and wholesalers should
take advantage of this. Selling directly online using an 'off the shelf'
model allows them to reduce their operational costs. Some companies
have understood this, as evidenced by a quotation from the e-‐‑
commerce manager at W.W. Grainger, a US wholesaler known for its
distance selling activities and physical network of subsidiaries,
highlighted in a recent Forrester study 11
“Grainger will soon be an e-‐‑commerce business with over 600

subsidiaries.”
Not that long ago, B2B companies would rely mainly on paper catalogs,
a sales force on the ground and significant call-‐‑center resources to
manage their sales and customer relationships. Now that a growing
number of purchasers are searching and buying online (using both
computers and mobile devices), these companies are forced to rethink
their strategies for acquiring and engaging customers. The customer
service provided by an individual has now been replaced by the

10 Digital is busy transforming B2B e-‐‑commerce, Forrester, 2015
11 Ibid

-‐‑ 45


relevance of algorithm results and search engine recommendations, as

well as the exhaustive content of the product sheets. According to
Forrester12, 52% of companies say that their customers' adoption of e-‐‑
commerce allows them to reduce the costs of managing the sales cycle.
The traditional players in the B2B sector must thus draw upon the
appropriate business and technical resources in accordance with the
potential of each online buyer.
• Small and medium-‐‑sized enterprises tend to have the same kind of
online purchasing behavior as individuals. The best way of
capturing these customers is to offer them a check-‐‑out process
modeled on that of the B2C e-‐‑commerce sites.
• Buyers from large organizations also appreciate the simplicity of
the B2C shopping experience, but are required to follow internally
defined procurement processes. They are looking for an e-‐‑
commerce-‐‑type shopping experience which nevertheless makes the
link with the constraints of their e-‐‑procurement systems.
These differences explain why some operators have chosen to deal with
these two clientele types on separate websites. Thus we have Staples,
with its portal, Quill, dedicated to very small and small enterprises,
along with its StaplesAdvantage marketplace for key accounts.
In addition to this segmentation by company size, we also encounter a
breakdown by type of buyer within customer accounts.
• General employees may well be required to place orders of

minimal cost without having to follow a pre-‐‑established validation
process. If they use a credit card to pay for the order, they will

12 The Case For Channel-‐‑Shifting Offline Customers Online, Forrester, 2015

-‐‑ 46


appreciate functions that make it easy for them to submit a claim for
expenses.
• Conversely, procurement professionals will tend to make much
larger purchases, for which order tracking and validation processes
are key. They may, for example, require tools for analyzing the order
history for each user account, department and buyer within their
companies.
NEW EXPECTATIONS IN TERMS OF CUSTOMER

EXPERIENCE
Surveys of procurement professionals all confirm that B2B purchasing

behavior is changing to become more and more like that of B2C
purchasing. 49% of major B2B buyers surveyed by Accenture
prefer to use B2C websites to make their purchases, and 52% plan
to carry out more than half their purchases on pure e-‐‑commerce
platforms in the next three years13. Expectations with regard to the
smoothness and simplicity of purchasing processes are so strong that
56% of buyers say they will pay up to 30% more to benefit from a
better online experience.
When asked what they deemed to be the 3 essential features when

making a purchase online,
• 60% of the buyers focused on search and catalog navigation

functions,
• 58% emphasized the importance of customer ratings of products
and vendors,

13 Building The B2B Omni-‐‑Channel Platform Of The Future, Accenture-‐‑hybris,
2014

-‐‑ 47


• and 50% highlighted the importance of personalized

recommendations.
As regards payment, 69% preferred instant payment solutions

(bank card or electronic wallet) rather than purchase orders and
invoices (28%). Only 3% preferred the Ariba-‐‑type eProcurement
portals.
Faced with these new requirements, distributors are investing heavily

in maximizing their online experience and aligning themselves with the
best practices of B2C. According to a study conducted by Hybris and
Forrester, Amazon has become the reference model for all B2B players
investing in the e-‐‑commerce channel14, so much so that they aspire to
recreate the 'Amazon experience' on their own websites. Recreating
this experience is as much a question of breadth of range as of
ergonomics and service quality. Much of the challenge for candidates
thus lies in how to cover the long tail in various categories.
Breadth of choice and quality of service have become the two essential
levers of an effective strategy for acquiring and retaining professional
customers. Indeed, Amazon has made breadth of range the very
foundation of its customer experience. Thanks to its strategy for
integrating third-‐‑party vendors who, let us reiterate, account for 46%
of sales (in numerical terms) made on the website15, the platform
succeeds in meeting the expectations of B2B buyers in terms of
customization (contextual merchandising16, personalized cross-‐‑sell and
up-‐‑sell) and competitive prices.

14 Ibid
15https://www.internetretailer.com/2015/10/22/amazons-‐‑sales-‐‑rise-‐‑23-‐‑
propelled-‐‑service-‐‑sales-‐‑gains
16 In 2006, Amazon owed 35% of its sales to the product recommendations
produced by its algorithm Source: ibid

-‐‑ 48


When asked what factors encouraged them to return to a supplier

website, B2B buyers immediately cited:
• Prices (84%)
• Excellent quality of service (83%)
• Depth of catalog (83%)
What becomes increasingly evident in this context is that a lone

distributor will only be able to respond to such requests by drawing
upon specialized third parties to provide their operational excellence
and competitive prices. This is why the marketplace model is
increasingly emerging as the only model able to meet these new
expectations.
2.2 … THE MARKETPLACES ARE THE MAIN DRIVER OF

THIS TRANSFORMATION…
Marketplaces are capturing an increasingly large share of B2B

market growth. According to Archana Vidyasekar, Senior Research
Analyst at consulting firm Frost & Sullivan’s Visionary Research Group,
the main drivers of this growth will be the 'many to many'
platforms, bringing together a very large number of buyers and
vendors, like the two giants Amazon Business and Alibaba. Scot Wingo
– CEO of Channel Advisor17 – confirms this. According to his figures,
the annual growth of B2B sales through marketplaces is five points
higher than that of 'traditional' B2B e-‐‑commerce.

17 Channel Advisor is an American provider of e-‐‑commerce solutions hosted in
the cloud
2.2 … The marketplaces are the main driver of this transformation…
-‐‑ 49


THE MARKETPLACES -‐‑ A NEW ELDORADO FOR B2B

VENDORS
B2B vendors have been quick to grasp the value of joining marketplace
sales channels. While effective natural SEO was once largely enough to
secure website traffic, it is now increasingly difficult for small e-‐‑tailers
to come out on top of the search results. The same goes for paid listings
-‐‑ the areas reserved for sponsored links are hyper competitive and
make less of an impact than they would have done a few years ago.
Basing a strategy only on SEO or sponsored links is very risky.
Marketplaces have thus become an additional and indispensable
channel for expanding one's market and selling fast.
B2B vendors, whether wholesalers, manufacturers or suppliers, have

thus adopted marketplaces as additional sales channels, allowing them
to expand their audience and possibly bypass the intermediaries
between themselves and the end buyers. By allowing third-‐‑party
vendors to come and sell on his platform, the operator puts his brand
and the trust it inspires at their disposal. This can provide even little
known vendors with a way of selling a great deal, provided they have
good products, good prices and good reviews.
In return for access to the audience and the services, vendors will need
to pay registration or subscription charges and sales commissions. For
most marketplace vendors, these costs are seen as marketing and
technical investments. Being present on these platforms comes down to
an economical way of paying for traffic and leads. Establishing oneself
on the main marketplaces can be of interest even to vendors who
already have their own online retail spaces, since marketplace traffic is
qualified and marketplace visitors have a clearer intent to purchase
than on search engines for example.
-‐‑ 50


The qualification of traffic varies from one marketplace to another,

depending on whether it is general, like Amazon, or sector-‐‑specific.
Vendors have a vested interest in segmenting audiences by channel,
putting together catalogs tailored to the needs of buyers and thus
maximizing their conversion rates and return on investment on each
platform.
VENDOR CASE STUDY: N2 SURPLUS
In its study 'Portals to Business', B2BEcNews studies the case of a

B2B vendor who chose B2B marketplaces as the main channel for its
business.
N2Surplus Inc. has been working for over nine years in the
distribution of B2B products ranging from office supplies to eyeglass
frames, industrial valves and scientific equipment for laboratories.
With fewer than 12,000 listed products, N2Surplus is incomparably
smaller than the major players positioned in these categories (W.W.
Grainger Inc., Staples, PSC Industrial Supply Co.). Nevertheless,
N2Surplus has still managed to carve out its place within the online
market by investing in different marketplaces such as Amazon,
eBay, Rakuten and NeweggBusiness, in addition to its own website.
The company will soon join the Sears.com marketplace.
The company made its first sales on eBay in 2005. In 2006, it began
selling on Amazon.com. Eight years later, it opened its e-‐‑shop on
Rakuten, before doing the same on NeweggBusiness in January
2015. In parallel, N2Surplus is launching its own e-‐‑commerce site,
N2Surplus.com, choosing the BigCommerce technology platform
because of to its ability to link up with orders generated on the
marketplaces.
-‐‑ 51


It is interesting to note that N2 Surplus does not promote its entire
catalog on all these channels. On eBay, buyers are more likely to be
seeking good deals on used goods. Conversely, N2 Surplus reserves
its new items for Amazon, Rakuten and its own website. On Newegg,
the distributor focuses on IT equipment and automotive spare parts,
two of the Newegg brand's traditional categories.
While many major manufacturers and distributors sell on these

marketplaces initially designed on a B2C model, N2 Surplus is
emblematic of the attractiveness of the model for small and
medium-‐‑sized enterprises. Unlike e-‐‑procurement networks, these
open platforms bring together many SME buyers attracted by the
breadth of the offering, attractiveness of the prices and ease of the
shopping experience. This is a prime audience for medium-‐‑sized
suppliers, who benefit from the simplicity of creating an account on
these platforms.

MARKETPLACES ARE ACCELERATING THE
TRANSFORMATION OF “CLOSED”E-‐‑PROCUREMENT
SYSTEMS
B2B transactional marketplaces are also increasingly important in the

purchasing process of key account buyers. A study by Acquity Group
carried out in 201418 among professional buyers for major
organizations showed that, of all the B2B marketplaces and e-‐‑
procurement platforms, Amazon Supply (now Amazon Business) was
the most popular. According to the survey

18 State of B2B Procurement, Acquity Group, 2014
-‐‑ 52


• 17% of the buyers questioned regularly made purchases on Amazon
Business,
• 38% at least once per quarter,
• and over 34% of B2B buyers began their purchasing process by
searching for products on transactional marketplaces
“The No. 1 reason cited by buyers to justify their choice to purchase on a
B2B marketplace like Amazon is the simplicity of the buying process. In
reality, the purchasing managers of large organizations have an
increasing tendency to look for an online shopping experience that
mirrors the smoothness they are used to on the websites they use as
individuals.”
E-‐‑procurement platforms and solutions providers cannot ignore this

demand. This is why many are developing modules to allow
professional buyers to switch to partner B2B marketplaces from their
e-‐‑procurement interface. Ariba has thus allied with eBay so that buyers
using Ariba Networks can compare prices negotiated with their usual
suppliers to those prevailing on eBay's 'open' marketplace. Amazon and
Oracle recently entered into communication on the creation of a
connector allowing for the same type of purchasing experience.
In addition to comparing prices, buyers can thus order directly from the
marketplace, with the purchase validation handled natively by the e-‐‑
procurement platform in accordance with the validation process
defined in the tool.
Thanks to these technological innovations, e-‐‑procurement systems are

increasingly moving away from being closed ecosystems and opening
up to Web platforms. Thus, the logic of price transparency and instant
stock updates that are now the norm in the world of e-‐‑commerce is
gradually imposing itself upon these platforms.
-‐‑ 53


One question remains: are marketplaces intended to integrate with e-‐‑

procurement tools or will they end up supplanting them? Alibaba has
recently been marketing a module called Alisource Pro to create a
bridge between the marketplace's sourcing activities and the buyers'
information systems... Amazon's recruitment would suggest that the
Seattle giant is actively working on building features and connectors
designed for key account buyers in response to their business needs.
Would the next step be to develop a native e-‐‑procurement
application?...
THE MARKETPLACES' CONTRIBUTION TO B2B

DIGITIZATION AND A NEW CUSTOMER RELATIONSHIP
ENCOURAGING CUSTOMERS TO MIGRATE ONLINE
Several B2B distributors are now aware of the opportunity of selling

direct on the Web, but often encounter difficulties in getting their
customers to migrate away from the paper catalog and telephone
ordering model to their e-‐‑commerce channels. The marketplace can be
a decisive argument to facilitate the digitization of the customer
portfolio: once purchasers have understood that the online offering is
much broader and much more competitive, they will naturally turn to
this channel for all purchases that do not require a personalized sales
process through a member of the sales team.
The marketplace thus allows profitable revenue to be generated from

small accounts that were not previously addressed. The customer
acquisition costs inherent to traditional sales models could once push
retailers to abandon certain market segments where order volumes
were too low. The marketplace allows traditional B2B companies to
win new customers with low acquisition costs, relying on third-‐‑party
-‐‑ 54


vendors to provide a wide and competitive offering that generates

profitable sales whatever the buyers' order level.
Beyond the optimization of costs and the acquisition of new customers,

the migration of existing customers from offline to online will increase
the value and order recurrence of the existing customer base. According
to Forrester19, buyers converted to online purchasing pay more
attention to new products, have a higher purchase frequency and
develop greater loyalty to the distributor brand.
MANUFACTURERS: ADDRESSING THE END BUYER AND

ONBOARDING RESELLERS
The development of e-‐‑commerce has turned the established

distribution circuit on its head, in particular by enabling suppliers to
sell directly to end customers, without necessarily going through
wholesalers or other distribution networks. The brand sites are very
attractive for buyers and manufacturer websites, such as Raja.com,
Bosch or even Massey Ferguson now attract significant qualified traffic.
Confidence in the manufacturer brand has thus prompted over 83% of
B2B buyers to start their product search by directly consulting the
brand sites20.
B2B manufacturers who already use B2B e-‐‑commerce would be well

advised to draw upon third-‐‑party vendor catalogs for products to
complement and enhance their brand offering. Proposing a
complementary offering alongside their own products allows them to
capture the value of transactions which would have taken place on
other channels (and on which they would have earned nothing, even
though they were initiated by purchasing their own products). Raja, a

19 The Case For Channel-‐‑Shifting Offline Customers Online, Forrester 2015
20 State of B2B Procurement, Acquity Group, 2014
-‐‑ 55


leading European player in packaging solutions, already has an e-‐‑

commerce offering extended to attract professionals working in
warehouses. In October 2015, the company announced its plans to open
a marketplace allowing it to increase the depth of its catalog and thus
position itself as the one stop shop for the logistics professions.
In contrast, many brand websites are mere showcases that refer

visitors to online or offline partner distribution networks, settling for a
low-‐‑paying affiliate model when they could capture the value of the
transaction on their own website via the marketplace model. To
increase the monetization of their audiences and allow their
distributors to benefit from the legitimacy of their brand, many
manufacturers have an incentive to offer their partners a turnkey sales
channel on their websites. With this in mind, the automotive industry is
now looking closely at the marketplace model21: leaders such as Ford or
General Motors are studying or about to build their own marketplaces
to put some of the transactions carried out by their network of dealers,
garages or spare parts providers onto a branded e-‐‑commerce platform.
MULTICHANNEL DISTRIBUTORS: CREATING ADDITIONAL

VALUE FOR SUPPLIERS AND THE PHYSICAL DISTRIBUTION
NETWORK
For a distributor, the marketplace can also be a very good tool to
strengthen cooperation links with suppliers. Most B2B distributors
do not source their suppliers' entire catalog, selecting just part of it to
include in their offering. When a distributor opens its marketplace, it
can offer its suppliers an additional turnkey sales channel for all the
products it does not buy from them. The integration of a partner can

21 https://hbr.org/2000/05/e-‐‑hubs-‐‑the-‐‑new-‐‑b2b-‐‑marketplaces/ib
-‐‑ 56


also go further than a simple catalog import. If the supplier has a brand
to promote, the distributor may propose a dedicated sales area on the
marketplace, via a corner presenting its offering under its own brand.
The marketplace can also be an excellent lever to strengthen the

integration of the offering online and via a physical distribution
network. We are witnessing the accelerated convergence of physical
sales and online sales. Buyers now expect a unified offering from one
sales channel to another. The contribution of mobile technology plays a
key role here by making the line between offline and online
increasingly blurred.
It is very interesting to observe, in this context, a growing number of

physical chains, like Staples in the US or Rétif in France, that are
opening marketplaces in addition to their e-‐‑commerce sites. This is
often explained by the fact that, without the contribution of a
marketplace, most of these players would be left to propose an online
offering that would be less significant than that of their physical points
of sale. Through the marketplace model, these physical chains are
seeking exactly the same thing as pure players: to expand their product
offerings and price ranges to meet consumer expectations, at the same
time improving profitability.
In addition, the launch of a marketplace also allows for the creation of
new synergies and shopping experiences. Thus, in some stores, it
becomes possible to place an online order for a product offered by one
of the thousands of partner vendors and have it delivered directly or
pick it up instore. Thanks to the marketplace once again, a physical
store may offer items that have been returned to the store and
repackaged for sale through its own vendor account on the
marketplace.
-‐‑ 57


CONCLUSION
The traditional boundaries of B2B commerce are being completely

remodeled, and marketplaces are the main driver of this
transformation.
• These platforms are the leading disintermediation channel on which

manufacturers and suppliers can sell directly.
• Marketplaces have shaken up the closed systems of e-‐‑procurement
networks by building bridges with business management software.
• They are accelerating the conversion of B2B e-‐‑commerce to the
principles of immediacy and transparency in terms of prices and
product availability.
• They are participating in the creation of integrated ecosystems,
where suppliers and distributors join forces for a broad and
competitive offering on all channels.
Tomorrow's leaders of B2B e-‐‑commerce will be those that manage to

capitalize on this model to stand out from the crowd by meeting the
increasingly demanding requests of B2B buyers.

-‐‑ 58


2.3 … SINCE THEY ARE SOURCES OF GROWTH,

INNOVATION AND PROFITABILITY

TESTING NEW CATEGORIES WITHOUT INCURRING RISK
AND EXPANDING ONE’S OFFERING BEYOND THE
CURRENT PERIMETER
For a B2B vendor, expanding the online catalog and testing or opening
up new product categories is not easy. The right suppliers must be
found, orders placed (initially for a low volume, which is not very
attractive in terms of price), products listed internally, logistics and
storage space developed and the right product sourcing carried out to
be sure of consumer expectations. The opening of a new category
therefore generates significant costs, even before the products are
offered to the customer. Rather than doing everything internally,
opening a marketplace is the only really efficient and cost effective
alternative.
This strategy has been very widely used by the main hybrid
marketplaces. In recent years, when Amazon wanted to open up new
categories for small tools or industrial equipment, instead of
distributing these products itself, it began by entrusting the task to
specialized external vendors. An example of this in the B2C sector is the
Fnac.com marketplace. This European leader in the distribution of
cultural and electronic products used the marketplace model to initiate
its sale of toys and small electrical household items well before they
appeared on the shelves of the physical stores. Less than two years
later, the new categories tested on the Marketplace accounted for
2.3 … Since they are sources of growth, innovation and profitability -‐‑
59


almost 11% of the group's total turnover (€390 million out of a total
turnover of 3.89 billion Euros22).
This demonstrates the effectiveness of a marketplace as a solution for

extending the offering of a company operating in e-‐‑commerce and
allowing it to open up other product categories. But, the benefits of the
model are not limited to the products it does not have in its catalog.
Some hybrid operators allow third-‐‑party vendors to sell products that
the operator is also selling. For example, on Amazon Business, a
customer can purchase a barcode scanner either directly via the
Amazon offering or via a marketplace vendor, whose prices are visible
on the same product sheet.
Why would a company be interested in allowing other vendors'

products to appear on its product sheets?
• Firstly, this allows for effective management of potential shortages

of stock. If the operator does not have the product in stock, the
customer can turn to other vendors who do stock it, rather than
going to a competitor. The essential point here is that, from the
customer's point of view, the shopping experience and security of
the transaction remain the same. For a customer, buying from a
third-‐‑party vendor is the same thing as buying from the operator.
We buy on Staples.com, not on vendor ABC.
• It is also possible that the vendor will have more favorable supply
conditions and therefore may prove more competitive whereas, to
do the same, the operator would have to cut back on its margins too
much. The Marketplace thus also allows the operator to concentrate
on sourcing products with a higher level of rotation and good
purchase conditions, thus giving it greater room to maneuver
economically for the development of its site.

22 FNAC, Annual Report, 2015
60


• Finally, thanks to the marketplace, products that are no longer

manufactured, or limited edition and will therefore no longer be
replenished by the operator, remain available. Professional vendors
will take over from the operator in offering these products, either
new or used.
The choice and availability of the products showcased are critical

issues. A buyer who cannot find his desired product, or is told that it is
no longer in stock, is a disappointed visitor and represents a missed
sales opportunity. Above all, this customer is very likely to find his
chosen product elsewhere on the Internet, and may well make this
competitor website his first port of call in the future. By setting up its
marketplace, a hybrid operator can limit these problems of choice and
availability.
The marketplace can also be a great testing tool for a business wishing
to enter new markets beyond its existing geographical scope. A
company that provides building contractors could thus decide to extend
its geographical coverage and begin by relying exclusively on an
existing network of local vendors. This opportunity is great on B2B
markets, where nearly two thirds of businesses make less than 10% of
their income outside their national markets23. In areas where several
companies are targeting niche markets, many vendors see international
markets as key growth drivers, with marketplaces already representing
a significant business channel.

23 Digital is busy transforming B2B e-‐‑commerce, Forrester, 2015
61


OFFERING A 'CUSTOMER CENTRIC' BUYING

EXPERIENCE
By expanding its catalog, an e-‐‑tailer will be able to finely segment its

website audience to offer a specific product to a particular buyer.
Customizing offers and recommendations, a technique that has already
been used for a long time in the B2C sector, is now popular with B2B
buyers24. An obvious example here is Amazon's recommendation
algorithms which, according to the company, accounted for nearly 35%
of sales on the platform in 2006.
The WeMarket marketplace has made customization a key element of

the user experience. Founded in 2015 in Holland, the platform positions
itself as a generalist, connecting international suppliers with buyers
from all countries. According to its founder, Gis van den Broek, the
strength of this marketplace lies in its “ability to finely customize the
search engine results and the navigation experience based on the
information entered when customers open an account and on the
purchase history (...). If you are a retailer of big name fashion and
accessories, you will see only the best vendors from major brands in
your geographical sales area.”
As for its vendors, WeMarket provides extensive information on the

markets with the strongest appetite for their products, thus inviting
them to prioritize the geographical areas where demand is
concentrated. The platform also makes recommendations on targeting
niche markets where buyers may not yet be very active, but where data
models suggest a strong tendency to buy their products.

24 Building The B2B Omni-‐‑Channel Platform Of The Future, Accenture-‐‑hybris,
2014
62


B2B buyers are very sensitive as regards the completeness and

relevance of content provided to them to guide their purchasing
decisions. Of the 83% of B2B buyers who say that they initiate their
product search on their suppliers' website, 37% said that the low level
of information often pushes them to make their purchase via another
channel.
Content management and customization is key, and the issue goes far
beyond mere automatic recommendations. Content can also be
produced by third parties through marketplace aggregation. Drawing
on the expertise of vendors also means giving them the tools to enable
them to better address the customer's need for product information.
Many B2C platforms, such as Auchan in France, rely on their 'expert'
customers to assist 'novice' customers in their purchases using click to
chat tools. One can well imagine similar devices being used to allow
vendors with a degree of expertise on specific categories to generate
content to assist buyers with their shopping experience. The
marketplace delegation model is thus no longer restricted to the sale in
itself, but impacts upon all steps in converting a prospect into a
customer.
In B2B, even more than in B2C, differentiation by services is essential.
Indeed, a vendor's specialization will often extend beyond its ability to
sell at the best price with a speedy delivery time. The acquisition of
industrial equipment or large tools often goes hand in hand with
particular needs in terms of installation or maintenance. Here, the sale
of additional services via a marketplace, linked to a specific product,
comes into its own. This allows for a better response to the demands of
buyers within specific markets, such as ventilation equipment and air
conditioning, car maintenance or hotel and catering equipment.
63


Distributors such as W.W. Grainger and MSC Industrial Supply have

succeeded in differentiating themselves from Amazon online by
offering additional installation, configuration and maintenance services
when heavy equipment is purchased. In a marketplace context, vendors
are able to stand out from the crowd and thus increase their sales by
offering additional services related to a product sold on the site.
Another example, in a different area, is that of the generalist
marketplace DHGates, which has on-‐‑the-‐‑ground teams at its buyers'
disposal to verify the goods purchased from suppliers via the portal.
Certification and inspection services are often provided by third parties
that are part of the marketplace ecosystem. In the case of DHGate, this
service is provided by the operator itself, making it a pivot of its
differentiation strategy.
GENERATING PROFITABLE GROWTH BY SHARING THE

COSTS OF E-‐‑COMMERCE
POOLED MARKETING INVESTMENTS
The concept of cost sharing is a central issue and poised to become

increasingly more important. B2B online selling is largely a traffic
generation business: SEO (both natural and at a cost), affiliation,
advertising, social networks... a high level of performance in all these
areas is necessary in order to attract enough visitors to the website and
convert them into buyers.
In a hyper competitive environment where the biggest players are just

a click away from the smallest, traffic acquisition becomes more and
more complicated and expensive. Featuring among the best audiences
can take years and requires considerable resources. Once an audience
has been secured, maintaining it also requires significant investment.
Even for small vendors aiming for qualified rather than mass traffic,
64


appearing at the top of the search engine lists is becoming more

difficult.
Looked at in this light, the pooling of marketing costs becomes almost
an obligation. By opening a marketplace, a B2B vendor provides other
vendors with visibility and shares the cost through the commission
made on each sale. This allows it to maintain its traffic growth
momentum. It is generally risk-‐‑free for the third-‐‑party vendors, since
they only pay if they sell, and risk-‐‑free for the operator, since the
marginal cost of an additional vendor is almost zero.
POOLING TECHNICAL INVESTMENTS
This cost-‐‑pooling logic equally applies to technical costs. Thanks to a

range of specialized software and tools, having one's own e-‐‑commerce
platform is much cheaper than it was a few years ago. It nevertheless
requires a high level of customization, security and traffic spike
absorption, which still generates significant costs.
Although there are turnkey website creation tools suitable for small e-‐‑
commerce ventures, any business aiming to generate a higher level of
turnover really should invest in the creation of a website that
corresponds to its needs and the specific experience it wishes to offer
its customers. Opening a marketplace in addition to the e-‐‑commerce
site allows these investments to be pooled by enabling third-‐‑party
vendors to benefit from a turnkey sales channel for which substantial
technical investments have already been made.
On several Marketplaces, vendors must pay a monthly subscription to

benefit from the status of professional vendor and, above all, access
advanced business management tools. This facilitates the management
of various aspects of the sales cycle: orders, deliveries, product returns,
accounting, etc.
65


ALLOCATING RESOURCES TO PRODUCTS WITH A HIGH

MARGIN RATE
The marketplace model allows for full online management of customers
to whom it would not be profitable to dedicate sales resources. In
addition, it can be used to delegate the sale of non-‐‑strategic products,
which it would not be profitable to source, to third-‐‑party vendors. The
purchasing department can thus focus on sourcing the 'bestvendors',
with a high margin rate, while the sales teams can focus on supporting
strategic accounts requiring personalized attention.
AN EXTREMELY PROFITABLE MODEL
It is thus very much in the operator's interest to have strong, scalable

technology that will be key in the development of its partner vendors'
business and thus directly impact upon their margins. Indeed,
compared to traditional online sales, the revenue generated by
marketplace activity has a very high margin. Financial analysts estimate
that the margins related to Amazon's marketplace activities are around
90%, compared to a 5% margin on direct sales. While the revenue
generated from its marketplace still remains below that generated by
its own sales, its share is increasing significantly every year. In 2014,
46% of items sold were from the marketplace and the announcement of
sales of more than 1 billion products on the marketplace in 2014 shows
that this trend is likely to continue25.
The marketplace thus allows for additional revenue to be generated,

which impacts positively upon the prices of products sold by the
operator. Amazon can offer lower average prices than its competitors

25 https://www.internetretailer.com/2015/01/06/amazon-‐‑marketplace-‐‑sales-‐‑
double-‐‑2014
66


thanks, among other things, to the high-‐‑margin revenue generated by

its Marketplace.
All these reasons explain why launching a marketplace is becoming

increasingly essential for B2B players, whether they are distributors
with sales points or a franchise network, wholesalers or even
manufacturers, to whom this new channel offers tremendous
possibilities.

67


3. LAUNCHING A B2B
MARKETPLACE: CHALLENGES AND
BEST PRACTICES
3.1 5 ESSENTIALS PILLARS
The success of a marketplace is based on five pillars:
• Traffic flow
• Product mix
• Legal framework
• Sales and communication cycle management tools
TRAFFIC FLOW
The attractiveness of a platform very much depends on the volume and

quality of the traffic it creates. The more visitors, the more transaction
opportunities there will be. The marketplace provides vendors with an
additional sales channel that gives them a visibility they would not
always be able to build themselves.
Appearing on Amazon means being visible to millions of potential

customers (Amazon serves over 19.5 million customers worldwide
every day). To create traffic on their websites, e-‐‑merchants must spend
time, money and have SEO expertise. By entering a marketplace, they
can defer these tasks to the operator, whose aim is to guarantee his
vendors a significant level of qualified traffic.
3.1 5 essentials pillars -‐‑ 68


The extent of the traffic generated by the operator must be considered
in relation to the size of the market in question. Thus, a leading e-‐‑
commerce website in its market does not necessarily need a traffic flow
of a million single visitors to operate a marketplace. Similarly, a
company with a strong brand, real business expertise and a very good
relationship with potential vendors can also open its own marketplace.
PRODUCT MIX
It is the operator who defines the 'editorial' or commercial line of

his marketplace (vertical or generalist) and hence the products or
services to be sold there.
He must determine:
• Which products are authorized on his marketplace

• How the offerings will be made visible
• The rules for setting prices
WHICH PRODUCTS ARE AUTHORIZED ON HIS MARKETPLACE
This decision depends chiefly on the operator's aims. On eBay, the

restrictions are almost nonexistent. Vendors can sell virtually anything,
from traditional objects, such as computers or toys, to the most unusual
items.
On real marketplaces like Amazon or Staples, the situation is different.
Both operators define precisely which products can be sold. They
maintain full control of their catalog and product mix.


There is another parameter to be taken into account. The nature of the
operator, whether hybrid or pure player, will determine how he
approaches the issue. A pure player is only an intermediary and is
therefore not competing with vendors. As for hybrid operators, the
challenge is to determine their degree of openness. Thus, on Amazon or
Staples, vendors can submit articles already sold directly by the
operator, whereas Grainger or MSC Industrial Supply only authorize the
sale of goods that they do not offer themselves.
These choices depend on the operator's strategy, aims and

constraints.
HOW THE OFFERINGS WILL BE MADE VISIBLE
It is again the operator who sets the rules that will govern the
prominence of offers on the marketplace and thus their visibility. On
Amazon or Staples, proposals from third-‐‑party vendors are directly
visible on the product sheets. Navigation is organized by product, like
on a traditional e-‐‑commerce site. Everything is done so that visitors can
buy as easily as possible from any vendor, provided they meet the
criteria set by the operator, including the quality of service and price
levels. Other operators use the model of the classifieds sites – one
product sheet per vendor offering. Thus, users searching on Amazon
Business for a 'Bosch drill' will get a single product sheet grouping
together all the vendor offerings whereas on eBay, for example, the
same search will generate as many web pages as there are vendors,
potentially several hundred.
As regards the product sheets themselves, two approaches are possible:
• Either vendors create their own product sheets, which may then be
submitted for validation by the operator,


• Or they enter their information within a framework created and

imposed by the operator.
On vertical platforms, it is often the vendors who create their product

sheets from scratch (descriptive and visual). The operator is often
constrained by the way the vendors list their products. This of course
requires him to strike the right balance between trust and vigilance.
Operators like Amazon already have catalogs containing numerous

product sheets with varying degrees of information. Nevertheless, they
all communicate a minimum level of information: the product name, a
description, visuals... This compulsory basic framework is there to
ensure that consumers have structured information and a uniform
shopping experience, regardless of the vendor.
THE RULES FOR SETTING PRICES
The prices of products sold by vendors on a marketplace may also be

subject to certain rules. On Amazon, vendors are not permitted to sell
their products at a higher price than on other platforms – this is the
'price parity' rule. Caps are also imposed to avoid possible scams.
Regulating the way in which vendor offerings are promoted is

extremely important on a marketplace. Through this arbitration, the
operator can adjust supply and demand and, above all, maintain the
right balance, for the benefit of the buyer first and foremost. If the
operator does not have a product in stock, it should be easily accessible
via another vendor.
An important feature of B2B transactional marketplaces is a quantity-‐‑

based pricing system. Allowing for discounts related to volume is an
essential feature of product categories where order volume can be very
large.


On the matching marketplaces, pricing is usually based on negotiations

between the buyer and the supplier through a quotation request and a
series of commercial exchanges. The operator therefore exerts no direct
constraints on pricing. In contrast, platforms such as Alibaba allow
buyers to gauge their performance by comparing the prices they
negotiate with the average market prices for the relevant product
categories.
LEGAL FRAMEWORK
E-‐‑commerce, whether B2B, B2C or C2C, is regulated. The operator's

task is therefore also to ensure that transactions carried out via his
marketplace comply with all the legal provisions. However, not all
marketplaces have the same level of legal stringency.
Industry-‐‑oriented B2B marketplaces (chemicals, metallurgy, etc.) are

particularly well regulated: transactions concerning 'sensitive' products
have much tighter controls both in terms of contract types and the
labels or certifications required to sell or buy. Suppliers and buyers
must prove their pedigree before they can exchange on these spaces.
Operators who failed to meet these requirements at an early enough

stage have experienced difficulties, because it is precisely this legal
framework and this trust that are most difficult to create and maintain,
especially when the vendors are very small businesses. It is indeed
increasingly difficult to impose these requirements because of the lack
of regularity in the business relationship. eBay uses a rating system -‐‑ a
feature that is often taken up by other marketplaces, whether B2C or
B2B. Again, vendor evaluation criteria are essential elements in the
marketplace operator's strategy.
The legal aspect is certainly something to be considered, since it is a

way of generating trust among buyers. It also helps operators to


ensure that their own business activities are secure. Professional

vendors, even on an international level, must, for example, accept a
contract and terms of sale on the marketplaces that commit them to
respecting French legislation. It is important for the Terms and
Conditions of Sale and the Conditions of Use of the Marketplace to
stipulate the operator's role as hosting the website, or as a technical
provider, rather than editor. In the latter case, he would indeed be
obliged to control a number of elements inherent to vendors which he
would be unable to view.
COMMUNICATION AND SALES CYCLE MANAGEMENT

TOOLS
COMMUNICATION TOOLS
Communication between buyers and vendors, whether in an advisory

context before the actual purchase, or as part of the after-‐‑sales or
hotline service, is an integral part of the commercial sales cycle in
commerce and e-‐‑commerce.
Marketplaces are no exception to this rule. They all offer tools

dedicated to communication between buyers and vendors. These
can be real success factors, creating reassuring conditions throughout
the purchasing process, from pre-‐‑sale to post-‐‑sale. Their
comprehensiveness also speaks volumes about the operator's strategy,
including the visibility he wishes to give third-‐‑party vendors.
These tools are found in various forms: messaging, chat, telephone

hotlines, Skype, etc. Whatever the tool, the operator must retain
control and be able to trace the exchanges so that he will always be
able to play his role as intermediary in the transaction and during the
entire sales cycle.


SALES CYCLES MANAGEMENT TOOLS
Whether the customer is, for example, on Amazon or Staples, he can

make purchases from multiple vendors without having to repeat the
payment transactions. Once his cart is full, he pays for his purchases in
a single transaction and it is the marketplace operator that
redistributes the respective amounts to the various vendors. Again,
trust is important: the operator must have an efficient and secure
platform to manage all financial flows and compensations between
buyers and vendors.
• Almost all of the major marketplaces include a stock management

module in the vendor dashboard. This will show the initial stock and
update it in real time during customer orders. Some features even
provide alerts when stocks fall below a certain level. On the most
advanced platforms, vendors also benefit from solutions that inform
them of the state of stocks across all the sales channels on which
they are active, including the marketplace. This allows them to have
an updated inventory in real time, integrated with their own
information systems. Certain operators, like Staples, offer reporting
tools that give vendors a greater level of control of their business.

• The operators also support vendors in monitoring their
transactions, from shipping of the products to their receipt by the
customer. In some cases, they also help with the resolution of
disputes and complaints. The customer will need to be able to access
the status of his order whatever vendor he uses and trace the parcel
until he receives it. Once again, it is up to the operator to facilitate
this. Reliability is critical at this stage. This will ensure that
everything goes well for both the vendor and buyer, and that
everyone has the information required for a smooth transaction
from beginning to end.


• The possibility of generating bulk orders (thus avoiding the tedious
process of selecting all the products on the distributor's website),
easy order renewal for recurring purchases, promotion of the
customer services available and purchasing guides or advice to
inform the customer on occasional purchases, will all be additional
conversion assets.
Beyond the services facilitating the various stages of the sales cycle,
some operators are choosing to offer additional service 'bricks' outside
of the marketplace perimeter: the Kinnek marketplace has thus
increased the number of tools to optimize the management of large
volumes of transactions and contracts on its platform. Once an SME is
familiar with these tools, the likelihood of it using other channels for its
supplies decreases.
This strategy, which consists of providing transaction management

tools, is particularly effective as a lock-‐‑in lever designed for small
account holders that do not have the time or resources required to
manage a wide variety of purchase and sale channels. One cannot help
but draw parallels with the breakthroughs made by the major
generalist marketplaces, such as Amazon and Alibaba, in entering e-‐‑
procurement systems by offering integration bricks designed for key
account holders. Integration in a company's management process
becomes synonymous with customer retention.



KINNEK -‐‑ MANAGEMENT TOOLS GENERATING

INCREMENTAL GROWTH
This marketplace, launched in 2012, connects restaurants and other

small businesses with specialized equipment and consumables
suppliers. According to its CEO, Karthik Sridharan, the volume of
business generated by the marketplace exceeded 100 million dollars
in the 2015 fiscal year. The platform brings together nearly 20,000
purchasing companies and more than 2,000 suppliers, mainly in the
US, and, in November 2015, had raised over 20 million dollars. The
funds raised are to be used in part to develop new sales cycle
management and procurement tools. For a marketplace like Kinnek,
the ability to 'lock in' its vendors and buyers by developing sales
cycle management functions is key.
Many vendors appreciate the platform's functions and user

experience and have asked to be able to make their own purchases
on the platform. This is now leading Kinnek to open up new
categories related to agricultural equipment for small farms,
electronic components for industrial SMEs and food processing
equipment used by bakeries.
It is interesting to note that this range expansion strategy derives

from an endogenous growth dynamic: the buyers for these new
categories were also the first to join as vendors within the
platform's historical categories. Karthik Sridharan gives the example
of the bakeries that initially provided bread for restaurants and
have now become customers of specialized equipment, or even the
wine producers, who are now buyers in the viticulture equipment
category.


PAYMENT
In a context of trade in goods and services between buyers and vendors
from different continents, the question of financial transactions is very
sensitive for operators. Security and trust are among the most
important criteria for Internet users when making a purchase on an e-‐‑
commerce site.
It is up to the marketplace operator to demonstrate that he has built a
safe environment for banking transactions and that it is he who records
the transactions.
To address this issue, the operator can pose as a 'trusted third party'
intermediary between the buyers and vendors. He cashes the
transaction via his payment system, performs bank checks; then, when
the product has been sent, transfers the funds to the vendor.
Reinsurance and the role of 'trusted third party' have led some
operators to commit to paying the vendor only once the customer has
validated the transaction's compliance. Otherwise, he may go as far as
to reimburse the customer, thus strengthening his image as guarantor
of the quality of service, in addition to security.
From a technological point of view, operators choose to use either

existing payment systems, such as Stripe or Braintree or, in rare cases,
develop their own solution, as is the case for Amazon with Amazon
Payment or AliPay for Alibaba.
Some operators, like Amazon Business, offer a credit line service for a
company and the various buyer accounts linked to it.
Adopting the payment system embedded in the marketplace can be a

relief for both vendors and buyers. For a vendor, having to manage a


payment solution remains a source of complexity and expense, with

fraud management, data security, the various means of payment (credit
card, American Express, PayPal), etc. As for customers, they may not
know the reliability or quality of the monitoring offered by the
marketplace vendors. Going through the operator's payment system
gives them greater protection. The transaction will be smoother and
they will have the possibility of appealing in the event of a dispute.
This is also one of the fundamental interests of a transactional

marketplace: increasing the number of products in one cart, from
multiple vendors, at the same time ensuring a smooth and integrated
shopping experience through a single cart and a single payment.
The context is a little different for matching marketplaces. The nature of
the transactions, which can involve complex payment modalities,
means that the role of trusted third party in the payment process may
be delegated to a specialized third party, or escrow service.
THE IMPORTANCE OF THESE FIVE PILLARS
To attract the public to their pages, marketplaces must offer many

services. Operators will therefore cover a wide spectrum of
business roles, ranging from software solution providers (stock and
order management, messaging tools, APIs) to financial bodies (payment
system), and trusted third parties in the legal framework.
Of course, not all marketplaces offer the same level of service, and there
is no obligation for them to cover all areas of e-‐‑commerce.
Nevertheless, we find that those based on the five pillars provide the
best shopping experience and are most successful.


3.2 ESTABLISHING GOOD ORGANIZATION
When a company decides to set up a marketplace, it must be aware that
this will structure its whole e-‐‑commerce ecosystem, and will therefore
also change the organization of and relationship between its various
departments: procurement, sales, marketing, accounting and finance,
customer service, logistics and technology. Significant organizational
issues will impact upon all the company's business areas.
These organizational changes may take many forms. Below are just a
few examples:
PROCUREMENT
In a hybrid model, the integration of a marketplace could be an

opportunity for the operator to change his procurement strategy. He
will henceforth be able to offer more products and, eventually, more
competitive prices. His procurement center might take this opportunity
to focus on the products with the strongest rotation and best margins
and leave the long tail to third-‐‑party vendors.
COMMERCIAL COORDINATION
With the explosion in the number of items listed, the operator must
choose which of these he will bring to the fore. This implies really
bringing on board the teams in charge of merchandising as part of the
marketplace strategy. In the case of a pure player marketplace, the
operator will naturally have less control of stock and prices. This should
not, in any way, prevent him from having an extensive merchandising
strategy. However, the promotion and coordination capabilities will be
different.
3.2 Establishing good organization -‐‑ 79


MARKETING STRATEGY
The operator will find himself, for example, having to manage keywords
campaigns potentially including many more products. Customer
acquisition strategies and presence on search engines and price
comparison websites must take into account the fact that the operator
does not necessarily control the quantity of products offered or their
prices.
ADMINISTRATION AND FINANCE
A marketplace requires the setting up of an accounting and financial

flow system able to synchronize the indicators coming from the
platform (sales, invoicing) with the transfers to be made to the vendors.
The vendors' cash flow will depend on the accuracy of the
marketplace's procedures and the power of its financial management
tools.
CUSTOMER SERVICE AND CALL CENTER
Buyers who visit the marketplace do so because of its brand, its values
and what it conveys. Customer service is of paramount concern, even
when it comes to goods offered by third-‐‑party vendors. The operator is
a service quality guarantor and should therefore ensure the proper
integration of the marketplace sales processing and after sales service.
This requires the customer service teams to be provided with the right
tools allowing them to have as complete a view as possible of the whole
sales cycle.
LOGISTICS


If the operator is an e-‐‑tailer himself, the marketplace may prompt him
to adapt his business. It will give hybrid operators the flexibility to
choose the products they will stock and ship themselves, and let other
specialized vendors handle the logistical problems for product lines
falling outside of their expertise. A hybrid marketplace operator in the
world of industrial machinery could decide not to stock products which
are very specific to certain industries and complicated to manage
logistically and to rely solely on a network of specialist vendors, who
will be delighted to use this sales channel to market their products.
Where an individual customer in the private sphere might be seeking

fast and/or free delivery at all costs, a professional buyer will know the
limitations of the trade and accept longer delays due to complex
logistics. The professional will nevertheless be looking for impeccable
order preparation, the ability to palletize the order and multiple modes
of transport tailored to specific countries in the case of international
orders.
The operator will be able to offer to optimize the buyer's order before
the cart is validated, enabling him, for example, to set the delivery
terms and deadlines -‐‑ criteria that are essential in some trades. A
building contractor might want to anticipate his supplies of electrical
wiring for a certain site, scheduling a precise delivery date related to a
particular stage of completion.
Hybrid marketplace operators also have an incentive to share the costs
of their logistics infrastructure by allowing their vendors to benefit
from it. Through its FBA (Fulfillment by Amazon) service, the US giant
offers logistics solutions to its third-‐‑party vendors. Any vendor can
benefit from Amazon's warehouses, which will handle not only their
storage but also the delivery of products when an order is placed. The
strong success of this service was highlighted by 65% growth in 2014.


The pooling of these expenses results in a virtuous circle: shared costs
mean higher margins that allow for a reduction in prices and thus an
increase in sales, and so on.
In a 2015 report, analysts at Kepler Cheuvreux estimated that FNAC's

gross margin rates on marketplace sales could increase by 15 points,
from 80% to 95%, if the retailer allowed the third-‐‑party vendors on its
marketplace to benefit from its logistics infrastructure.
CONCLUSION
These examples demonstrate how the whole of a company's business is
impacted by the launch of a marketplace. It is therefore essential to
fully understand these organizational changes ahead of time.
• To achieve this, the company needs to focus on several critical

factors: the quality of the technical platform,
• effective and proven methodologies,
• a strong will to complete the project at the highest level of the
company.  
Organizational changes are such that many business areas may come
into conflict with each other at the operational level. The team in charge
of overseeing the creation of the marketplace must be extremely
vigilant and ensure that its work does not create any conflicts, which
requires the full support of the management team. We must never lose
sight of the benefits a marketplace can bring: increased sales, turnover,
margins. But this success can only be achieved when all company
players are on board.


3.3 SUCCEEDING WITH THE TECHNICAL PROJECT

QUALITY AND METHODOLOGY
The quality of the technical platform is closely linked to successful

change management for all the company's business areas. If the
technical platform is inefficient for marketplace vendors then it will be
difficult for the person in charge of recruiting and coordinating the
vendor community to increase the offering from vendors.
Similarly, if the platform does not allow for effective viewing and
monitoring of business indicators (sales, transactions, customer
feedback, etc.), the sales team will be less enthusiastic to take on new
ways of working.
The same problem arises within the procurement, finance and

technology departments: if the technical base is not flexible enough to
adapt and interface with the existing tools, there will be more
psychological barriers to be overcome before the platform can be
accepted.
The right choice of technology must be accompanied by good

integration methodologies. Technical and operational experience in
setting up a marketplace is a crucial advantage when conducting these
kinds of organizational changes. Nothing replaces experience in the
deployment of a marketplace.
CATALOG INTEGRATION TOOLS
Catalog integration is an essential aspect of any marketplace project.

The use of an effective tool allows the operator to guard against the
risks of
3.3 Succeeding with the technical project -‐‑ 83


• vendors turning away from his platform because of the difficulties

they face in presenting their offering,
• having to deal with inconsistent data, which will compromise the
browsing experience for the end buyers.
It is essential for vendors to be able to quickly integrate their catalog

through a flexible and intuitive integration process. This vendor
experience must nevertheless be sufficiently signposted and secured
for the operator to ensure the consistency of the incoming data flow.
The role of the tool is thus to effectively handle heterogeneous
incoming information (in presenting their offerings, different vendors
might use different names for the same product) and guarantee
navigation consistency (all vendor offerings for the same product
should be collated on the website in the same product sheet).
Since marketplace business is one of volume, the operator will need to
manage hundreds or thousands of vendor catalog imports, presenting a
very large volume of products. Automating this catalog integration is
therefore imperative.
FLUIDITY OF INTEGRATION
The impact of marketplace integration occurs at all technical levels: the

front, middle and back end.
• The front end, because intelligent visibility must be given to third-‐‑

party vendors
• The middle end, because all these new products and the associated
data need to be managed effectively
• The back end, to manage all the transactions between vendors,
customers and the operator


The characteristic of a good platform is to facilitate this integration

without undermining the existing information system, but rather
connecting to it intelligently. The system should take into account all
levels (front, middle and end), so that the marketplace is not just a tab
or a set of separate functions on the merchant site, but stems from in-‐‑
depth integration of all the processes related to the e-‐‑commerce
business.
As such, the choice of technological base for the marketplace is

crucial.



CONCLUSION
Marketplaces were at the heart of B2B e-‐‑commerce from the onset, and
they are currently powering its growth. Although B2B players seized
upon this model early, the cultural revolution it represents comes first
from the B2C space. By redefining the standards of the online shopping
experience and reshaping buyer expectations, B2C e-‐‑commerce leaders
have accelerated the conversion of B2B e-‐‑commerce, forcing them to
embrace the principles of immediacy, price transparency and
availability. The online success of B2B vendors now depends on their
ability to aggregate all the offers of interest for buyers, at the best price,
with high quality service.
That is what the Marketplace model does, by connecting B2B buyers

and sellers of goods and services on the same space, efficiently, to give
them the most complete and competitive selection in an organized and
secure environment. Disintermediation ensues, creating value for every
party concerned: operators, sellers, buyers.
By federating the offers of a multitude of vendors, a marketplace

maximizes inventory while shortening deadlines without
compromising on service quality. Be they generalist or vertical,
operated by a hybrid operator-‐‑seller or a pureplayer, marketplaces are
an inevitable development, whether in physical goods or in services.
The benefits provided by a marketplace are multiple and support a win-‐‑
win-‐‑win logic:
• The operator gets more products, less stock, shared costs, and better
integration of his partners.
• The B2B seller gets more customers, less investment and a
controlled supply.


• B2B buyers get more choices at better prices, and a secure shopping
experience.
We have seen in this book that launching a successful marketplace

entails strategic, business and technical challenges that must be
addressed successfully. Management's commitment is paramount to
mobilize teams and harmonize the positions of the various
departments.
But the key success factor remains the quality, performance and
scalability of the technical platform; it must be conceived both to
service all business departments (purchasing, marketing, sales, finance,
customer service, etc.), as well as vendors (import offer, order tracking,
customer service, etc.) and buyers (security, trust, monitoring, etc.).
Mirakl (www.mirakl.com) was created by e-‐‑commerce experts who

have conceived and operated leading marketplaces for the past decade,
such as Fnac.com, one the leaders in the French market. To meet the
development challenges of a marketplace, Mirakl helps its customers
strategically, technically and operationally.
The technical solution developed by Mirakl, Mirakl Marketplace B2B

Platform ©, has been designed to allow the quick and simple launch of a
robust and scalable marketplace. It contains all the application bricks
necessary for the functioning of an efficient marketplace.
Mirakl has been chosen by major B2B players (Auchan Pro, Rétif), e-‐‑
commerce leaders (Mistergooddeal, E-‐‑price, MedicAnimal) and
distributors (Best Buy, Woolworth, Darty, Galeries Lafayette, Auchan
Group), as well as media and telecom players (Conde Nast, The
Beautyst). Our clients’ teams benefit from Mirakl’s knowhow and
expertise, as well as regular updates to its technology, which anticipate


the many evolutions of ecommerce (mobility, social, cross-‐‑canal,

virtual).



THEY TRUST US:




Philippe Corrot and Adrien Nussenbaum
in collaboration with Jean-‐‑Marie Fouquet
December 2015



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Several factors explain this migration of B2B buyers towards e-­‐‑

Like B2C e-­‐‑commerce, the growth of B2B e-­‐‑commerce is already driven

1.1 B2B marketplace: definitions and models -­‐‑ 5

Distributors and manufacturers cannot ignore this phenomenon,

This format would appear to meet the strategic objectives of

1.1 B2B marketplace: definitions and models -­‐‑ 6

starting their own marketplaces. Improving service, differentiating the

However, operating a Marketplace is a new profession and there are

To take this further, we created the company Mirakl with a view to

1.1 B2B marketplace: definitions and models -­‐‑ 7

1. MARKETPLACES AND B2B: A

An electronic marketplace is a secure online space where buyers and

The main selling mechanisms found on marketplaces:

1.1 B2B marketplace: definitions and models -­‐‑ 8

This model was predominant on B2B marketplaces in the late

PROCUREMENTS MODELS AND MARKETPLACE MODELS

B2B marketplaces are platforms on which manufacturers, suppliers,

The great promise of B2B marketplaces is to simplify everything

By centralizing supplier offers and company demands on a single

1.1 B2B marketplace: definitions and models -­‐‑ 9

The B2B marketplace is not only a framework offering unprecedented

We can distinguish between two major types of B2B marketplaces

• Matching marketplaces, where the main value offered is through

SOURCING AND MATCHING MARKETPLACES

• The products are usually purchased from providers subscribing to

1.1 B2B marketplace: definitions and models -­‐‑ 10

• The contractual negotiations can be complex and require a

The role of the marketplace is to offer services that optimize the

Certification systems can be very sophisticated. On the Global Sources

1.1 B2B marketplace: definitions and models -­‐‑ 11

Among the main matching marketplaces, there are several platforms

• Alibaba.com: the largest B2B marketplace, initially specializing in

But suppliers from other continents also have their spaces:

• Kellysearch and ThomasNet: the most important marketplaces for

1.1 B2B marketplace: definitions and models -­‐‑ 12

• ExoportPages: a German marketplace for the European market

Many sourcing platforms have also emerged, specializing in specific

• Wabel sourcing: specializes in sourcing white label products

So-­‐‑called transactional B2B marketplaces are closer to the 'off the

1.1 B2B marketplace: definitions and models -­‐‑ 13

quality of service, delivery time and prices are in line with

The canonical example of a transactional B2B marketplace is Amazon

Staples' marketplace is also at the core of developments. Launched in

Transactional marketplaces are not only emerging in the wake of the

Whether generalist or vertical, these marketplaces share a capacity to

• A comprehensive product catalog covering their whole brand

1.1 B2B marketplace: definitions and models -­‐‑ 14

1.2 MARKETPLACES AND B2B: 30 YEARS OF

The idea of bringing together buyers and vendors in a controlled

1.2.1 INNOVATING TO REDUCE TRANSACTION

The development of computerized data transfers, also called EDI

data in their information systems, without the use of paper or human

EDI significantly reduced transaction costs by strengthening the

1.2.2 THE REVOLUTION OF THE 1990S

Shortly afterward, in 1991, the NSF (National Science Foundation)

EBAY: THE B2B MARKETPLACE LEADER

Paradoxically, it was through a B2C channel that companies first

That was Omidyar's 'eureka' moment. The power of the Internet

Omidyar then launched his website, AuctionWeb, for private

The website quickly becomes a crossroads and is fast emerging as a

Leading industrial players like Motorola, IBM, Hewlett-­‐‑Packard and

Unlike the scores of B2B marketplaces that failed to survive the

THE “MARKETPLACE BUBBLE” OF THE LATE 1990S

Several factors explain this migration of B2B buyers towards e-‐‑

Like B2C e-‐‑commerce, the growth of B2B e-‐‑commerce is already driven

1.1 B2B marketplace: definitions and models -‐‑ 5

1.1 B2B marketplace: definitions and models -‐‑ 6

1.1 B2B marketplace: definitions and models -‐‑ 7

1.1 B2B marketplace: definitions and models -‐‑ 8

1.1 B2B marketplace: definitions and models -‐‑ 9

1.1 B2B marketplace: definitions and models -‐‑ 10

1.1 B2B marketplace: definitions and models -‐‑ 11

1.1 B2B marketplace: definitions and models -‐‑ 12

So-‐‑called transactional B2B marketplaces are closer to the 'off the

1.1 B2B marketplace: definitions and models -‐‑ 13

1.1 B2B marketplace: definitions and models -‐‑ 14

Leading industrial players like Motorola, IBM, Hewlett-‐‑Packard and

LIQUIDITY CRISIS AND SHIFT TO E-‐‑PROCUREMENT

ARIBA AND THE E-‐‑PROCUREMENT NETWORKS

• The e-‐‑procurement platforms respond first and foremost to issues

Index Venture invests heavily in marketplaces, both for product-‐‑

The firm iResearch estimates Alibaba's Chinese e-‐‑commerce market

Although Jeff Bezos' intuition about opening up to third-‐‑party

The third-‐‑party vendor catalog has significantly increased the number

According to Scot Wingo, CEO and co-‐‑founder of Channel Advisor,

1.3 The players in the value chain -‐‑ 38