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What is a B2B Marketplace?

Learn how B2B marketplaces streamline procurement and reduce costs, as we explore horizontal and vertical markets as well as public and private B2B markets.

marketplace-blog_image.pngAs a consumer, buying products online involves nothing more strenuous than a Google search followed by cursory price comparisons and a glance at the reviews. For a B2B buyer, the process is much more complex and, consequently, more expensive.

Suppliers have to be identified and vetted. Contract negotiations may take months and involve many different stakeholders. Once the relationship is established, it must be monitored and managed for compliance,  which requires  manual and automated audits related to product, pricing, and order-to-invoice automation to ensure vendors are efficiently fulfilling orders and transacting. B2B sales are just as complicated from a supplier’s perspective; they must find buyers, negotiate, implement processes and policies agreeable to both sides of the transaction, and manage contracts, invoicing, and inventory.

B2B marketplaces streamline business-to-business procurement and sales by acting as a digital intermediary between buyers and suppliers. They allow buyers to find new products and suppliers more easily, often pre-vetted according to the marketplace’s standards. They provide data that helps buyers make a decision, and they implement digital processes for RFPs and RFIs, contract negotiation, purchasing, and invoicing.

In short, B2B marketplaces can enhance one-to-one B2B relationships by including 3rd party products where appropriate. B2B buyers spend more time on their vendor’s site, simplifying purchasing as there is no need to purchase these additional products elsewhere.

There are several types of B2B marketplaces. In this article, we’re going to explore some of the key differences, how buyers and suppliers benefit, and how PunchOut2Go can help bring marketplaces and eProcurement platforms together.

Public vs. Private B2B Marketplaces

Public B2B marketplaces, which may also be called independent or open marketplaces, are marketplaces in the traditional sense, such as Amazon, Alibaba, Walmart, and Best Buy . Any supplier that fulfills specific criteria can join and sell their products, and any buyer who is interested in those products can make a purchase. The biggest B2B market in the world, Alibaba, is a public marketplace, as are the Ariba Network,  Amazon Business, and many other marketplaces.

A private marketplace, in contrast, is created primarily to serve the needs of one business. A company like Walmart may operate private marketplaces with a one-to-many configuration, bringing its suppliers together on a platform it controls to increase procurement efficiency throughout its locations and business units.

Businesses create private marketplaces in many different scenarios. For example, a company might outsource manufacturing to several organizations while buying parts from others. To enhance procurement efficiency and accelerate sales, it could create a private marketplace that connects its manufacturers to its suppliers. Larger suppliers or groups of suppliers may combine to create a private marketplace for select buyers.

Software and services providers like Mirakl exist to help businesses launch and manage marketplaces of both types while extending and embracing their chosen eCommerce technology, such as Magento, SAP Commerce Cloud,  and Salesforce Commerce Cloud.

Vertical vs. Horizontal Marketplaces

We have already mentioned the paradigmatic examples of a horizontal marketplace: Alibaba and Amazon Business. A horizontal marketplace sells many different product categories across multiple industries. They typically operate on a many-to-many principle: many buyers can connect with many sellers.

Vertical marketplaces, in contrast, are tightly focused on the needs of a specific sector within an industry. 1-800Flowers.com owns and operates a marketplace, also leveraging Mirakl on Magento,  within the floral, gift,  and gourmet foods verticals. It connects thousands of florists and 3P sellers with B2B and B2C buyers and takes a percentage of the transaction without the need to warehouse products.

Vertical marketplaces often play a key role in sourcing products for retail. For example, in the fashion industry, Joor and NuOrder connect fashion brands with retailers, helping them to source and buy products. To show you just how prevalent vertical marketplaces are in some industries, Joor works with 200,000 retailers and 8,600 brands across the world.

The Benefits of B2B Marketplaces

Traditionally, B2B sales are conducted through one-on-one relationships between buyers and sellers. Without a third party like PunchOut2Go who reduces the cost and complexity of B2B integrations, these relationships can become both inefficient and expensive. B2B marketplaces complement efficient one-to-one relationships and can provide additional advantages, including:

  • Enhanced shopping experience and ability to attract customers.
  • Improved information flow, which enhances planning and coordination.
  • Simplified and accelerated ordering with powerful online product comparison tools.
  • Reduced staffing costs for research, procurement, and sales relationship management.
  • Increased pricing transparency leading to more efficient markets.
  • The ability to test product lines’ selling effectiveness.  
  • New business opportunities through the network effects of well-organized marketplaces.
  • Sellers are empowered to “sell more” by offering 3rd party products through their commerce solution, driving revenue opportunities while providing more value to their customers.

This last point is worth emphasizing. Marketplaces attract buyers looking for efficient procurement workflows and reduced costs. Suppliers benefit from a platform used by large numbers of buyers, and network effects combine to create a beneficial business environment for both.

PunchOut2Go Connects Buyer eProcurement Platforms to B2B Marketplaces

EProcurement is the fastest growing B2B sales channel, and buyers want to integrate suppliers with their eProcurement spend management, internal private marketplace, and ERP platforms. That includes B2B marketplaces.

Unfortunately, many marketplaces do not support eProcurement integration and automation features such as PunchOut catalogs, purchase order automation, and electronic invoicing. The PunchOut2Go cloud integration platform can help:

  • B2B buyers to integrate marketplaces with their eProcurement or ERP platforms.
  • B2B marketplaces to offer features such as PunchOut catalogs and purchase order automation to buyers.
  • B2B sellers can offer more diverse purchasing methods to their buyers who have invested in eProcurement platforms.

If you would like to learn more about how PunchOut2Go facilitates fast, inexpensive, zero-code eProcurement and B2B marketplace integration, fill out the form below, and we’ll be in touch shortly.

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