B2B Digital Marketplaces Are Booming—Here's Why
McKinsey & Company reports that about 65% of B2B companies across industries will fully transact online in 2022. And for the first time, B2Bs are more likely to offer digital over in-person sales.
There has never been a better moment to sell products and services online. Today’s sellers have abundant new opportunities to use technology to reach audiences, extending market reach. And while online marketplaces have traditionally been associated with consumer products and services, marketplace technology has become one of the key sales channels not only for B2C marketplaces but the B2B sector as well.
According to Statista reports, in 2021, online sales on B2B platforms, log-in portals and marketplaces increased 17.8% to $1.63 trillion.
Traditional methods of B2B operations – from onboarding through to discovery, trading and fulfilment – are becoming digitalised, driven by the outbreak of the pandemic back in 2020 and its consequential lockdowns, and a new influx of millennials in decision-making roles, seeking business interactions more aligned with their B2C experiences. According to 2021 reports, 64% of B2B buyers now place more importance on experience than price, whilst 86% of buyers are willing to pay more for a better experience.
In response, there are many B2B sales channels available to businesses, but operating one's own digital marketplace provides opportunities for true optimisation across the user journey. B2B marketplace platforms bring buyers and sellers together, from wholesalers, manufacturers, and suppliers looking to trade products, parts, raw materials, and services globally.
3 Trends Mapping the B2B marketplace landscape - Unlocking the digital growth potential of your business
A post-pandemic trend
The rise of digital over the last two years has been widely discussed as a result of the pandemic- 40% of consumers are buying more online than they had previously done, UNCTAD reports. There is no doubt that there has been a dramatic acceleration in the digital transformation of lives and businesses. However, digitalisation is a trend that has been going on for a lot longer, which fortunately reduced the disruption and made the transition smoother for many businesses.
It should be on top of every business's agenda to embrace digitalisation and adapt to their new customers' needs in the new reality of digital maturity. But to reshape value propositions to empower agile-response organisations, which will weather natural volatilities in the external environment It's about increasing flexibility to respond and better understanding customer needs, such as convenience.
Why is this important?
Because having the flexibility to respond to fully understood customer needs- whether that be convenience, price transparency or another factor; makes for a successful business which can stand the test of time.
Take, for example, fine arts. In 2019 the global art market was already facing challenges, with sales down 5% on the previous year and sales in China, which holds the third-largest share of the market for art and antiques, falling by 10%. However, there was already a trend to digitalisation that became the solution after the eruption of COVID-19. Tech and digitalisation facilitate the ability of businesses and international buyers to participate in online sales and accelerate the process of engaging wherever they are in the world. For example, Christie's- the world's leading auction house, relied on its existing online platform to keep a door open to buyers through digital auctions. Christie's online auction platform also fostered a mid-segment market for mid-value auctions, allowing Christie's to maximise their offering, and audience.
As a result, Christie’s reports the highest total sales in the last five years, a record year for private sales, and has maintained the leading position for the best online art auction platform. They have also dramatically increased up 43% to USD$ 445 M the number and breadth of its online offering.
They also pioneered the spectacular breakthrough of NFTs onto the international art market, with the landmark sale in March 2021 of Beeple’s EVERYDAYS: THE FIRST 5000 DAYS, followed by many other NFT firsts throughout the year.
"Online is a very fruitful channel for new bidders and new clients to Christie’s. In general, we’ve seen prices achieved online that rival those of live auctions and in many cases can be better than those in live auctions." - Christie's testimonial of NovaFori's technology
Millennials driving the B2B landscape - Christie's reports in 2021 that 32% of new buyers were millennials.
A key factor driving B2B digital growth across sectors is the change in demographics of B2B and buyers. A decade ago, most B2B buyers were Baby Boomers or Gen Xers, who preferred personal interactions with sales representatives. But that has changed drastically as the Millennial generation (born between 1981 and 1996) has come of age.
The digitalisation of B2B marketplaces will continue to grow as millennials demand convenience and automation, as their customer behaviours are powering the digital transformation in B2B marketplaces.
Merit reports suggest that nearly 73% of Millennials are now involved in product or service purchase decision-making at their companies, with one-third reporting that they are the sole decision-maker for their department. And about half of all B2B product researchers are digital natives, which increases every year.
In addition, Gartner research found that 44% of millennial B2B customers would prefer not to interact with a sales rep at all. As a result, Gartner projects that by 2025, 80% of B2B sales interactions will occur on digital channels. That indicates a real need for the B2B sector to incorporate user-centric journeys across platforms.
Functionality and UX significantly impact customer experience and retention
In the digital age, optimal customer experience strategies work to create a space free of friction and provide users with a journey that meets their every need as quickly and efficiently as possible.
On average, customer-experience leaders in B2B have higher margins than their competitors. As shown by McKinsey, B2B companies that transformed their customer experience processes saw benefits similar to those seen by B2C companies, including a 10 to 15% revenue growth, higher client satisfaction scores, improved employee satisfaction and a 10 to 20% reduction in operational costs. The combination of these benefits means a higher ROI on B2B operations, supporting the company as a whole.
Additionally, with the help of data science and machine learning (ML), digital marketplaces can better understand users' behaviour and predict what their customer journey looks like, further improving the personalisation of the user's experience. With the benefits of predictive analytics, marketers can build patterns to analyse user behaviour, interests and characteristics that can be leveraged to serve a tailored experience.
Measuring marketplace performance to ensure that all market segments are thick and functioning optimally is key to growth, long-term sustainability and value optimisation.
Implementing technology to satisfy changing demands -The right marketplace for your use case
Selecting the right technology provider to build your marketplace platform has never been more important- as a result of the recent vertiginous increase in selling software and services available.
However, not all marketplace technology providers will offer every feature and functionality you require, and many may take different approaches to building technology. Therefore, it's vital to work with a partner who most closely understands your aspirations and the best execution of those aspirations.
At NovaFori, we adopt a collaborative and hands-on approach, combining our B2B marketplace expertise with your industry knowledge and business requirements to design the platform that's right for you. We provide businesses with a flexible, scalable and modular platform solution, designed with a B2C user experience with complex product attributes of the B2B world in mind, to ensure your marketplace is a seamless extension of your business and your ambitions.
To learn more, please contact us at email@example.com.
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