Dan Quinn, GM for MEA at Tradeshift, recently wrote that the private sector is taking a page from consumer e-commerce giants to build digital business-to-business (B2B) marketplaces to strengthen, streamline and support supply chains. Leading economists have estimated that more than $9 trillion in liquidity and working capital has been trapped in supply chains due to COVID-19.
These new B2B marketplaces can immediately connect thousands of buyers and suppliers across the globe on a single digital platform while financing trade to foster rapid supplier payments with easy effective solutions to fully digitize supply chain purchasing.
By 2024, B2B and B2C marketplaces will roughly be equal and will total $3.5 trillion each in global transaction value.
The B2B challenge and advantage
B2B markets are huge (annual global B2B spend is more than $100 trillion) and relatively untapped, with most transactions still taking place offline.
Consumer-facing marketplaces have become an essential part of our daily lives, but B2B marketplaces are only just beginning to emerge.
B2B transactions tend to involve higher average order values (AOVs) and generally have much more complex workflows. As a result, capturing these transactions online is significantly more challenging than consumer-facing marketplaces.
Large AOVs and Complex Workflows
B2B transactions, by nature, tend to be significantly larger than B2C transactions. As a result, the stakes are much higher: a single bad transaction can damage the business and reflect poorly on the supplier, putting more emphasis on quality and trust when locating it.
Larger AOVs translate into more complex workflows: negotiation based pricing, complicated payment terms, customized orders, and multi-party relationships, amongst others. This makes it much harder for B2B marketplaces to capture transactions online when compared to their B2C counterparts.
Cargo.one, a marketplace for freight forwarders to book air cargo online was able to transform a complicated, multi-step process which took several days into a fast and easy booking process as seen in the two diagrams below
Not only did they build a front-end to enable seamless booking on the demand (freight forwarder) side, but they also built a SaaS tool on the supply side to help airlines digitize their back-office and manage their revenue.
B2B marketplaces have the potential to build convenience for both sides of the platform, while B2C marketplaces generally build software for the supply side only (the B in B2C).
This SaaS-heavy tendency means that B2B marketplaces will often end up providing much more value in terms of convenience and revenues compared to their relatively SaaS-light B2C counterparts.
Top B2B businesses
TradeWheel.com is one of the fastest growing online trading platforms for all B2B commerce activities and the go-to option to buy any product from any industry.
It is Alibaba that paved the way for all the B2B platforms after it. It was established 18 years ago by Jack Ma and offers a dynamic B2B portal for e-Commerce, online money transfers, online auction hosting, mobile commerce, and online shopping to its users. Verified suppliers are providing merchandise in bulk quantity.
It is the largest B2B e-Commerce marketplace, but ever since Amazon stepped its foot in the B2B industry, it has created an environment of neck to neck competition among the contenders.
Amazon’s (B2B) business marketplace reported $1 billion in revenue in 2015, its first year in operations. That revenue number expanded to $10 bn in 2018 and is projected to bulge to $31 bn by 2023.
DHgate has been a constant B2B online trading platform with its ever-changing and upgrading features and has an impressive directory of buyers from all around the world.
ECVV has morphed into one of the largest B2B platforms of the world since its commencement in 2003. It was established with the sole objective of facilitating global trade more efficiently. Its main office is in Shenzhen, China, with label offices and warehouses in many developed countries of the USA and Europe.
GCC-based B2B marketplaces
Distichain, a UAE-based B2B e-commerce platform that provides public and private enterprises with tailor-made marketplaces, is expanding into the US and Australia after launching in October its first marketplace, extrabeaute.com.
In an interview with Arabian Business, Haisam Jamal, co-founder, and CEO of Distichain, said that these 3 marketplaces are set to deliver 60% of 2021 revenue.
Jamal also revealed that e-procuring will be another huge opportunity for Distichain, as its platform would help bring transparency, smart purchases, competitive pricing, and fast transaction completion. Procurement as a service (PaaS) is currently estimated at $6.5 bn in 2020.
Meanwhile, UAE’s Tradeling was launched during the pandemic to connect regional and global suppliers to MENA-based business demand. Today, it has close to 400 suppliers from over 25 countries with gross merchandising value increasing to a high 2-digit million figure in just three months.
Muhammad Chbib, CEO at Tradeling said: “We see a growth in the B2B marketplace here in the UAE and growing inquiries from across the GCC.
“The main challenges are finding the right talent with expertise and insights into the B2B sector, which is a different terrain compared to B2C e-commerce. An in-depth understanding of the global market is essential in addition to knowledge of the trading dynamics.”
Finally, founded just a few months ago by Careem and McKinsey alumni, Riyadh-headquartered B2B e-commerce startup Retailo wants to empower over 10 million SMEs in the retail sector with a marketplace that enables retailers to procure inventory for their stores in the MENA, and Pakistan (MENAP).
Retailo announced funding of $2.3 million in a pre-seed round and the company is starting with small grocery stores in Saudi Arabia and Pakistan which it says is a $100 bn opportunity.
MENAP is home to 700 million individuals and 10 million SMEs.