A B2B (business-to-business) marketplace is a completely different animal from a B2C (business-to-consumer) or a D2C (direct-to-consumer) platform. While the consumer is the ultimate end user, B2B platforms exist to facilitate transactions between middlemen.
There are four essential roles within a B2B marketplace:
The platform owner–that is, the owner of the website
The producers–the entity making
The providers
The customers (other businesses).
Increasingly, and especially with purely digital products, the platform owner, producer, and provider may all be the same entity. Some examples include Microsoft and Oracle, who provide enterprise-level software solutions to private businesses and governments worldwide. But your B2B marketplace may involve the movement and sale of tangible goods, such as vehicles, consumables, or real estate, to other businesses at wholesale.
Regardless if your business provides products and services in the digital or physical realm, let’s investigate the ways your B2B business can be scaled and how a board director can help.
How do you grow a B2B marketplace?
The keys to growing a B2B marketplace, in principle, are not much different than growing any other enterprise.
Mainly, these include:
Standing out – You need to be able to communicate your value proposition in a way that is understandable even to an eight-year old. How is your platform different from your competitors? How is the quality of your offerings higher than the rest? Can you offer the same goods and services for a lower price or commission than the competition? Do you save clients time or provide some other tangible or intangible benefit through connecting with your portal?
Solve an actual problem in the real world – No matter how great you think your platform is, if it is not solving a relevant and persistent problem, especially one that has been previously ignored or deemed “unsolvable,” your platform is not going to gain traction.
Marketing, marketing, marketing – Do you offer service tiers to capture different market segments? How well are you utilizing social media? How much content do you produce and what is the quality of that content? Would your current clientele be willing to refer you to their friends and associates? How is your SEO optimization?
How do you monetize a B2B marketplace?
There are several ways to monetize your B2B marketplace. The key, however, is to provide value at both ends of the business transaction.
Five main tactics include:
Commission – Using a commission model, the marketplace operator collects a small fee for every transaction made. From whom that fee is collected, either the buyer, the seller, or both, depends upon your particular service and business model. One caveat to using commissions is that if your commission charges are too high or the process becomes too laborious, the possibility that buyers and sellers link with each other independently and seal the deal offline, leaving you in the lurch.
Listing fees – If you accept listing fees from a seller, which are essentially one-sided commissions, these can be in the form of a flat fee or a commission of the item being sold. The theory behind accepting listing fees is the promise that through your platform the vendor will find a buyer for their product quickly.
Ads & featured listings – As a marketplace operator, you can charge for ads and featured listings to promote certain buyers and sellers over others. There is an inherent difficulty in judging how much to charge for such ads and listings and in predicting how they will be received by other users of your platform.
Subscriptions – Subscriptions can be offered on a monthly, quarterly, or yearly basis and are best for more established players rather than businesses just developing a B2B Marketplace. There needs to be enough traction so that subscribers - both buyers and sellers - feel compelled to keep using the platform and that the experience is worth the fee you are asking.
Hybrid – A hybrid model can include the availability of subscription services or the option of one-time commissions. Developing a hybrid platform is incumbent on who your buyers and sellers are, the products or services being exchanged, and the life cycle of those products and services.
What is scalability in B2B?
Scalability in B2B is conceptually simple – make a plan to optimize your customer reach and measure your results. But put in practice it is a lot of work. Scalability means reviewing all of your processes across every department or division in your company, assessing how well these processes are serving you under your current circumstances and evaluating what you would need to change in order to scale up. For every department, there can be a number of different actions that you could try as you embark on scaling your business, and you need to be prepared to learn from and move past failure quickly.
11 strategies to scale a B2B business
Not every B2B business is the same, but here are some strategies that can help you as you begin your scaling journey that are applicable to any startup or young company.
Know thyself and thy customer – Understand how well your product serves the customer you’re seeking. If there are incongruences, you need to address those immediately.
Prioritize your accounts – Who among your customer base is bringing in the most revenue? Who among your clientele is demonstrating the greatest loyalty toward your product or service? Prioritize your accounts by assessing both who are your top customers in terms of dollars and in terms of loyalty.
Develop a referral program – Reward your current (and loyal) customers for bringing in new business to your door. This is a much better way to draw in clientele than only offering discounts and promotions to brand new users, which in turn can create some resentment among your Day Ones.
Build confidence and trust through content creation – Become a go-to for resources like white papers and how-to guides. Speak at relevant conferences and participate in trade shows. Host events on LinkedIn and YouTube. Establish yourself and your business as an authority in your industry and use SEO to your advantage so that you can be found.
Leverage social media – Leveraging social media goes hand-in-hand with content creation. The issue is that you do not have infinite time and money to devote even amounts of time on all platforms. Focus on the platforms that have traction among your clientele.
Use sales enablement tools - Sales enablement is the strategic, ongoing process of equipping sales teams with the content, guidance, and training they need to successfully engage buyers. Content generation is one way to build sales enablement. Sales enablement can also be supported through the use of software that optimize processes and workflows for your sales and customer service teams.
Iterate your processes – This means across all of your departments. Use metrics that will indicate the results of processes, not just the number of times you completed a process. Reflect on what works, and what doesn’t, and manage change accordingly. That includes human resources.
Hire (and fire) wisely – What you want to look for are people who are a good fit culturally who are coachable and trainable. Ditch bad apples who can destroy your business from the inside out by lowering morale, exposing you to potential litigation, and causing your best people to leave your organization.
Build community – Android and iOS users are loyal to those products and services respectively because they feel they are part of a community (“green bubble” versus “blue bubble”). Community building is part of an overall strategy to build loyalty, and with loyalty, repeat and near exclusive business. You need to make building a “minimum viable community” as much of a priority as building a minimum viable product.
Sustainability – Beyond price, time, convenience, another factor to consider in today’s business climate is sustainability. As ESG reporting is becoming more commonplace and even legally mandated in specific locales, another way you can support the scaling of your business is demonstrating how your B2B platform supports your clients’ goals. According to a McKinsey expert, “Sustainability can be a source of durable competitive advantage, and the return on investment will come from profitable growth from new sustainable offerings.”
Use AI to your advantage – This is not to advocate for building a Rube Goldberg device to feed yourself soup when you could just use a spoon. If you can accomplish a task reasonably and efficiently within your current stage of growth without spending money on an AI tool, that is perfectly fine. But it does not hurt to investigate where you can leverage this new technology within your processes to save time, money, and heartache, especially as you plan to scale up.
How a COO can help
In a nutshell, the scaling process is an experiment in progress. While you won’t know exactly what works until you try, that doesn’t mean you have to go in blind, reinvent the wheel, or lose your mind trying to do it all alone.
An experienced COO has the knowledge to predict what might happen under certain conditions. The great news is that you don’t need to hire a full-time COO, especially if your startup is still relatively small and your budget is tight. A Fractional COO, contracted for a specific time frame or on a project basis, can share their wisdom with you at an affordable price point.
While Bhuva Shakti is not a COO herself, as a seasoned Board Director with over two decades of experience in the tech industry, she can guide you in finding the right COO to support your startup’s growth. Get the process started by scheduling a consultation with Bhuva’s Impact Global today. Why wait to benefit from her expertise? Book your appointment now!
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