January 21, 2020

How marketplaces will hit B2B. Today, and tomorrow.

Posted by Kees de Koning

Consider this your invitation to the future of B2B commerce. The rise of B2B marketplaces calls for action, B2B expert Kees de Koning explains. 

marketplace b2b

B2B companies need a digital 360 view of their entire business. You’ve heard it before, and you’ll hear it many times again. So, what else is new? It’s the fact that new technology is evolving more rapidly than B2B’s capabilities are. The waiting game is over. 

Step away from crystal balls

Today, it’s Amazon Business and Asian competitors that worry B2B companies. Defining value added services is at the top of the agenda to save them from the race to the bottom. As it should be. It’s an absolute must. In addition to that, it’s important to understand what the ongoing globalisation actually means. I don’t mean we should gaze into crystal balls to dream up fantastic, but unlikely, flying cars. We need to be realistic and extrapolate existing technologies and services in the context of B2B. Just like we could have done with B2C webshops 15 years ago… 

So let’s do just that: peek into the future. A future in which B2B will struggle with its visibility, dynamic pricing, and matching services. Whether it will be 2030 or 2040 is somewhat less relevant. What is relevant, is that these developments are almost inevitable. 

Zero visibility on B2B marketplaces

With Amazon Business and the like, you lose visibility of your customers. And worse: by 2030 customers may have lost visibility of you as well. 

The emergence of AI-based services (such as Amazon Smart Business) will eventually result in B2B marketplaces consuming all vendor’s product feeds and selecting the best match for each customer in real time based on price, availability, shipping costs, delivery time… Anything but loyalty to your company, basically.  

Especially wholesalers and retailers that do not own product brands may become entirely invisible, and, yes, gradually made irrelevant by smart algorithms that optimise on price and delivery. After all, the parties that own these algorithms are pretty darn good at logistics at scale, so what’s their incentive to include you in the chain?

Even product brands will suffer. Your brand is still visible to the end consumer of course, the issue is the price. How do you think such a smart marketplace, the exact one that just swallowed the better part of your distribution network alive, will “negotiate” purchase prices?

The bidding race called dynamic pricing

Taking smart selection based on static feeds a step further: such matching services could easily use dynamic feeds too. Just like B2C commerce made its way into B2B, dynamic pricing will eventually arrive in other fields than hospitality and transportation. Since matching services gather prices from all vendors at the same point in time, it may initiate a bidding race to the bottom. Hopefully, this will actually evolve beyond pure dynamic pricing. After all, price is just one component that is taken into account by the algorithm.

So why not also dynamically determine other aspects such as delivery time, warranty or payment conditions? Your systems should be able to make the right call for that specific bid based on inventory, pipeline et cetera. And to take it a step further: it should also be able to negotiate on bulk pricing. After all, smart algorithms (both theirs and yours) would be able to predict future revenue to a certain degree, and based on that deals can be sharpened further.

RSVP to the future of B2B commerce

This peek into the future of B2B commerce is not a guarantee, but it is quite a realistic scenario, as it simply follows (existing) developments. What I can guarantee, is that B2B companies need to take action today. I’m quite optimistic and excited about all these developments. So instead of pointing the finger and warning you about the future, I invite you to step up. 

I invite B2B companies that sell commodities to find out what their added value is and to make that their core business. It’s time to move away from box shifting as a viable business model. I invite B2B brands to work on their pricing and channel distribution strategy. It’s much harder to protect product value if distributors sell on marketplaces for a bargain. Scattered pricing and distribution is negotiation ammunition for the big players.

But most of all, I invite B2B companies to invest in creating a digital 360 view of products, production processes, customers, sales… everything! The better they are able to pull up all this data, the better they are prepared for the future. Even with no big data projects planned, there’s already the urgency to work towards a full, historic data set, deduplicated, standardised, and accessible. So, who’s up for it? 

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