There has been explosive growth in worldwide B2B marketplace sales and that growth is going to rapidly accelerate in the next few years, causing further disruption in the industrial sector.
One study shows just how significant this growth of marketplaces will be. Worldwide B2B marketplace sales could reach an estimated $3.6 trillion by 2024, up from an estimated $680 billion in 2018, according to financial services advisory firm iBe.
This rise is driven as more and more companies embrace marketplaces as the best platform to facilitate online sales. These marketplaces offer one-stop shopping, broader product selection and comparison, and, in many cases, lower prices.
And the leader is, of course, Amazon Business which is set to top $31 billion in revenue and $52 billion in gross merchandise volume by 2023. McKinsey & Company reports that 65% of industrial distribution customers are already procuring from marketplaces such as Amazon and eBay. For 34%, these digital leaders are actually their primary or secondary distributor.
“If you’re an industrial distributor, those numbers should sound like an alarm bell,” writes Adrien Nussenbaum co-founder and U.S. CEO of Mirakl, a global leader in online marketplace solutions.
“Yes, you may already have a digital channel, as two-thirds of distributors do,” Nussenbaum wrote in his blog late last year. () “But for 78% of the top distributors globally, digital makes up just 10% to 25% of total sales. In other words, if you’re thinking that your digital channel is going to protect you against digital natives in the coming shakedown, you’re wrong.”
Further evidence suggests that Millennials are playing an important role in wanting a successful, on-line buying experience. One survey showed that nearly 90 percent of Millennial buyers reported that an excellent digital buying experience is very important or even extremely important in vendor selection.
That’s not surprising. In its report on distribution McKinsey wrote: “People shop on Amazon at home. What we hear most often from business customers is, ‘Can we have an Amazon shopping experience at work?’
But it’s not just Amazon that is targeting industrial and other business customers. It is also Alibaba, eBay and at least two new international marketplaces that want to enter into the lucrative industrial/B2B arena. And it’s no wonder based on the growth of existing marketplaces.
eBay reportedly sees business buyers and sellers as an “important customer segment,” and Alibaba sees a big opportunity in B2B marketplaces by helping small and mid-sized U.S. companies buy and sell products and services both domestically and overseas.
Five years ago, there were far fewer B2B marketplaces in vertical industries. But today, there are more than 70 B2B marketplaces in more than 13 diverse industries, according to research compiled by Digital Commerce 360 B2B.
Digital Commerce’s September 2019 survey of more than 100 buyers on digital buyer expectations reveals that almost half of B2B buyers complete more than 25% of their purchases on marketplaces. The study also shows nearly 4 in 10 buyers completed more than 10% of their B2B buying on Amazon Business.
The growth of these marketplaces should be a wakeup call for many industrial distributors and manufacturers to continue to upgrade their own websites, provide a seamless transaction process, enable mobile purchasing and provide relevant content that will drive traffic onto their sites.