On Wednesday 29 June we held our first in person event since the start of the pandemic. Alongside Venture Capital firm Northzone, we hosted B2B marketplace leaders and founders for an evening of conversation and networking. We had great founders in the room and on Zoom, but why were we so keen to get them together?
As a category, B2B marketplaces are booming and we’re noticing the effects they’re having on traditional spaces within the B2B world. While consumer marketplaces are well established and continue to disrupt industries, their B2B counterparts are just at the beginning. We wanted to bring together pioneers in the category to meet, share their learnings and experiences, and discuss what happens next in a more challenging macroeconomic environment. We’ve shared the highlights below and you can find the full recording on this page too!
Deepka Rana, Vice President at Northzone, kicked things off with an insightful introduction explaining why the VC community is excited about these marketplaces. It’s early innings, Deepka explained, but being capital efficient and building a network effect are two huge draws for investors. The B2B journey may be trickier than B2C given the differences in the way that businesses make purchases at scale and their expectations of certain payment terms, to name a few factors, but the rewards seem even more impactful.
So why are B2B marketplaces booming right now? And why are we so interested in supporting them? As our CEO and co-founder Anil Stocker put it: “recently we’ve been investing really heavily in our product to start to embed into B2B marketplaces. Personally I think it’s a huge megatrend: the coming together of marketplaces and finance, and the decentralisation of finance out of banks”. As we saw with consumer marketplaces, traditional B2B industries are going to be disrupted by new entrants. They’re going to digitise and we’re here to help take some of the friction out of B2B payments to help delight, attract and retain their customers.
Our expert panellists were Sam Freedman from beauty marketplace Curate Beauty, Erez Mathan, COO of fish marketplace Rooser and Jina Kwon, UK Country Manager of independent retailer platform Ankorstore.
Here are a few key takeaways from the panel and Q&A, which you can watch in full below.
Disruption vs innovation
- Disrupting markets can breed distrust but marketplaces are helping to digitise and improve communication in their industries.
- B2B marketplaces offer more control between buyers and sellers. They can also improve logistics and help to streamline old fashioned offline processes which are admin heavy.
- Content and events are a powerful tool to build your network of sellers and buyers. It’s important to be a trusted connector and expert in the field.
The balancing act
- It’s crucial to think about what the supplier cares about and balance that with what the buyer needs. You have to confidently serve both.
- The model doesn’t have to be winner takes all: B2B is a huge market compared with B2C and other companies can help in doing education pieces and disrupt. B2B marketplaces can be more niche.
Embedding credit at checkout
- Trying to underwrite and offer credit yourself can be costly and risky. Sticking to the main focus of what your marketplace is trying to solve matters more, especially early on. In an unstable macroeconomic environment, the cost of failure could be massive. Your marketplace is solving an important problem; you don’t need to add the challenge of becoming a fintech to that.
- B2B customers expect payment terms of 30 or 60 days so it’s important to be able to service that. Making the experience more seamless will help you gain market share.
- Previously there was a cost to not growing fast as everyone else had access to cheap capital and could grow really quickly. The focus is now shifting on being more efficient and spending smarter.
- Cost matters more now. Scaling a business is about slowly understanding the dynamics of a marketplace first before you commit to massive headcounts to fuel growth at any cost.
What growth looks like now
- Doubling or tripling your GMV each year is key to proving growth. Beyond that, take a look at your customers. They should be growing with you.
- You are the middleman and it’s tough: managing expectations is key between vendors and buyers.
- The problem a lot of marketplaces have is that they don’t manage to be the point you do your business in: they’re a niche you shop at to complete your inventory. The key is to figure out how you become core to a business instead of simply chucking more buyers at the top of the funnel. If you’re not core to someone’s business, is your marketplace viable?