Last month we sat down with leaders of B2B marketplaces to discuss their experiences, share knowledge and connect the community. Our event was in partnership with Venture Capital firm Northzone at their London office and attracted leaders from marketplaces across many different sectors.
We were lucky to be joined by three experts in the category: Sam Freedman from Curate Beauty, Jina Kwon from Ankorstore and Erez Mathan from Rooser. They were guided through the questions by our very own Anil Stocker, CEO and co-founder of MarketFinance.
In a series of blogs we’ll explore the panellists’ answers to various questions around scaling, funding and running of B2B marketplaces. Read on to find out more and unlock the keys to your own growth…
The initial stages of growing a B2B marketplace throw up a lot of things to consider and manage. It’s an exciting, if nerve-wracking, time – whatever industry your marketplace is in. Starting a marketplace can be challenging and we often hear about the classic ‘chicken and egg’ dilemma. Do you focus first on growing the number of sellers or buyers on your platform?
We asked each of our guests to share their perspective and some hacks they found effective when scaling their B2B marketplaces, right from day dot.
As UK Country Manager, Jina is responsible for the successful launch of the UK market for Ankorstore, an independent retail marketplace. This is what she had to say about whether to focus on the buyer or seller first:
“We took the bet on the brand side, because we thought that was the most efficient way to build network effects. Brands generally will have a network of retailers that they work with already or at least prospect lists. We believed that it’d be more efficient to build that side of the marketplace than for us to go out one-by-one and do that work ourselves.
There are great network effects on the brand side, because most of them, even if they’re very new, will have aspirational retailers that they want to get into. And being pinged by many different brands to join this new platform, Ankorstore, is a very viral way to get started.”
Getting a lot of quality sellers on your platform as a priority is a great strategy, but often you’ll need to offer them some incentives. This could be things like access to the platform for free, financial subsidies or marketing support. Jina said gaining trust was one of the biggest obstacles at the beginning: “We were in acquisition mode and we were offering quite a lot to retailers to come on board, or to brands to refer their retailers. One of the common objections that we got was ‘It's too good to be true. Everything that you're offering – not only are you taking away our pain points that we've suffered for 50 years, but you’re also giving me money on top of that.”
If your brand also wants to take a bet on the seller side, there are some things you should consider – figure out the budget you’re willing to allocate to incentives, agree on what’s your initial goal number of sellers and design a strategy on how to take advantage of your seller network to attract buyers. This strategy is likely to build trust and prestige of your platform as any buyers joining will have their pick of high quality products.
Erez Mathan is the COO and co-founder of Rooser, a global seafood network connecting seafood buyers and suppliers. When asked what came first, fish or restaurants, he said:
“If you think about fish trading, it’s like that scene in The Wolf of Wall Street where they’re trading over the phone and pieces of paper are being moved around. That’s basically how the fish industry trades commodities today.
So we did a bit of a ‘fake it till you make it’ at the beginning. An order would come in on the platform and then we’d have a bunch of great seafood sales people on the phone, manually matching the transactions.
In hindsight, it was a clever thing to do – I don't know if we planned it that way but we took on the best seafood sales people in the industry that have a lot of gravitas. In an industry that operated in a certain way for centuries it's quite hard to build a rapport with the businesses that you want to get into.”
It’s important to understand the industry you’re trying to get into – how are relationships created, what’s their pain points, how likely are they to take risks? Think of questions which will help you create a profile of buyers and sellers. If you’re in an industry that still operates a lot (or mostly) offline, like seafood, you might need to rely on partners who are already established in the space.
Erez identified another crucial aspect of Rooser’s early success: “Another important thing we did was stabilising the cash flow between the different parties. Seafood people buy fish off the boats and pay within 7 days and then they only get paid after 60 days. So there's quite a lot of cash flow deficit in the middle. Rooser will guarantee the payment at a given time and make sure that you can stabilise your business. I think that's quite important and a powerful draw.”
Businesses can be really negatively affected by unstable cash flow, so being able to solve that pain point is a powerful way to add-value as a marketplace. But it can also prove a challenge to your own cash flow – this is where tech integrations from external finance providers come in! At MarketFinance we can help your company provide better payment terms at checkout with minimum work on your side. Click here to learn more!
Sam Freedman is the CEO and Founder of Curate Beauty, a digital marketplace featuring a variety of independent beauty brands for retailers to browse and buy. Sam reflected on early challenges of her marketplace in her response:
“Before we actually launched the platform I had a consultancy business where I had retailers and I would match them with brands almost offline. We'd scramble to find the brands and then we realised ‘this is a bit ridiculous, we need to have some sort of portfolio to showcase our brands’. When we launched the platform we decided that we needed to have at least 50 good brands on board.
What helped us grow both sides of the marketplace was putting our expertise at the forefront. We've done trend reports that got us great leads from both the brand side and retailers. We’ve also run a virtual trade show. Beauty industry is based on touch and feel. It’s sensorial and you miss all of that when you're just online. To bring it to life we wanted to create an experience, an event, even if it was virtual as we were in lockdown.”
Seems Curate Beauty’s experience is reinforcing the fact that creating a strong portfolio of sellers is key to establishing a credible mage. Another important takeaway? Become an expert in your industry! Position yourself as a thought leader by creating high quality marketing content bringing your expertise to the forefront.
So what comes first, buyers or sellers? It seems that all of our panellists are Team Sellers! This is because a strong portfolio of sellers helps you capitalise on network effects and attract buyers organically. Remember that every marketplace is different and it’s crucial you know your industry. Talk to key stakeholders, take learnings and strive to become a trusted authority in your space.
If you’d like to hear the full answers to the above questions check out this clip:
If you’d like to learn more about how MarketFinance can help you in providing better payment terms to your customers, get in touch!