As more and more companies in the B2B electronics distribution industry adopt B2B marketplaces, having one is now critical to the success of your business. Even in B2C, it’s no longer just Amazon and Alibaba calling the shots; almost all large retailers now have eCommerce marketplaces — Walmart, Best Buy Canada, Christian Lacroix, ePrice, and more.
All that said, starting an electronics B2B marketplace is no walk in the park. There are just so many factors to consider, and bringing change to traditional, existing distribution channels and processes can wreak havoc if not done properly. On the bright side, however, companies in the B2B electronics distribution industry that moved online are seeing 5x more revenue growth than traditional methods.
Thus, if you are considering starting a B2B marketplace for your business, you are on the right path. In this article, we will walk you through the detailed process, highlighting the common pitfalls and what you need to know to stay one step ahead.
How trading electronics on B2B marketplaces works
B2B marketplaces are a digital means of trading that allows buyers and sellers to transact and build strong relationships over the internet. Electronics wholesalers and distributors are adopting the B2B marketplace selling channel to complement their walk-in and website sales. Most of them already rely on eCommerce platforms to initiate and process sales.
A typical platform provides critical features like advanced product search, product management, self-service options, integrations with the ERP, CRM, punchout tools, and business analytics. Popular wholesale electronics distributors like Petra Industries and Werner Electric have already embraced this approach.
According to the 2019 UPS report, most companies across Asia, Europe, and North America hope to increase their B2B marketplace purchasing significantly within the next three years.
The rise of B2B marketplaces: what it means for electronics wholesale in 2021
Electronics distributors that move their business-to-business transactions online see 5 times more revenue growth than their offline counterparts. In fact, Amazon Business, the company’s B2B marketplace, is reported to be growing faster than its B2C wing. This is proof that marketplaces, although difficult to implement in B2B, have massive rewards. According to Insiderintelligence, US B2B sales revenue is forecast to increase by 12.2% and surpass $1.4 billion by the end of 2021.
Source: Insider Intelligence
Several researchers have noted that the average amount companies spent on B2B marketplaces has risen sharply. The same can be said for the frequency of purchases made via such portals. Amazon Business and Alibaba Groups’ B2B marketplace recently recorded the highest sales volume in Asia-Pacific and North America, their two largest markets. The Global B2B Marketplaces Market 2021 report indicates that B2B buyers, too, are becoming more reliant on these platforms.
Enterprises dealing in electronic goods and components have benefitted from the tremendous growth shaping B2B marketplace sales. Electronics remain a top category on Amazon Business and Alibaba. Other good typical examples are multi-vendor B2B marketplaces like Made-In-China, which sells electronic products from China and Taiwan along with leadingwith, leading manufacturers like Intel and Huawei which now also run marketplaces to supplement their revenue streams.
How B2B marketplaces generate value for B2B electronics wholesale and distribution
Electronics B2B marketplaces are trending because of the value they provide to stakeholders involved. They help suppliers coordinate transactions with multiple buyers more efficiently. On the same note, they also give buyers numerous buying options and competitive prices.
The impact of B2B marketplaces on B2B buyer-supplier relationships is especially significant for companies that run under the market model of corporate governance where transparency and access to information are critical.
How are B2B marketplaces beneficial to B2B transactions and relationships?
Electronics B2B marketplaces provide buyers with access to trusted suppliers while enabling the latter to diversify their selling channels. These platforms improve how companies conduct online transitions, reducing uncertainty in product price and quality. Without a dedicated and informative platform, buyers would have to make eCommerce purchases in the dark. B2B marketplaces provide an “electronic brokerage effect” which consequently results in low transaction costs and standardized contacts.
The way B2B marketplaces operate gives buyers access to a large catalogue of suppliers and products. This is an advantage to electronics distributors and vendors as they benefit from the economies of scale the setup provides. It would be more expensive to run such a platform for a single firm offering limited products. However, nowadays companies can leverage marketplaces to reach vast audiences and boost their revenue.
Electronics wholesalers and distributors running B2B marketplaces can reap significant financial rewards by bringing together buyers and vendors through more streamlined eCommerce experiences.
What further value can be generated from a B2B marketplace?
B2B marketplaces can provide value in relational exchanges in two ways:
Reducing transaction costs
A platform offering additional services that help companies save money will be able to attract more users. Such an approach promotes market-like coordination in B2B eCommerce. Value addition can be achieved through services that help companies eliminate uncertainty in areas like price, quality, and customer behavior. That means buyers will be able to compare prices and access information about the product/service. This puts them in a better position to insightfully choose vendors they would like to build B2B relationships with. On the other hand, the vendors and marketplace operators gain unlimited access to analytics that help them meet buyer expectations.
Provide collaboration tools
B2B marketplace operators can also provide hardware and software that enables companies to collaborate in terms of joint product development, testing, or product customization. Providing such services to a large number of clients enables the business to benefit from economies of scale. Hence making access to the collaboration tools affordable to a firm of any size as compared to private applications.
Over to you
Overall, B2B marketplaces have had a significant impact on how businesses trade electronics. As distributors pivot towards eCommerce, it’s only natural to explore B2B marketplaces to remain competitive. Electronics B2B marketplaces simplify complex product transactions enabling companies to build strong, long-term customer relationships. All it takes is carefully researching your software options and selecting the right platform – this is the key to building your electronics marketplace on a solid foundation.