Alibaba's B2B eCommerce Online Platform
Brought to you by WBR Insights
Thanks to the internet and the inexorable onslaught of digital technology, we are seeing brands in almost every space transforming in new and exciting ways. New technology brings new ways to communicate and connect with customers.
Ecommerce platforms have long been a great way for businesses and consumers to connect with one another. Whether it's through auction sites such as eBay, handmade and craft platforms like Etsy, accommodation apps such as Airbnb, or good old-fashioned shopping sites like Amazon or Alibaba, there are loads of ways individuals or businesses can access new markets and sell products online.
One side of business which has been slow to embrace the power of online marketplaces are those brands operating in the B2B space. Historically, B2B brands have focused more on direct selling and other person-to-person sales techniques rather than listing their products on online marketplaces, but 2020 is looking to be the year that all changes.
B2B Online Marketplaces
The need for B2B to move into the online marketplace space is being driven by the changing nature of its customer base. With millennials and the older end of GenZ now taking their places in the world of business, it is they who are now in buyer positions and responsible for purchasing decisions.
The major difference between this generation of buyers and their predecessors is the way they like to explore products. That is, they like to explore B2B products in much the same way they do when purchasing consumer products in their private lives. They like to research products online, get advice and recommendations from their peers - especially true of GenZers through social media - and begin that decision making process on their own. The traditional phone call or visit from a sales rep does still have a role to play in the process, but this generation prefers that to occur far further down the funnel than would have traditionally been expected.
Online marketplaces, therefore, provide an opportunity to furnish these buyers with all the information they require to begin that decision-making process while bringing a host of other benefits to the seller along with it.
One of the main ways in which online platforms can help businesses streamline their purchasing is by helping facilitate tail spend. Whereas strategic spend accounts for approximately 80 percent of spending but only 20 percent of transactions, tail spend makes up for a significant portion of a company's budget. Stationary and other office supplies, HVAC equipment, light bulbs, tools, cleaning supplies, and more are all part of that remaining 20 percent of spend and 80 percent of transactions. It's in this sector that online marketplaces can really shine, providing a one-stop-shop where most, if not all, of these items can be purchased - much like on consumer-facing platforms like Amazon.
In a post-marketplace world, distributors will naturally take a hit. To survive, they will need to adapt to understand digital technology, develop state-of-the-art systems, support independent marketplaces, and collaborate with key manufacturers to provide services not available through a marketplace. Online marketplaces will be providing businesses with a quick and efficient service, so the onus will be on distributors to make sure they can remain competitive.
One huge step in the proliferation of online marketplaces is the recent announcement that Chinese ecommerce giant Alibaba is set to make its B2B platform available to the American market. US buyers presently make up roughly one-third of Alibaba's B2B customers but opening the platform to American sellers as well will make it a serious contender for Amazon Business's crown.
Office Depot and Robinsons Fresh - both tail spend product companies - have already signed up to sell on Alibaba, but the Chinese giant has its sights set on small businesses as a priority.
"Most small businesses [70 percent] are not digital, and they trade locally with their customers," said Alibaba's President of North America B2B, John Caplan. "If you're a Washington State apple grower, if you're a baseball bat maker in Louisville, those businesses want customers around the US, and we've got millions on the platform."
Despite Alibaba having approximately ten million buyers in 190 countries, US sellers won't initially have access to the full portfolio of markets on the platform. However, they will be able to sell to US clients, as well as those in India, Canada, and Brazil. Instead of taking a commission, Alibaba's offering to US sellers will be a membership deal with first-year fees estimated to be around $2,400.
Now that big players like Alibaba are making their presence known on the world stage, we think 2020 will be the year that we see online marketplaces finally find a foothold in the B2B world. With younger and more tech-savvy buyers at the steering wheel, the future is bright for B2B online marketplaces.
Online marketplaces are set to be a hot topic at B2B Online 2020, taking place in April at the Chicago Marriott Downtown.
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