How to build a successful marketplace business model with enterprise commerce technology
Marketplaces currently have a strong tailwind and will change global commerce in the long term. As a company in the manufacturing industry, it is crucial to understand how to develop a successful marketplace and what role you should play in it. In this chapter we talk about the requirements for marketplaces, revenue streams, operators & traders, and what technology is needed.
The essentials of a B2B marketplace
Successful B2B marketplaces are built on a predefined set of key aspects. Those consist of seven main attributes that combined build the business platform for your revenue growth:
Enterprise technology for leading B2B manufacturing marketplaces
Evolving or building a first and third-party marketplace was recently confirmed by Gartner to be an important and successful digital growth strategy for retailers, brands and manufacturers. Expand your product range, complement it with other merchants products and services, provide more convenience to your customers or lower your CAC and IT spend with a marketplace approach. Spryker ́s Enterprise Marketplace Solution allows you to either easily extend your existing B2B or B2C store and transform it into an Enterprise Marketplace based on the same cloud-native, scalable and headless Spryker Cloud Commerce OS or to build a standalone solution. Invite other merchants, allow them to create offers, handle transactions, payments and order management centrally by using the modular capabilities in our cloud.
Spryker Cloud Commerce OS was built from the ground up to fulfill enterprise requirements without compromising on flexibility, velocity or scalability. Based on composable commerce methodology, SCOOS provides a set of marketplace mandatory features that can be extended with over 300 modules to build manufacturing-specific marketplaces. A successful B2B marketplace is being defined by a reliant technology backbone delivering the needed infrastructure to scale.
Proof of value: Running your marketplace initiative on Spryker
Since its inception, Spryker has been dedicated to enabling companies to digitize transactional business models through market-leading commerce technology. Spryker‘s Marketplace Solution is based on the modular architecture of Spryker Cloud Commerce OS. SCCOS is unlike other commerce solutions in its focus on Packaged Business Capabilities (PBCs). Compared to old software monoliths, these offer customers the freedom to integrate additional functions without major additional costs. Compared to known Microservices, PBCs provide better governance by business users compared to costly and complex monitoring by IT experts.
Marketplace customers of Spryker Cloud Commerce OS and the corresponding marketplace solution likewise benefit from access to a diverse ecosystem of technology partners to create the best possible marketplace experience borne out of a best-of-breed approach.
With experience from more than 200 customer projects, this setup has proven to be the best for both operators and merchants on marketplaces. Some of the key reasons at a glance:- Faster time to market due to out of the box capabilities
- Centralized, yet open platform for flexibility and scalability
- Optimized total cost of ownership due to marketplace monitoring and onboarding
- Backed by a wide ecosystem of technology partners for future improvements
Executive summary: multiply your growth by 10 thanks to a successful B2B Marketplace
In the previous chapters, we addressed the three most important questions regarding B2B marketplaces:
- Why are marketplaces relevant for business growth?
- How do you create a competitive B2B marketplace
- What is the proof of value in developing a marketplace with Spryker?
Self-empowering network effects are omnipresent on marketplaces and define a major force to drive 10x growth for your business. In short, as an operator each additional merchant will exponentially improve your marketplace business. Let’s take a brief look at those improvements:
- A new merchant adds more selection and convenience to your offering
- It also reduces the risks of dominant pricing strategies of single merchants
- An increased offering helps to differentiate your marketplace from competitors while increasing the overall customer experience
- More time spent on your marketplace increases traffic which results in a larger share of market and wallets
- More traffic and customers will raise the awareness of your marketplace for new merchants that want to join
- The cycle starts again
Your marketplace keeps growing in relevant marketplace metrics while lowering the total cost of ownership with each new merchant.
We then support the theoretical concept around network effects with a forecast of how a marketplace can grow within three years. We assume an MVP with roughly 20 merchants including the operator itself, about 500 products per merchant, a basket of goods averaging $500 and a 2% conversion rate at around 300,000 visitors per month.
Furthermore, we assume that each additional merchant has an incremental, positive impact on the metrics associated with it, i.e. increased shopping cart, more visitors, etc.
In the table and graphs shown below, you can quickly observe that an exponential growth of 10x over 3 years is by no means a fantasy. As experts have already confirmed, the growth of the marketplace is driven, among other factors, by the growth of merchants who generate additional added value and are both multipliers and accelerators.
In our example, the B2B marketplace records a GMV of around $3 million in the first year with a take rate of 7%.
By adding more merchants, the marketplace reaches more customers, increases the average shopping basket and enables you as an operator to achieve a higher take rate.
Accordingly, in year 3 we already report almost $70 million GMV at a take rate of nearly 20%.
