The Downsides of Selling in a B2B Marketplace

By
Johnny Marx
March 15, 2016

As more B2B buyers move online to make their purchases, B2B eCommerce is becoming a top priority for manufacturers and distributors across a wide variety of industries. Companies are taking different approaches to their online selling strategies. Some, for instance, are choosing to sell via online B2B marketplaces, where suppliers can put their products up for sale alongside other manufacturers and brands in order to make their product lines more “discoverable” to a wider audience. There are definitely downsides to this B2B marketplace approach, however. Let’s take a closer look at what it means to sell via a B2B marketplace, and whether it’s a good option for your business.

B2B Marketplace Downsides

A COMPETITIVE ENVIRONMENT

As mentioned earlier in this post, many manufacturers and distributors are attracted to the idea of a B2B marketplace because of the visibility it might offer their brand. By selling on an established marketplace, where buyers are already going to look for other products, brands hope to capture new customers. However, this can be a difficult environment, especially for smaller brands. With your products stacked up right next to your competitors’ offerings, it ends up being a game of either brand recognition (who has the more recognizable logo and name?) and price (which product can I buy cheapest?). In sum, while B2B marketplaces may initially appear to offer opportunities for new customer acquisition, they also create an environment of sometimes seemingly endless choice for the buyer, who will be constantly sizing up your products against those offered by your competitors.

LESS CONTROL OVER BRANDING & MESSAGING

In a B2B marketplace, individual sellers have little control over branding (i.e. the look and feel of their page on the site, as well as the overall customer experience) and messaging. Sellers are building their eCommerce offering on the marketplace provider’s platform, with their template, user experience, and maybe even customer service team. For larger brands, this can create an erosion of brand equity. For smaller brands, it can be difficult to engender any lasting brand-recognition among buyers.

WEAKER CUSTOMER RELATIONSHIPS

Without direct communication between your brand and the people buying your products via the marketplace, it will be difficult to build the long-term relationships that remain the bedrock of B2B business. Customer relationships will ultimately be more low-value, and it will be hard to retain those customers for repeat purchases over time.

SO WHAT’S THE ALTERNATIVE?

The main alternative to a B2B marketplace is a Direct B2B eCommerce model, in which retailers can interact solely with your brand and products. By setting up a B2B eCommerce portal dedicated solely to your brand, you can not only avoid direct competition from other brands and have more control over your branding, you can also tailor the purchasing experience for each of your customers, implementing customer-specific pricing, discounts, catalogs, and order history. While you may choose to sell in a B2B marketplace at some point down the line, a Direct B2B eCommerce portal is a necessary part of your overall eCommerce strategy. Questions about B2B marketplaces and direct portals? Let us know in the comments!