As per Statista, the global B2B e-commerce transactions totalled US $ 12.2 trillion in 2019, and it may have seen around 25 per cent growth in last two years! One of the most prominent trends in B2B e-commerce is the rise of the B2B Marketplace. By now, the fashion industry may have a fair idea about what a B2B Marketplace is all about! The impact of this online marketplace model cannot be understated, as it has redefined the business relationship between B2B buyers and sellers and acts as a networking point.
The concept is seeing strong adoption level in the global fashion businesses and India is not behind too! More B2B Marketplaces are marking their presence in the Indian industry and are trying to revamp the ruptured conventional fashion supply chains by taking almost all laid-down processes on to the digital platform.
The advantage being, unlike before, suppliers and buyers need not invest time and resources to search each other and worry about their order status as well as financial transactions.
The fact of the matter is that a large part of the traditional supply chain in textile and apparel industry faced a significant setback during Covid-19 and stakeholders such as large manufacturers, SMEs, distributors as well as retailers underwent severe efficiency loss in the key procurement processes, especially where sourcing decisions were taken in an unorganised environment that lacked both credibility and accountability!
These disruptions pushed forth for the evolution of B2B Marketplaces that emerged strongly to offer B2B buying and sourcing through online platforms at reasonable prices and shorter delivery times.
So, how do these platforms work? These Marketplaces have members from various segments on buying and vendor’s sides who can place orders and cater to these orders. To get associated with Marketplaces, there are business models like subscription, listing fees and commission, and the companies can choose what works best for them.
Why to go for a B2B Marketplace?
Traditional B2B sales in the fashion industry have the following complexities that differentiate them from the B2C model. All these factors are taken into consideration by the company building and managing a B2B Marketplace:
- Long purchase cycle
- Price can vary depending on product changes and the quantity of items
- Bulk sales usually; samples needed
- Different payment types and international payment issues
- Logistics and distribution issues
- Document and bureaucratic issues
B2B Marketplaces are creating better online supply chains within the industry and pondering upon the existing gaps between buyers and sellers.
“The fashion brands have adopted technology a little better because end-consumers are evolving. They are dealing with millennials and Gen-Z crowd and these consumers have seen some fashion statements on social media. Therefore, brands are obviously adopting things faster than factories and manufacturers are still trying to cope with the rapidly evolving trends. The reason being – communication gap between brands and vendors. And this is what a B2B Marketplace tries to solve. In this effort, every MP tries to develop a kind of supply chain that works well for both the parties,” commented Anuj George, Head of SaaS, Zilingo.
Following are the two examples of how B2B Marketplaces are finding solutions for prolonged issues of the industry and developing their partners through their journey:
- ReshaMandi has tied up with farmers and has given them an IoT device
- Zilingo has partnered with factories to make them cost-effective through its tech-enabled tools
For a fashion brand that has its own manufacturing, there is a valid argument they have on this entire scenario. According to Akhil Duggar Jain, Executive Director of MADAME – a renowned home-grown fashion brand that also has Jain Amar Clothing Pvt. Ltd., by its side as parent company, the go-to strategy for a brand should be how to create better and agile supply chain and see how a B2B Marketplace assists in that.
“Around 70 per cent of the products that we sell through our brand is being produced from our factory. However, as we are continuing to grow, there seems to be an obvious need for a third-party B2B supply chain which is becoming a significant need for us,” mentioned Akhil.
Another important aspect while discussing the functioning and offerings of a B2B Marketplace is – how does a company create demand for products/services on Marketplace before there is enough supply and vice-versa?
Dr. Stephen Patton, Director of Sourcing (South Asia), Liverpool Mexico has his say on this. He elaborated, “Innovation has outpaced adoption. By the time companies are ready to adopt a concept, innovation reaches to next level! A factory can ask to explore what the buyers are looking for and stop selling that they themselves want to manufacture but start producing what people (end-consumers) are asking. It takes a little time to adopt. Modifying a supply chain takes nine to ten months, while changing a product line/collection takes two to three weeks.”
Key expectation of a buyer from a B2B Marketplace
Buyers, as they say, are the ones that drive the growth of manufacturing factories by placing orders there. Buyers and factories, thereby, need to be aware of each other and a Marketplace needs to be seen from that perspective so that the experience on a digital B2B platform can be enhanced for buyers in terms of ease of finding factories, ease of order placement and execution etc. However, the key question here remains – what is the working experience of a buyer from a Marketplace? What features do they believe are of more value and what more do they expect?
Stephen asserted, “In our case, which is Liverpool Retail Group, customers expect a type of product with certain quality level. They do not go into details if it is direct sourcing or third-party sourcing. It’s a series of assumptions they make that are based on the historical contacts of what the brand represents to them. We have to ensure that whatever we sell, should be aligned to the company’s values. If it is not aligned, it’s our name that takes the hit! In order to manage these expectations, brands need to align themselves accordingly with suppliers if both are associated on a Marketplace, monitor quality and lead time closely. That’s a simple but foremost expectation.”
B2B Marketplace – 6 critical functions
- Multi-vendor capabilities: A key function of a good B2B Marketplace solution is that it allows you to control your company page and information. You should have access to manage your profile, content information, contact details, pricing pages and your team’s role management.
- Self-service functions: It’s often the case that individuals prefer to place orders themselves rather than having to interact with customer service representatives. Therefore, a solid B2B e-commerce marketplace has features that enable this self-service model if companies choose to do so. B2B Marketplaces need to be highly responsive and intuitive to create an enjoyable user experience. For example, when buyers seek out solutions for their business, they often have to ask for quotes, submit orders, or track shipments – the B2B Marketplace you choose should support these functions.
- Information security functions: Just like with any digital platform, data and information security and confidentiality are essential for organisations to feel secure and comfortable using the platform. Ensure that the B2B Marketplace you choose places emphasis on protecting your private information so that you don’t need to worry about data breaches.
- Easy-to-use search navigation: A key aspect to a B2B Marketplace is the ability to filter and search for specific vendors and businesses. The right marketplace platform has easy-to-use search functions that enables you to filter sellers by brand, price range, and product availability quickly and accurately.
- Fast, flexible workflows: Flexibility and speed need to be the cornerstone of your B2B Marketplace. We’ve all seen how quickly markets and industries can change, and your e-commerce functions need to be able to adapt alongside them. Buyers and sellers need to be able to rely on a flexible and customisable platform that allows them to personalise onboarding strategies, change order submission and processing practices, and replenish supplies when necessary,
- Integration options: The best technologies can work alongside your existing apps and tools. Make sure that you find a B2B e-commerce marketplace with functions that seamlessly collaborate with any other software solutions your organisation uses. This leads to a more streamlined process and a better experience for both buyers and sellers.
