Amazon recently confirmed that they are about to launch a Swedish site, which will doubtlessly stir the pot for the entire e-commerce sector. But what do B2B companies really think of the development of Amazon and other marketplaces? In this year's edition of Litium's report “Scandinavian B2B Commerce 2020”, we asked nearly 1000 respondents that very question. In this article, we have gathered the answers.
Increased exposure the primary benefit
Amazon, Alibaba, Wish – e-commerce marketplaces are a hot topic; this is also true for B2B sales. Despite successes within the consumer segment, it seems that many B2B companies are still largely focused on the potential drawbacks of using external marketplaces for sales rather than the benefits these platforms offer. But do the drawbacks really outweigh the benefits? And what are the real benefits of external marketplaces?
The study revealed that the majority of respondents (74%) believe that the main advantage offered by marketplaces is increased exposure. This is hardly surprising given the fact that a major focus of online sales right now centers around availability, i.e. customer convenience and lower thresholds for purchases. You can no longer rely on customers to contact you to buy your products. Just as today’s consumers have grown accustomed to shopping online without having to leave the comfort of home, companies are now looking for a similar experience on the B2B market.
Is the loss of customer contact a risk?
According to the study respondents (54%), the biggest downside of selling via marketplaces is the potential risk of losing close customer relationships. Moving sales over to the marketplaces certainly makes the relationship with the customer more transactional, but it does not necessarily prevent you from maintaining contact with your customers.
However, this move requires you to ask yourself a pivotal question: what is more important to your sales - your interpersonal skills or your amazing products and services? The move towards marketplaces can certainly make your customer relationship less personal, but you also have the opportunity to increase sales volume with less resources.
Price is not always the most important consideration
According to the study, 34% of respondents said that the main argument against selling on an external marketplace is that they cannot or do not want to compete on price. It is true that much like online consumers, companies are turning to marketplaces like Amazon in search of competitive prices.
Fortunately, it is still important that you deliver on your promises as a supplier. Businesses that sell on marketplaces continuously receive ratings and reviews based on how well their products and services meet their customers’ expectations. So price is not always the be-all and end-all. The magic formula to building customer trust, and ultimately your business, is to be able to offer short delivery times and reliability – at the best prices.
Is the move to marketplaces inevitable in the long run?
Of the study respondents who do not use marketplaces, 30% reported that they lack the resources to establish this type of digital presence. And of course, such a move requires the dedication of resources across several different channels. But one way or another, the reality is that your potential customers will inevitably search for your products online, not only on Google but also on marketplaces like Amazon. Therefore, it is essential that your customers can find the products and services you offer wherever they look for them.
Many businesses report that they do not use marketplaces because they do not want to feel dependent on them, but if you really think about it, you are already dependent on Google to get traffic to your site and exposure for your products/services. All platforms that generate click-throughs for online stores – such as Google, Instagram and Pinterest – are now increasingly being transformed into marketplaces – including the platforms themselves. So, in the end, it may be in your best interest to make the strategic decision to establish a presence on the marketplaces yourself – before your competitors make the decision for you.
If you would like to see the results of the study, you can download the full report here. And if you have any questions about Litium’s assessment of the marketplaces, you are also welcome to contact us!