Distribution Marketplaces

Disruption in Distribution

10 Jul 2018

Cloud-based B2B eCommerce solutions are rapidly becoming more robust, and less expensive. As the technology landscape evolves, the trend toward distributor marketplaces in the cloud is accelerating. This disruptor is quickly changing the face of the industry. Lesser known distributors with the most advanced cloud-based marketplace strategies have an opportunity to finish this year as industry leaders, leaving larger distributors in the dust.

A 2017 UPS study of 1,500 industrial buyers across the U.S. reported that the number of buyers who have purchased from an e-marketplace has more than tripled in the past four years, from 20 percent in 2013 to 75 percent in 2017. Although major distributors initially created the first set of “mega” marketplaces, many smaller distributors are taking advantage of lower cost cloud-based B2B eCommerce solutions and coming together to create collaborative, robust marketplaces of their own. 

One example would be distributors that service the contracting industry. An electrical supply company might team up with a lumber wholesaler, plumbing and heating distributor, and other complementary distributors to create a new marketplace as a “one stop shop” for the contractor customer. This allows each member of the marketplace to provide their unique set of products while expanding their overall reach. Together these smaller distributors are able to reach new customers and markets, while expanding their share of wallet at the same time. It also puts them in a position to compete with larger distributors, and even Amazon.

Cost is an important component for smaller distributors but to create the right strategy for a strong online commerce experience still requires the right platform. Robust B2B cloud-based software must not only create a strong customer experience; it must provide fully supported, native B2B capability out-of-the-box whenever possible. Cloud-based distributors need to handle the complexities of B2B commerce including:

  • Content that is targeted to the personal experiences of individuals and the organization
  • The ability to customize controls for quotes, budget and approval workflows
  • Complex catalogues including customer specific products, contract pricing and local inventory
  • Ease of integration with backend ERP and PIM systems
  • Once again, a configurable, fully functional mobile app

The right strategy for this disruptor takes into account the unique, hybrid nature of B2B commerce. Although more of the buying process is driving toward self-service, the complexity of the B2B industry means that a customer may need personal service at any time. A distributor needs to be able to handle those offline requests for help in the buying cycle, with full knowledge of every transaction that has occurred before. In fact, a 2015 B2B Buyers Consumer Information Study reported that 75% of B2B buyers expect everyone they deal with to know what interactions, on- and offline, have already occurred and the exact information that has been exchanged. Integration with distributors’ complex enterprise systems, a strong CMS and a fully functional mobile app are absolutely required to deliver that unified commerce experience B2B buyers expect, particularly in a cloud-based marketplace.

As the B2B buying cycle becomes increasingly data-driven, marketplaces are delivering value to the bottom line from this perspective as well. Robust, cloud-based marketplaces provide not only a wide span of products, but more data to help accelerate the buying cycle through stronger personalisation. They also deliver data that is invaluable in the form of lead generation opportunities for both the distributor and manufacturers.

Without providing more value, distributors will lose business to both direct sales for manufacturers, and to smarter distributors creating these enhanced marketplaces. A strong marketplace strategy using the right cloud-based platform could be a make-or-break deal for many distributors in 2018 and beyond.


Insite Software

date published:

10 Jul 2018