According to a 2019 Hackett Group report on the value and use of business-to-business (B2B) online marketplaces, organizations are looking to reduce the complexities involved in purchasing. To do that, many organizations are considering B2B online marketplaces, which offer a host of benefits over traditional B2B procurement processes, including reduced costs in labor and process, to pricing and shipping.
What are B2B online marketplaces?
B2B online marketplaces are e-commerce solutions where products (and sometimes services) are provided by multiple suppliers, while payment is processed by the marketplace service provider. B2B online marketplaces are similar to their consumer-facing counterparts in many respects, but they also have several differences.
First, B2B online marketplaces provide controls for influencing and managing spend. This is especially important for tail spend, which typically accounts for 25% of an organization’s spend, and can also hide things such as waste, maverick purchasing, and even fraud.
Second, these marketplaces allow buyers to interact with multiple suppliers, unlike traditional supplier catalogs. This interaction with multiple suppliers can help decrease prices due to the competition that naturally occurs among suppliers. The Hackett Group created a model to help organizations estimate the hard benefits of using a B2B online marketplace. Respondents to the survey saw an average of 5% reduction in prices occurring naturally from competition in a marketplace.
Benefits of using B2B online marketplaces
These marketplaces can offer lower cost spend that can be spread across multiple suppliers, especially when that spend isn’t managed by a procurement organization.
According to the Hackett Group survey:
- 59% percent of respondents saw an average of 5% reduction in prices due to price comparison
- 69% reported savings from reduced or free shipping
- 65% were able to consolidate their supply base, and 63% were able to save money on technology enablement because they weren’t on-boarding low-cost suppliers
Most notably, 89% of respondents also saw an increase in internal customer satisfaction. Since most people are familiar with the B2C versions of e-commerce, there is a certain level of intuitiveness that already exists when using B2B e-commerce, which helps to reduce the time to buy online, rather than shopping at a brick-and-mortar store.
According to the report, other “soft” benefits include reduced wait times and increased visibility into spend. The ability to shop efficiently allows organizations to focus on their business. Traditional procurement processes can be complex, causing wait times for products that can often last months. B2B marketplaces can streamline this process, allowing users to get their products in as little as two to three business days. Seventy six percent of survey respondents noted greater visibility into spend, due to the advanced reporting and data that’s available with an online marketplace.
To learn more about the value of using a B2B online marketplace like Amazon Business, download the 2019 Hackett Group report here.
Independent research sponsored by Amazon.