How to sell B2B online – direct vs. marketplace
Selling your products online comes with a wide range of benefits for you as a brand. You enjoy better customer retention, save money, and increase your revenue. But while many brands have seen the light and invested in B2C webshops, relatively few have dared to take their B2B sales online as well.
There are several potential reasons for this unwillingness of brands to take their B2B sales online. One of them is that they are unsure of how and where to get started selling B2B online.
We’ve already covered the how in multiple earlier blog posts (this one, for example). So in this blog post, we’re going to cover the where. Specifically, where you as a brand should sell your products online; Directly using your own B2B eCommerce solution or via a B2B marketplace.
Two ways to sell B2B online
Traditionally, selling B2B online as a brand is done in one of two ways; Selling online directly or selling online via a marketplace.
When selling via an online marketplace, a brand is making its products available to all buyers on the marketplace. And all the buyers are allowed to purchase the brand’s products. The creator of the marketplace ultimately decides who has access to the brand’s products.
Selling online directly, a brand’s products are only displayed and available for purchase for the buyers that the brand decides they want to sell to. The brand invites its customers to shop in a password-protected B2B webshop and control who has access to their products.
There are benefits and drawbacks of both methods, and what you should do with your B2B sales ultimately depends on what kind of brand you have (and desire it to be).
Online Marketplace sales
For many new brands just getting started, online marketplaces appear as an easy way to get started and find some customers for their products. There seems to be a belief among younger and smaller brands that a marketplace will increase visibility and familiarity with their brand and products. And while this is certainly true in some cases, this visibility comes at a price.
Competition
The first “price” you should be aware of, if you are considering selling your products via an online marketplace, is the level of competition. Competition on an online B2B marketplace is fierce, to say the least.
Depending on what you are selling, your products have to stack up against similar ones from hundreds of competitors. Here, familiarity often wins, meaning that well-known brands have the advantage against smaller brands from the get-go.
Pricing
With that level of competing brands on B2B marketplaces, many brands resort to price competition. They simply cut the prices of their products.
The first problem with this is obvious. When you cut your prices, you get less revenue to cover your expenses. Another problem is that your products might be presumed as being of inferior quality – why else would they be priced so low?
Also, if you already have agreements with resellers of your products, how would they feel that you are suddenly selling your products at bargain prices to first-time customers? Probably not too good.
Fees
To make things worse, most marketplaces charge you a fee when you make a sale via their platform. So not only have you been forced to cut prices, but now you have to pay a fee on top. Needless to say, the profits left for you, in the end, are close to non-existing.
Direct online B2B sales
The alternative to selling B2B online via a marketplace is selling directly using the brand’s own B2B eCommerce solution. This means that the brand will not get exposure to potential customers, but instead, they remain in complete control over their brand and products.
So the brand themselves will have to reach out to potential retailers to get their products in stores. For example, by attending wholesale trade shows. Once this is done, – or if the brand already has arrangements with retailers – selling online directly is utter benefits!
Stay in control of your brand and products
One of the most important benefits of selling online directly is that the brand is able to keep full control of its products and brand reputation.
When selling B2B online via a marketplace, the marketplace, and not the individual brands, controls the user experience. You as a brand is not able to send personal invites to your customers and the marketplace is handling all of the customer communication and service. This means less work for you, but also less control of the experience your customers get (which could influence whether they want to purchase your products again). Also, you will have a very difficult time building brand equity this way.
With direct online B2B sales, the brand is in complete control over the process. The brand can decide what level of service they want their customers to enjoy, and the brand themselves influence whether the customer wants to come back and order again.
If you’ve already built some brand equity, you should also have some interest in who you allow reselling your products. Whether the resellers live up to your brand standards and customer’s expectations. With direct online B2B sales, you can ensure this as well. Selling via a marketplace you don’t know for sure where your products might end up.
Personalized ordering experience
Another drawback of online marketplaces is the very limited or non-existing option for brands to personalize their profile and distinguish themselves.
When selling directly via a B2B webshop, on the other hand, you have almost unlimited options to customize and personalize your shop also when it comes to the login page. As a result, you can tailor the ordering experience for each one of your retailers. That means that you can set individual prices and discounts, offer product exclusivity, reordering functionality, etc. But you can also change the visual appearance of your brand’s B2B webshop, for example, by adding your logo and company colors.
A personalized ordering experience is more convenient for the retailers and ultimately means happier retailers.
Customer retention and revenue increase
By keeping control of your brand, products, and the ordering process, there is a good chance that you will experience better customer retention and increased revenue.
Several studies have shown that most brands that go from manual order handling to using a B2B eCommerce solution see increased revenue. There are several reasons for this effect. For example:
So while selling B2B online directly might not expose your brand in the same way a marketplace does, it will still increase your sales. And you won’t have to cut prices to experience the effect.
B2B direct vs. B2B marketplace
So where should you choose to sell your brand’s products online? Via an online marketplace or directly via your own B2B eCommerce solution?
We’ll leave that decision up to you.
But if you decide that selling directly to your retailers is the best solution for your brand, we can help you with that. In fact, you can sign up for our free B2B eCommerce solution below. Fill in your company name and email, and you are pretty much good to go – and it’s completely free!
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