Key features of a B2B marketplace

Creating a B2B MarketPlace may seem a complex task and it is difficult to get it right when there are so many things you need to remember. Here is a list of 6 key points to keep in mind before launching your MarketPlace!

The business model

Commission is based on business volume.
A MarketPlace business model is not the same as that of an e-commerce site. The latter is based on the volume of business and the number of vendors. A MarketPlace generally charges its vendors a monthly subscription to cover all or part of its fixed costs and a commission on the volume of business generated.
Just a simple example: if the marketplace takes a net commission of 10% on €100,000 of business volume and bills its vendors for a subscription of €100 each month, it will earn €20,000.
This principle of remuneration requires a dedicated marketplace trading account, as well as good organisation, particularly with respect to management control.
Please note: commission and subscription rates vary much more than on B2C marketplaces. (Commission rates range from 3 to 50% and subscription rates from 0 to 1,000 euros a month.)

The operator's customers are its vendors

Unlike a classic e-commerce site, the end customers of the platform are not its customers, but the vendors. It is to the vendors that you sell a commercial intermediation contract and the vendors are those who pay your commissions through their sales.
They must therefore be the focus of your attention and you must specify the services offered (logistics, invoicing, export assistance, etc.) that justify your remuneration and will earn their loyalty and encourage them to make maximum sales on the platform.

Customer experience depends on vendors

On an e-commerce site, the operator has full control over the customer experience.
This is not the case on a marketplace site.
Vendors play a key role in this customer experience; they are responsible for the product or service, its shipment and for all after-sales service. The operator must, for its part, manage its brand, the brand promise, litigation and ultimately, the customer experience. The operator must therefore impose rules on its vendors (standard presentation, editorial constraints, rules of conduct for customer relations, etc.) to ensure a positive and consistent customer experience.

For the end customer, the operator is a trusted third party

On a marketplace site, the operator has no control over certain key elements (customer complaints, reimbursement rates, process quality, etc.), which makes it a third party in the buyer-vendor transaction.
It must therefore act as a trusted third party and intermediary for the buyer. To assume this role, the operator must have a clear view of the quality of the relationship between its vendors and the end customers.
To avoid having to mediate in disputes that could have been avoided, the operator must support its vendors as they increase in competence with respect to customer relations and if necessary, encourage them to outsource customer relations to an experienced partner.
The operator becomes a trusted third party, and no longer just an intermediary in customer-vendor disputes.

Promotional offer management is complex

There are two ways of making a promotional offer on a marketplace site:
– The operator creates promotions on its offer or its own funds (10% discount on the first order).
– The operator creates promotional offers and invites its vendors to participate. These offers will then be showcased on the platform. In this case, it is the vendors who bear the cost of the promotion.
Promotional operations on a marketplace site are complex, because they do not only apply to its own products.
They can become even more complex, depending on the business model:
– One vendor per product item (no competition).
– Several vendors per product item (competition that tends to lower prices).

Managing payment methods and financial flows is complex and regulated

On a marketplace site, when a payment is collected, only the commission goes to the operator. The remainder must be paid to the vendor. This distribution leads to accounting, financial and regulatory complexity. Basically, the operator offers a service: collection on behalf of third parties.
This payment service is regulated in Europe and supervised in France by the French Prudential Supervision and Resolution Authority (ACPR) and the Banque de France.
To use this service, you must work with an approved partner such as Webhelp Payment Services.
Your payment partner will take full charge of managing payment flows (deducting commission, cash in, cash out). In a B2B context, it is important to choose a specialist payment company that allows you to offer your end customers B2B-specific payment methods and terms.

Do you now feel ready to start creating your Marketplace? Please do not hesitate to contact us to find out about the opportunities and choices available for setting up a Marketplace and a fluid, appropriate and upgradeable payment management system.

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International B2B e-commerce: 5 mistakes to avoid

B2B ecommerce

Increasing numbers of B2B businesses both large and small are setting their sights on trading internationally through an e-commerce platform. To give yourself the best chance of making a decent fist of it, Axel Mouquet, CEO of Webhelp Payment Services, proffers his advice and explains which mistakes to avoid.

At Webhelp Payment Services, we know all about trading internationally: we cover 35 countries and we collect 80% of our payments (€1,5 billion a year) outside France on behalf of B2B vendors.

As a payment institution, at Webhelp Payment Services we help our clients to devise and manage their B2B payment strategy. Our shared objective is to improve the customer experience and develop a secure business.

To this end, we offer risk management, transaction management and non-payment management services, working internationally with brands such as Conrad, Aniel, IPH, Procsea, Conforama, Le Duff and Rungis International Market.

From day-to-day practice and our observation of the market, we have identified 5 avoidable mistakes:

    1. The ‘everywhere-at-once, all-at-once’ strategy. The temptation is to launch in several countries at the same time instead of introducing a gradual rollout (which is more advisable as we shall see later). In this faulty model, the starting point is often the home-country e-commerce website or the reference website, which is then cloned and rolled out simultaneously in the different languages and countries. Typically, this is done by employing translators to translate the existing content. But you can bet your bottom dollar (or euro) that it won’t work!
    2. A succession of ‘cut-and-paste’ openings. In this variation on the faulty model above, the plan is to proceed country by country, simply ‘cutting and pasting’ from one site to the next. But here too you’ll be heading for trouble, as B2B conventions vary hugely from country to country. You have to understand and follow not only the law but also business practice, decision-making cycles and order-validation circuits for example. It’s therefore a no-brainer: you must redesign the site – and the customer experience – for each country or region.
    3. Staking everything on adwords. This is perhaps the costliest strategy: the company invests a fortune on buying adwords in the hope that this will capture demand. Of course, you must not neglect or forget about digital marketing, but human contact is important too! In B2B commerce, building a relationship of trust – between professionals – is crucial, especially when your business is starting out. You have to devise a sales force deployment strategy on the ground or operating in the local language. And later you will have to regularly tweak your mix of digital and on-the-ground presence.
    4. Over-centralising your business. Is your company based in Paris, Lyon or Bordeaux? Then it’s there that all of your international operations will be based. We cannot say it often enough: in B2B you must ensure you have a physical presence local to your customers. And your customers will want to check that this presence is on offer, even if it is just a sales or logistics service. In B2B, digital commerce will never do away with borders completely!
    5. Having the same payment conditions everywhere. To speed things up when rolling out your B2B e-commerce platform internationally, it is tempting to standardise your payment conditions. But experience shows that even within Europe there are major differences here, and some of them may even put you at risk. There are differences between payment conditions, respecting payment deadlines, legal aspects of the market, etc., and you also have to take into account local competition, prices and products and services on offer. And in B2B, assessing customer credit risk is crucial. Webhelp offers a range of specific international commerce solutions.

    In summary, our advice is not to spread your resources too thin and to tailor your offer to each locality. To become an international business you will have to identify the key success factors for each country and focus your efforts on them.

    And here are 5 examples of approaches that work well, where we have helped our customers grow their B2B business internationally.

    1. Introduce a gradual, tailored rollout. The idea is to be realistic, starting with the country or region that appears to present the fewest operational difficulties and learning all the lessons you can before expanding elsewhere. On each occasion, you must take the time to understand the specific characteristics of the local demand. You should implement a carefully thought-out, localised approach incorporating co-design and co-construction.
    2. Use the marketplace model. The marketplace model has certainly proved its worth in B2C and now represents a tremendous opportunity in B2B since all the tools and methods are already available. This strategy enables you to construct your offer locally, minimising the risks, investment and any logistical problems involved. And you also have the option of signing up dependable salespeople with a good reputation who are already in place. At Webhelp, we think this model is becoming the go-to approach and that you should consider it very carefully. In other words, you’ll have to have very good reasons not to adopt a marketplace-based approach!
    3. Make sure you have localised payment strategies. This is where Webhelp Payment Services comes in: devising, implementing and managing the complete payment circuit, with the option of including credit insurance, constructing a secure business model for the country in question and taking into account specific customer risks. In this respect we are able to provide tailor-made solutions on the basis of conventional or pooled distribution of profits/risks.
    4. Build locally with international partners. Your success is conditional upon knowing the ins and outs of B2B practices in the country or region concerned. Giving yourself the ability to identify and work with international partners gives you a decisive advantage. Especially if your growth objectives – organic or external – are ambitious.
    5. Develop a local sales force. As we have seen, B2B is not all about digital technology. You should consider gradually introducing sales forces on the ground.


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Are High Street Stores Now The Weakest Link For Retailers?

As I have often detailed here, omnichannel is here to stay. Customer expectations today demand that the experience they have of a brand is just as good online as offline and however they choose to communicate, the service will be great.

That’s what customers expect today, but for many brands it is still not a reality. This article in eCommerce News about retailers in Sweden shows that for retail brands there it is often the physical store that is ruining the omnichannel experience. High street stores are becoming the weakest link.

A quarter of Swedish shoppers feel that they get a much more personal experience when shopping online, according to a new study.

Can you imagine that statement from a couple of years ago when the personal in-store experience was considered to be the reason why people will keep on returning to real stores.

Customers know that brands know about them and this helps retailers identify what customers like, what they are not interested in, and how to offer timely deals that will encourage more purchases. All this information is easier to gather in the online environment, but now there appears to be a backlash against the way that the real in-store experience differs – because the employees of the store do not know you when you walk in off the street!

Naturally the real in-store experience will always remain the weakest link if customer expectations for personalisation are increasing to the point where customers want to be treated as individuals when they walk into a store.

Building this kind of in-store personalisation can be complex, but it depends on the approach. The UK retailer Mothercare wrapped an online receipt system around all their existing processes – so after a purchase was made if the customer gave their email address for the receipt details then the system could match up their details to previous spending and offer additional deals.

This does rely on personalisation after a purchase though. Facebook offers location-aware technology to retailers so they can be aware of which customers that already “like” their brand are nearby to a store. This can be cross-matched with other demographic information to send offers direct to the phone of the customer.

Utilising a system like this also restricts the brand to only working with customers who are active mobile users of Facebook, but I do think that some kind of “logging in” will become more common when customers enter a store they like – probably using apps available from the retailer.

If a customer is encouraged to let the app know that they are in-store and the retailers makes it attractive enough to do this then not only can the in-store experience be personalised, but the retailer gets even more data on what the customer is interested in.

Most of us have now become used to reading news online to the extent that some major newspapers, like The Independent, no longer even provide a printed edition. The online news experience lets us comment on stories and share articles that are interesting. It is a far richer experience that the traditional consumption on news printed on paper and this kind of paradigm shift is taking place with retailers. The online experience is now so good and personalised to the individual; those shoppers want to feel the same way when they walk in a store.

What do you think about these changing expectations? How will it affect retail on the High Street? You can leave your thoughts or comments below.


What did we learn from Black Friday 2015?

A couple of weeks on from Black Friday in the UK and what have we learned?

 

Well, as predicted in The Drum recently, the omnichannel experience is now more important than ever. Creating a seamless customer experience all year round is more important than discounts on a single day. However, Black Friday was still extremely popular so what happened this year?

 

First, it became clear that the online discounts are becoming more popular than those discounts available in-store. I was watching the TV news and thankfully didn't see the traditional scenes of people fighting over TV sets, which fits with retailers saying this year that the in-store rush has eased. Conversely online shopping was up 36% with £1.1bn spent by online bargain hunters.

 

Contrast this with the midnight store openings. At Boots on Oxford Street only journalists were present. Other stores opening early at five or six in the morning found very few customers prepared to brave the cold weather conditions. Analysts also indicated that the recent terror attacks in Paris could have affected the desire for shoppers to line up in the streets all night, but I think the real reason for this change is just that shoppers have moved online.

 

15 major retail websites crashed on Friday. Big names such as Argos, Tesco, and John Lewis all suffered website issues demonstrating that even with all the planning and expectation, the sheer amount of customers all trying to shop online at the same time on the same day can create a nightmare for the IT team managing these ecommerce platforms.

 

Retail analyst Richard Hyman has suggested that about a quarter of UK retailers ignored Black Friday altogether. He said that next year there may be an adjustment in how stores adjust their opening hours and staffing levels, based on the trend for more shoppers to just engage online.

 

The real question for many retailers will be whether Black Friday is worth the effort and discounting. Asda was
the most public refusal this year, although other major brands such as Next and Jigsaw also ignored it. These retailers have all suggested that they would prefer to spread discounts over the entire holiday shopping season rather than focusing on a single day

.

The jury is still out. Black Friday 2015 was an enormous success for online retailers this year, but the message is far more mixed from the High Street. I’m sure it will be taking place again in 2016, but it will be interesting to see how those retailers with both an in-store and online offer manage to promote the event.

 

See how 10 top UK retailers performed on Black Friday

 

 


UK Retail Leads in Omnichannel Adoption

Consulting firm Kurt Salmon recently published their 2015 analysis of the retail omnichannel market in Europe. Being British and focused on omnichannel developments in the UK the most striking results that leap out from the research is that British retailers are far ahead of their European counterparts.

The research focused on four different areas; mobile, online, social, and cross channel. It stated that every company surveyed could improve their cross channel offering, but in the other areas there are clear winners.

The leading companies were Topshop, Wallis, and Miss Selfridge, followed by department stores John Lewis and House of Fraser.  A particularly good result was for the Arcadia group, with Topshop the top brand overall across all metrics.

An interesting observation from the survey was that one area where British stores appear far behind continental Europe is in offering stock checking options on the website. Having the ability to go online and check that an item of stock can be found in a store is a strong driver for customers to visit a store. If they need an item quickly it helps immensely to check stock levels or even having the ability to check stock and then reserve the items.

This is a great example of how the online store can be married to the physical store in a way that makes both online and offline work together. Retailers looking to drive cross channel engagement need to consider exactly how to enable customers to use the right channel at the right time, without an enormous cost of switching.

Given that the weakest area for all companies in this research was support for customers across multiple channels there is still plenty of work to be done. Perhaps by next year, some of these companies can have a much stronger omnichannel offer for their customers.

What do you think about the state of omnichannel adoption in retailers across Europe? Leave a comment here or get in touch via my LinkedIn profile.

 

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