Whitepaper B2B Marketplaces Webhelp Payment Services

Whitepaper: The sun rises - The role and opportunities of B2B marketplaces in a post-Covid world

Whitepaper-B2B-Marketplace

Following our last studies “The spring of B2B marketplaces” (2017), “B2B marketplaces are blossoming” (2018), and “The summer of B2B marketplaces” (2020), we once again joined forces with the strategy consulting firm Roland Berger and Mirakl to take stock of this new year of development for B2B marketplaces.

This new edition, entitled “The sun rises – The role and opportunities of B2B marketplaces in a post-Covid world”, goes further into the new development and opportunities for B2B marketplaces which played a key role in helping businesses continue their activities during the pandemic.

While the growth of B2B marketplaces has thus accelerated, they also face added pressure from B2C marketplaces, as customers’ expectations have also risen. Increasingly threatened by leading generalist marketplaces, B2B players have turned to diversifying their products and developing vertical services on highly controlled and specialized markets to protect themselves. This specialist approach shows clear success potential today and in the post-Covid era, as B2B marketplaces are expected to continue to grow at a strong rate.

We invite you to download this study, which addresses the following topics in detail:

  • The relevance of B2B marketplaces in a post Covid-world
  • Two distinct strategies for B2B marketplaces: digital generalist natives and incumbent B2B players


Fashion: sales agents role

[Fashion] "Sales agents play a key role in brand development!"

Fashion: sales agents role

Jérôme Tordjmann runs the Talk sales agency, specialising in urban fashion and streetwear, in both physical and digital environments. He answers 4 questions put to him by Aline Abeya, Sales Manager France & Benelux at Webhelp Payment Services.

The role of a sales agent is to help fashion brands, whether they are emerging or well established, to grow in a market. And in these complex times, they play the even bigger role of a facilitator. So at Webhelp Payment Services, we pay particular attention to our relationship with sales agents, to whom we offer a comprehensive range of payment services. Your agency, Talk, specialises in urban fashion and streetwear. Can you tell us a bit more about what you do?

Jérôme Tordjmann: I set up the Talk agency and have been running it since June 2019. It’s one of the subsidiaries of JV Fashion which I established in 2006. Talk specialises in urban fashion and streetwear for men and women on a B2B basis.

Our team of 7 people offers selective or comprehensive support in 3 areas:

managing sales in France and around the world (business development, sales, after-sales), with the overall management of billing, payments and debt collection taken care of in partnership with Webhelp Payment Services

creating temporary sales outlets: in-store corners, pop-up shops and shop-in shops (Galeries Lafayette, Printemps, Samaritaine, etc.), as well as recruiting and managing teams, training, merchandising and logistics. We also have a permanent showroom in central Paris, and we rent temporary showrooms during the fashion weeks in January and June.

– organisational consultancy: marketing, positioning, creating or adapting collections, artistic direction. We work alongside brands in all these areas, in both physical and digital environments – in the phygital world if you like. As far as the digital world is concerned, we can help brands with marketplaces like Zalando and Amazon which are becoming more and more influential from a commercial point of view.

So to sum up, we help a lot with “value creation”: sales agents play a key role in developing fashion brands!

To give you an idea of how well Talk is growing, our turnover has doubled each season.

Can you describe the kind of brands that you work with?

J.T.: They are often European brands, and exclusively involved in young, urban fashion and streetwear. We want to build and promote a really consistent world.

We work regularly with around fifteen brands, including: Daily Paper, ARTE Antwerp, Foret, The New Originals, Libertador, Mercer, Ksubi, Shaka, Rise of Human and Dechase.

Webhelp Payment Services offers sales agents a comprehensive range of payment services, from billing to debt collection, both nationally and internationally. And of course paying the agent their share after being paid by the client brand. What does your partnership look like?

J.T.: I’ve been working with Webhelp Payment Services since 2006, when it was called FDI. Talk’s clients are mainly adopting solutions like order analysis, payment plans, debt collection, credit insurance and customer scoring, both in France and internationally.

So at the moment we are not using the other services that Webhelp Payment Services offers sales agents, such as imports, logistics, paying commissions and KYC.

We are also in discussions with Webhelp Payment Services about offering some emerging brands the chance to embrace processes geared towards wholesale management. This is so that we can work together to help them grow in areas such as managing customer receivables, multi-brand stores and other strategic organisational issues.

How do you see the future of fashion brands in an era of marketplaces and online stores?

J.T.: Quite apart from the pandemic, online sales are booming. These sales compensate, sometimes to a large extent, for the decline in business for multi-brand retailers for example.

So clearly, we need to think about the development of large generalist marketplaces, like Zalando and Amazon, as well as more specialist platforms. We help brands within this environment, which is often new to them.

However, I sincerely believe that opposition to online shops is no longer a big deal. On the contrary, we are seeing the rise of a phygital approach, combining sales in physical stores with digital channels, trying to find the right balance.

The most dynamic emerging brands understand this: I can see that all the ones that we work with have an online store, which gives them a revenue stream, consolidates their financial and commercial position, and lastly, speeds up their growth.

Therefore, a phygital approach is a real opportunity for fashion brands, if they know how to manage it!

To find out more about this topic

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B2B Marketplace payment terms

B2B Marketplace: how to reduce payment terms?

B2B Marketplace payment terms

Payment terms, if not met, do businesses a disservice by depriving them of a source of funds. In the case of B2B marketplaces, which act as a link between professional sellers and buyers, it will be crucial to manage these deadlines by offering tailor-made solutions adapted to the business lines and operating models.

Although the Modernisation of the Economy Act (LME), which entered into force on 5 August 2008, made it possible to reduce payment terms and thus improve the cash flow of some suppliers, these payment terms vary greatly from one sector to another*.

On average, payment terms are 44 days for customers across all industries, with 25 days for commercial customers compared with 55 days for manufacturing industries. Within these same industries, companies pay their suppliers between 42 and 61 days on average.

Délais de paiement marketplace B2B

How can one remove barriers and offer buyers payment terms while keeping control of the seller’s cash flow and exposure to risk?

This is the equation that operators must solve in order to convince buyers to finalise a transaction and to ensure that sellers use the marketplace as a strategic axis for growth.

As a payment institution, Webhelp Payment Services is used to working with different business sectors such as fashion, agri-food, pharmaceuticals and manufacturers. We offer marketplace operator customers solutions specific to their customer strategy, including maintaining control of payment terms and deadlines in order to reduce risk. In fact, it is up to the marketplace operator to define the rules that apply on its marketplace. It thus directs the buyer towards a risk-free but potentially prohibitive prepayment, or towards payment on the due date, which facilitates the transaction but places a financial risk on the seller.
The payment terms themselves contain a number of elements that facilitate risk management, such as payment dates or the method of payment (bank transfer, direct debit, financing plan, etc.). Also, this decision-making phase is even more crucial than the transactional phase because it will help avoid problems in the future.

 

Tailored solutions to reduce payment terms

In addition to its function of bringing sellers and buyers together via the platform, the marketplace makes it possible to automate the tracking of invoices until they are integrated into the interested parties’ CRM. Automation of the process thus allows considerable time savings between invoicing and payment, significantly reducing the payment date.

To reduce and control payment terms on your marketplace, our experts support you based on the profile of the transaction and the buyer with tailor-made solutions adapted to your situation:

  • Is this a first purchase?
  • Do you have qualitative information about the buyer and their payment behaviour (have they ever had outstanding payments to their bank? Do they have overdue debts?)
  • What is the transaction worth? (a €100 purchase does not involve the same financial risk as a €50,000 purchase)
  • Is the buyer covered by credit insurance?

Finally, it will be essential to set up a proper credit management process, following-up overdue invoices and a step by step reminder and recovery process (amicable, pre-litigation, litigation).

 

Our experts will recommend good practice to suit your situation:

  • If it’s the first transaction between a seller and the buyer: focus on zero risk 

In the case of a new customer it is preferable to offer only prepayment by credit card or bank transfer to reduce the risk of unpaid invoices (order not despatched until payment has been received).

If you know your customer, you can give them the choice of payment method. Alternatively, you can calculate the customer’s outstanding payments and offer the customer only prepayment if outstanding payments are already very high in your marketplace.

Either way, these management rules are decisions for which the operator is responsible and are applied in the marketplace via the PSP and the platform.

  • The due date has passed 

Above all, it will be necessary to manage an incremental approach to future payment reminders. A customer who is late in paying is not necessarily a bad customer. Also, it is advisable to send the first reminder by e-mail or SMS, then to space out reminders so that they are not perceived as harassment.

However, if after several weeks the payment has still not been received, we will recommend that you call in specialist collection agencies who will be responsible for contacting the customer (by post and telephone).

To conclude, while it is true that, in the context of how a marketplace operates, the risk of non-payment is borne by the seller, it nevertheless remains the responsibility of the marketplace operator to set the rules and more particularly the payment terms made available, the payment deadlines granted or the type of reminders when payments are in default.

 

These good practices apply internationally, adapted to normal practice in each country, something which Webhelp Payment Services does through its seven subsidiaries based in Europe and North America, making payments to more than 35,000 buyers in 35 countries.

 

* Based on the 2018 Annual report on compliance with payment terms

 

 


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Debt collection and people

Collection of overdue payments: effective and people-friendly solutions based on Commitment, Innovation and Solidarity

Debt collection and people

In a difficult social context, a new model for collecting overdue payments is needed. More people-friendly, but no less effective, the new model has three focuses: Engagement, Innovation and Solidarity, as explained during a Smart Session given by Franck Etienne, General Manager of Collections Services – Customer Financial Experience products at Webhelp Payment Services.

Methods of collecting overdue payments are changing. They are adapting to a difficult social context, scarred by both an economic and a medical crisis. For businesses, the situation is worrying and delicate: what’s the best way to make it work? In-house or with a specialist partner?

Experience shows it is wise to re-organise the model around three focuses: Commitment, Innovation and Solidarity.

 

1. Commitment: to make collection advisors more effective

As professionals, collection advisors are accountable for the advice they provide, i.e. what they say to a client. Ultimately, this responsibility falls on the partner company. So the initial training and then daily coaching of these teams is crucially important.

Every day, these advisors are dealing with people who are struggling or unwilling to pay. So they are “on the front line”, displaying the brand image of the company seeking payment. Therefore, the advisors need to be extremely careful when using the three traditional phases – case analysis, listening and finding solutions! In addition, monitoring, listening and measuring systems need to be set up and properly managed.

Overall, the advisor must feel fully accountable and committed to his actions, completely consistent with his colleagues and managers and within the “spirit of the brand”.

From the customer’s viewpoint, it would be inadmissible for the credit company to provide responses which varied with the contact person or the communication channel (email, mail, SMS, etc.).

This concept of advisors’ professional commitment must be reconciled with the concept of trust.

Typically, the business of collection starts with fairly rigid call scripts. Exchanges between the advisor and the client are structured as they progress – which is very reassuring for a newly recruited advisor, for example.

However, switching as quickly as possible to other methods, such as the mind map,is recommended. This very practical and powerful technique makes it possible to visualise the client’s thoughts and behaviours. It is a live, adaptable method that benefits from exchanges between the various parties involved. This free flow of ideas makes it possible to emulate and constantly improve, increasing the competence and confidence of advisors – which ultimately results in greater efficiency.

And of course, in a context of working from home, whether hybrid or full time, this concept of trust between advisors and managers has become a key point of collective efficiency – the manager’s adaptability also being crucially important.

This new organisational situation will probably be perpetuated in many companies, the aim being a “triple win'” where everyone benefits: employee, creditor and end customer.

To meet this commitment challenge, a healthy trust between employee and manager needs to be put in place, rather than “command and control”!

 

2. Innovation: so that the advisor optimises the collection strategy

Too often, the keyword “innovation” is associated with new digital tools. This should not be exclusive: social innovation must remain the priority, as technology is there to be used for human performance.

For example, when carrying out data management analysis for our customers, we study many variables: profiles of overdue customers, behaviours and reactions to requests, analysis of reachability, creditworthiness, payments, etc.

In our experience, for this data analysis to be effective, it must be cross-referenced with analysis of the actual experiences of advisors and their managers.

What we find is that, over and above raw and quantitative data, it is the quality of the human interaction that makes the difference.

Thus the advisor has a key role in realising and optimising brand strategy. However, it should not in any circumstance be considered rigid, definitive and mechanically employed in a “top down” manner.

To return to the concept of technological innovation, let’s not forget we are now at the stage of enhanced advisor. This means the advisor can rely on a variety of automated business process solutions (or RAP for Robotic Automisation Process).

In practice, some repetitive or low value-added tasks are handled automatically, either totally or partially. This usually but not always refers to back office areas.

For example, there are real-time monitoring and re-transcription systems for conversations between advisor and client. They provide indicators that tell you about the quality of the conversation, such as its emotional content.

These monitoring tools can also offer the advisor tools to help with decision-making or discussion.

However, these tools should be studied or implemented with care. Within the Webhelp Group, experiments are underway, particularly in Nordic countries.

Measuring the implementation costs for these solutions is essential. In addition to direct costs associated with the acquisition and technical operation of these solutions, there are organisational costs to be included. These enhanced advisor solutions require very specific HR and managerial support. Careful preparation and then testing are required to create the expected added value!

Finally, technological innovation also applies to the omni-channel advisor. This advisor no longer only handles outgoing calls; he also handles incoming calls, emails, chat conversations, and sometimes even mail. This has led to the growing importance of writing in recruitment and training processes for collection advisors.

3. Solidarity: for empathetic support in line with brand values

Solidarity is traditionally defined by concepts of “social duty, reciprocal obligation, help and assistance, courteous collaboration between people in a community… “.

The brand must position itself clearly in relation to this fundamental value. This is even a priority in certain professions, such as mutual organisations and insurance companies for example.

And so in 2021, and probably in 2022, the brand will ask the question: “how are we to approach our clients who are suffering hardship in such a stressful social, health and economic context?”.

For its part, for several years now Webhelp Payment Services has been working in partnership with Crésus,a federation of 24 regional associations. Their mission is to help people who are in over-indebted or suffering financial problems. They also play a role in providing information on excessive debt and its prevention.

For example, this partnership has made it possible to measure people’s level of fragility in order to inform collection services and allow referral to appropriate support services.

In certain sectors of activity, this value of solidarity also enables the brand to play an advisory role–going as far as providing coaching. In addition, experiments between Crésus and Webhelp Payment Services will be extended during 2021.

Similarly, the idea of solidarity applies to teams of advisors engaged in a collective effort to improve service and share best practice.

To sum up, although there is a certain amount to be collected, it is possible – and probably desirable – to bring people into the relationship, while relying on technologies and tools that enhance that relationship.

It is also this empathy and this search for human solutions that over time will lead to a good and lasting relationship with the customer and a positive brand image! A relationship to everyone’s benefit!

 

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The Summer of B2B Marketplaces

The Summer of B2B Marketplaces

Following our last two studies “2017 – The spring of B2B Marketplaces” and “2018 – B2B marketplaces are blossoming”, we once again joined forces with the strategy consulting firm Roland Berger and with Mirakl to take stock of this new year of development for B2B marketplaces.

This new version, entitled The summer of B2B marketplaces: a bright future ahead for marketplace development, goes further into the new development and opportunities for B2B marketplaces.

We invite you to download this study, which addresses several topics in detail:

  • The different maturities on the subject of B2B Marketplaces by industry;
  • The 5 different strategies of B2B Marketplaces;
  • The different approaches to launch such a project;
  • A focus on the automotive spare-parts market based on the Marketplace model.


Trends 2020 – Upply is digitalising the supply chain and integrating Webhelp Payment Services solutions!

A preferred marketplace for transport and logistics professionals, Upply brings increased transparency and fluidity to the supply chain market. Highly innovative in terms of data and AI, Upply uses KYC and payment services provided by Webhelp Payment Services. For more details, we spoke to Christophe de Sahb, Business Developer at Webhelp Payment Services.

 

Launched in November 2018, Upply's mission is to help supply chain and transport firms control volatile freight rates by accessing prices and transport capacities in real time.

Several initiatives have followed:

  • Launch of a service for real-time comparison of transport prices in 2018
  • Launch of a price analysis and trends functionality in spring 2019
  • Launch of a marketplace for road transport in France in July 2019

Data science, AI and Marketplace for supply chain optimisation

Upply combines business expertise and data science: the fast-growing company currently employs 110 people, including 9 data scientists, and processes 150 million data updates every week. It's a winning formula, since more than 700 companies have registered on the Upply marketplace since July 2019!

Marketplace offers its users – hauliers, shippers and charterers – a direct digital connection service and a valuable decision-making tool.

The platform collects data (prices, meteorological data, financial indices and economic indicators, etc.) and analyses it using mathematical algorithms and advanced machine learning methods.
Xavier Fraval, Product Director at Upply, details the company's approach: "Thanks to the marketplace, we give all players – large or small, old or new – free access to offers and requests that correspond to their transport needs, using a matching algorithm."

How Webhelp Payment Services manages KYC and Upply's payments

"We started working with Upply in January 2019. Thanks to the pragmatism of this start-up and its agile mode of operation, our KYC and payment solutions were able to be integrated into marketplace in just four months," explains Christophe de Sahb, Business Developer at Webhelp Payment Services.

As of July 2019, we have enabled payment by bank transfer (denominated in euros), which is heavily used in the B2B market. Bank card and SEPA direct debit payment will be available in   early 2020.

As Upply states, prices are freely set and negotiated between the client and the carrier, with full transparency. For the marketplace service, Upply receives a management fee corresponding to 5% of the transport price, shared equally between the parties (2.5% for each).

A customised onboarding and payment solution based on a specific API

As Upply is 'API centric', it is natural that they chose this solution. "Our API solution builds on    the one we successfully implemented for our Rungis marketplace customer", emphasises Christophe de Sahb.

Tight deadlines and a challenging level of demand for the Webhelp Payment Services team. "We had to work intensively to produce specific diagrams, because, for example, Upply wanted one invoice for the seller and another for the buyer for each payment", adds Christophe de Sahb.

In practice, these two invoices are produced by Upply and forwarded to Webhelp Payment Services, which is then responsible for overall reconciliation.

"We have prepared a specific system for Upply, from ordering through to delivery", explains Christophe de Sahb. That's why we organised technical workshops between the teams, particularly around certain key themes: payment, identification and vendor onboarding (linked to KYC and AML regulations), invoicing and reconciliation, and finally pay out (remittance of funds).

"Upply's tools and operating methods allow for a successful balance in relationships among all players in the supply chain, today in Europe and tomorrow worldwide. We are delighted to be of service in this great technical and human adventure", concludes Christophe de Sahb.

 

Also read:

B2B Marketplaces – Limits of the Marketplace model for Global Account customers (1/2)

B2B – Marketplace or Drop Shipping: It is urgent not to choose (2/2)


Axel Mouquet appointed President and CEO of Webhelp Payment Services

Axel Mouquet, Deputy General Manager and Chief Commercial Officer of Webhelp Payment Services, a subsidiary of Webhelp group dedicated to payment and credit management, has been promoted to President and CEO.

He succeeds Dominique Chatelin, who has been the head of Webhelp Payment Services for the past 13 years, has now become President of the Supervisory Board of this entity.

A graduate of ESSEC business school, Axel Mouquet joined Webhelp in 2008 as Key Account Manager, before taking over the top management role of the Compiègne site in 2012. He then joined the subsidiary Webhelp Payment Services, first as Director of Business Development at the end of 2014, then as Chief Commercial Officer in January 2018.

Over the last 12 years within the group, Axel Mouquet has played various key roles in the development of Webhelp and has been instrumental in establishing Webhelp Payment Services as the leader for B2B Marketplace payments in Europe.


Outsourcing your receivables management to boost your business

Companies outsource primarily to cut costs. But today, it is not only about cutting costs but also about reaping the benefits of strategic outsourcing such as accessing skilled expertise, reducing overhead, flexible staffing, and increasing efficiency, reducing turnaround time and eventually generating more profit. When it comes to receivables management and its implications on an international scale, you are facing multiple practices requiring a vast range of skills such as:

  • Customer identification and risk assessment;
  • Credit insurance management and credit limit decisions;
  • Decisions on terms and method of payment;
  • Handling of orders;
  • Recovery processes;
  • Customer service and complaints management;
  • Payment allocation and transfers of receivable to suppliers bank accounts;
  • Legal and pre-legal claims management;
  • Problems identification and problem solving.

Benefits of outsourcing with Webhelp Payment Services

Webhelp Payment Services partners and clients have experienced numerous benefits from our outsourcing solutions. Some of them are:

  • Access to skilled and highly trained expertise;
  • Increased in-house efficiency;
  • Increased the quality of your client portfolio;
  • Increased customer satisfaction;
  • Reduced internal costs;
  • Increased turnover;
  • A drastic optimization of the DSO (Daily Standard Outstanding);
  • Strengthen business relationship with the customers due to the decreased number of disputes.

Impact on your organization

Companies are increasingly sensitive to the strategic aspect of their cash flow situation, and therefore to the management of their debts.

In today’s world “cash is king”. The cash flow is a key component for a successful business. A functional debt recovery procedure is now a top priority of many officers.

  • What level of risk am I prepared to accept?
  • What payment terms am I able to arrange for my customers?
  • What attitude do I need to assume when payment problems arise?

This is directly linked to changes put in place within many innovative businesses, to adapt to the new commercial context:

  • Focusing on the core activity;
  • Streamlining costs;
  • Profiting from the experience and unique skills of a partner;
  • Growing your flexibility;
  • Focusing management and investments on strategic functions;
  • Simplifying non-strategic processes.

The positive impacts on business organizations include:

  • Immediate access to the most advanced processes and tools;
  • A variable cost model;
  • Improved cash flow situation;
  • A better image of your professional presence in the international markets.

If you liked this article, please feel free to share it or to consult our website!


B2B Marketplaces – Limits of the Marketplace model for Global Account customers (1/2)

In B2B distribution, the new challenge is to massively expand the product offering. The Marketplace model has rapidly prevailed in this context. It is now showing some limitations, as François Duranton, CEO of ZeTrace, explains in this first column.

B2B marketplaces are gathering momentum! They are currently winning VSE/SME targets, especially for service-sector and non-strategic purchases.

But it is true that they are still facing some difficulties with Global Account and Government Contract customers, particularly for strategic or primary purchases.

Before going into detail regarding these difficulties, we may specify that there are three models for massive expansion of the product offering:

  • the industrialized Drop Shipping model, where a distributor shows its customers the catalogues of suppliers who will perform delivery;
  • the Marketplace model which establishes contact between vendors and customers around a trusted third-party operator; and
  • combination of these two models.

The advantages and disadvantages of these models are very different. For Global Accounts and Government Contracts, the Marketplace model has five main limitations.

1. Risk of legal requalification of the marketplace

On paper, the Marketplace model enjoys an excellent image. For example, it is very efficient for the delegation of tasks to the vendors – which take charge of catalogue onboarding, stock and price management, orders management and customer service, etc.

But the marketplace is based on a special business model, which could pose a problem for Global Account and Government Contract customers.

For example, the concept of personalized prices or prices negotiated with the operator is problematic, because, on a marketplace, the price is usually controlled by the vendor. But, if the marketplace imposes negotiated prices on its vendors, the latter could blame it for not complying with the standard intermediation model, i.e. doing “disguised drop shipping” – and this requalification could take place before a court.

Just recently, Cdiscount avoided a ruling of liability on counterfeit products sold on its Marketplace, in particular because it had in no way changed the information provided by the vendor, and had therefore remained in a role of hosting service and not publisher.

To meet the needs of these customers and to reduce the legal risk, the operator will therefore be obliged to take on numerous responsibilities (product compliance, tax reporting, customer relationships, etc.). And this complicates the pure marketplace model and has an impact on its profitability.

2. IT problems in ensuring an assortment for each customer

The Global Account and Government Contract customers tend to compartment their procurements: certain products, at a certain price, from a certain supplier.

The marketplace must therefore filter its assortments according to the customers who log on, and combine them with the negotiated prices.

This situation is not always well managed by commercially available solutions.

3. Constraint of the single invoice

For Global Account and Government Contract customers, they dread having numerous suppliers. They want to rationalize the full acquisition cost – which includes invoice processing, order forms, reconciliation of payments and deliveries, etc.

Hence the goal of reducing invoicing. But in the marketplace model, the current standard is as follows: if there are five vendors in a given order, that will result in five invoices.

Firms such as Webhelp Payment Services propose packaged third-party invoicing solutions. With this system, the operator signs an invoicing mandate with each of the vendors, which authorize the marketplace operator to issue in their name and on their behalf the invoices produced for the end customer.

The advantage of this solution is good standardization of invoices, which become easier to integrate by the customer and by the platform.

For example, the operator can compile all the monthly invoices in a statement of invoices, which greatly simplifies administration and reconciliation tasks at the customer level.

There is a limitation, however: certain auditors could consider that this invoicing becomes a “hotchpotch” and demand a personal account for each supplier. Ultimately, everything depends on the customer’s accounting strategy.

The only alternative solution to produce a single invoice is to switch to a dropship model, possibly supported by the marketplace information system: the operator creates the vendor listing catalogue, manages sales to the end customer and sends the order to the vendor, which manages dropship delivery to the end customer. This solution amounts to taking responsibility for the sale on the operator side (product compliance, taxes, etc.).

4. Rationalization of the supply chain

Global Account and Government Contract customers want to rationalize product delivery. Very often, they impose time slots for delivery, together with penalties. This situation is complex to manage for a marketplace in which each vendor manages their shipments.

There are solutions to the supply chain problem, such as groupage of deliveries in the warehouses of the marketplace distributor (cross docking). Then, this distributor manages deliveries in the time slots agreed with the customer.

However, these solutions are complex to implement, more costly, and they entail longer delivery times.

5. Globalized customer service

Another requirement: customer service will have to operate in the language and in the time slots wanted by the Global Account or Government Contract customer.

Possible case: a German vendor must ensure relations with a French marketplace customer. If this vendor is not capable of this, there must be a replacement solution.

In this respect, the marketplace must take charge of the costs that on paper it was supposed to save.

In the second article of this column*, I invite you to discover that the conventional opposition between Marketplace and Drop Shipping deserves to be left behind.

François Duranton, CEO of ZeTrace


3 key questions about your marketplace business model

One of the main marketplace elements you should consider is, of course, the business model and profitability. How can I develop my marketplace project into a profitable long-term business? Here are three key questions you should ask yourself to find out.

What ratios should I envisage in my business model?

By its very nature, and for the sake of profitability, a marketplace should not be managed by a large team. In markets where the commission rate is around 15%, the ratio 1 person to 5 million euros of business volume is an empirical figure to be considered. As for the profitability threshold, it seems to be around: 1 person to 1 million euros.
Another important ratio: the promotional budget. For some players, such as startups, the challenge is twofold: finding sellers and finding customers. Other B2B players - such as professional media (news sites, magazines, etc.) - certainly have the same problem, but they have an advantage in that they have a community and can activate acquisition levers (professional social networks, Google Ads, etc.). In both cases, it may be wise to devote a reasonable budget to acquiring customers.
The ratio of 15% advertising investment to business volume is often quoted for starting up a business, but everything depends on the type of business. At the end of the launch phase, this ratio can be as low as 4 or 5%. The promotional actions must be perfectly synchronised and fully consistent with the actual products offered and your brand advertising.

Should my sales staff be given a share of the profits?

Many B2B companies have traditionally relied on a network of sales representatives for whom they draw up a product sales commission plan.
But on a marketplace, the scenario is more competitive and the prices charged by sellers and their personal commitment must be taken into account.
The marketplace opportunity study is a good time to examine a new remuneration scheme in which no sales channel will feel penalised. Otherwise, some sales people or stores will not try to sell the goods displayed on the platform.
A profit-sharing scheme involving salespersons or stores in selling products on the Internet can be used to create a win-win scenario.

When can I expect my business to be profitable?

Take a look into the future: your marketplace has just been launched, the first customers are arriving and encountering the inevitable minor technical problems... But your business is not yet profitable. In B2B, as in B2C, this phase - which often feels as if you are in a commercial wilderness - can last between three months and two years. One of the challenges is to considerably reduce the length of this phase, with the help of experienced partners.
It will be followed by an acceleration phase, with satisfactory sales performance. This will typically last between one and three years, depending on the type of business.
Clearly, a lot of effort will initially be required. But make sure you don't try to go too fast and be careful not to cut corners!
Our aim is to make you aware of this reality: when an already established retailer creates a marketplace, this causes a split in the company and severe disruption that cannot be avoided. Advance planning is therefore essential to make this phase as brief as possible.
To put it differently, with a lot of pragmatism and a little humour: complex situations take a lot of effort!

If you liked this article, click here to learn more about our marketplaces services, or contact Christophe de Sahb (CDesahb@wps.webhelp.com).

Contributors:

François Duranton, director of Expertime Consulting

Martial Frugier, director of the Ecommerce, Retail & Transport business unit (Webhelp)