Consultants, tech companies and data companies (like us) gush how B2B eCommerce is 4-5 times bigger than B2C. If you think it is actually 15 times bigger, I simply nod. Who knows!
B2B procurement is deliberate.
B2C caters to customers like me who sees an empty 50 sq.ft space in his home and goes onto fill it with a work desk that he doesn’t need
Business (to business) motivations to transact online:
Supplier fragmentation. Discovery is a problem
Unregulated markets with crazy price disparities. A marketplace comes in to standardize pricing (Ex: Group purchases for predictable pricing)
Procurement workflow and product data/catalog management efficiency (eCommerce becomes an add-on)
So business models emerge to address specific motivations.
The four paths to building a 3rd party B2B eCommerce platform:
Consolidate the buyers and sellers (usually both SMBs). Give the buyer the working capital loans and charge the seller next to nothing.
Build the technology platform for companies to launch their own B2B storefronts. Charge subscription or license fee.
Run classifieds portals and make revenue from advertisements and listing fees (not truly eCommerce)
Build a product catalog software. Make it the industry-standard. Charge for subscriptions. Eventually become a marketplace
There is a fifth path and you don't want to go there. But if you are curious, it is selling on Amazon's B2B marketplace until they launch their own B2B copycat brand and run a number on you. So it is more a deadend than a path.
The gift of B2C is its homogeneity in consumer motivations. The average customer motto is "Me likes. Me buys."
So large monolithic marketplaces or fairly standard eCommerce platforms are possible.
B2B TAM isn’t as meaningful as B2C TAM
B2B eCommerce is federated at a market level and 'winner takes it all' at a segment level. You cannot launch a 'one size fits all' marketplace or storefront. So there will be many marketplaces and storefronts but you certainly can own online procurement of MRO parts.
Each of the industry niches are big enough to support multi-billion dollar businesses that we just won't come to know about.
So when we say that B2B eCommerce is a several trillion dollar market, it does not mean much because it is not one homogenous market that presents an opportunity. It is many markets rolled into one because that trillion dollar estimate makes for a good headline.
PipeCandy is a market intelligence platform that tracks the global eCommerce & 'direct to consumer' landscape.
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