With over $1.2Tn worth of B2B business moving online, and a growing proportion of this trade being done on marketplaces, B2B marketplaces offer a significant growth opportunity for organisations looking to shift from traditional supplier or distributor models to a multi-vendor direct to customer business model.

Omnyfy CEO, Fabian Rebeiro, sits down with Paul Skeldon from RetailX to discuss B2B marketplace in this webinar, which has been broken down into 4 easy to view parts, each discussing a specific topic.

Part 4 – Key features required for B2B marketplaces

In this section of the webinar Paul and Fabian discuss the key features required by operators of B2B marketplaces.

Other Parts

• Part 1 – B2B Marketplace Growth and Usage
• Part 2 – What’s driving the shift to B2B marketplace buying and how are customers buying?
• Part 3 – What are B2B customers buying?
• Part 4 – Key Features required in B2B marketplaces

With over $1.2Tn worth of B2B business moving online, and a growing proportion of this trade being done on marketplaces, B2B marketplaces offer a significant growth opportunity for organisations looking to shift from traditional supplier or distributor models to a multi-vendor direct to customer business model.

Omnyfy CEO, Fabian Rebeiro, sits down with Paul Skeldon from RetailX to discuss B2B marketplace in this webinar, which has been broken down into 4 easy to view parts, each discussing a specific topic.

Part 3 – What are B2B customers buying?

In this section of the webinar Paul and Fabian discuss what customers are purchasing on B2B buyers. This includes services, product and procurement for businesses.

Other Parts

• Part 1 – B2B Marketplace Growth and Usage
• Part 2 – What’s driving the shift to B2B marketplace buying and how are customers buying?
• Part 3 – What are B2B customers buying?
• Part 4 – Key Features required in B2B marketplaces

With over $1.2Tn worth of B2B business moving online, and a growing proportion of this trade being done on marketplaces, B2B marketplaces offer a significant growth opportunity for organisations looking to shift from traditional supplier or distributor models to a multi-vendor direct to customer business model.

Omnyfy CEO, Fabian Rebeiro, sits down with Paul Skeldon from RetailX to discuss B2B marketplace in this webinar, which has been broken down into 4 easy to view parts, each discussing a specific topic.

Part 2 – What’s driving the shift to B2B marketplace buying and how are customers buying?

In this section of the webinar Paul and Fabian discuss the different products and services that B2B customers purchase via marketplaces.

Other Parts

• Part 1 – B2B Marketplace Growth and Usage
• Part 2 – What’s driving the shift to B2B marketplace buying and how are customers buying?
• Part 3 – What are B2B customers buying?
• Part 4 – Key Features required in B2B marketplaces

With over $1.2Tn worth of B2B business moving online, and a growing proportion of this trade being done on marketplaces, B2B marketplaces offer a significant growth opportunity for organisations looking to shift from traditional supplier or distributor models to a multi-vendor direct to customer business model.

Omnyfy CEO, Fabian Rebeiro, sits down with Paul Skeldon from RetailX to discuss B2B marketplace in this webinar, which has been broken down into 4 easy to view parts, each discussing a specific topic.

Part 1 – B2B marketplace Scale and Growth

In this section of the webinar Paul and Fabian discuss the rapid growth of B2B marketplaces globally.

Other Parts

• Part 1 – B2B Marketplace Growth and Usage
• Part 2 – What’s driving the shift to B2B marketplace buying and how are customers buying?
• Part 3 – What are B2B customers buying?
• Part 4 – Key Features required in B2B marketplaces

Internet Retailing identifies third-party sales through marketplaces will be the largest and fastest-growing retail channel globally, adding more than $1.3trn in sales by 2027 and accounting for 38% of all global retail sales growth. First-party ecommerce sales will shrink from 44% today to 41% in 2027, adding $778bn in sales over the next five years. By then, third-party sellers through marketplaces will capture 59% of global ecommerce sales, up from 56% in 2022. (Source: https://internetretailing.net/marketplaces/third-party-marketplace-sales-to-account-for-59-of-all-global-ecommerce-by-2027/)

Now although these stats refer to “marketplaces” – with the right technology platform, any Online Retailer with an eCommerce store can incorporate Third-Party Sellers into their existing online catalogues to take advantage of the benefits that this form of online retail offers.

What is Third-Party Selling?

Third Party Selling is a business model where an Online Retailer enables third-party sellers – i.e. brands whom they do not carry or stock themselves, to list their products and services alongside their own, offering customers a much larger catalog of products from which to purchase, or affiliated services such as installation, delivery, insurance, complimentary products etc.

Fulfilment of Third-Party items may be through drop-shipping or cross-docking:

• Drop Shipping is a fulfilment process wherein the Vendor or Seller of the item ships directly to the customer. In the case of Drop-Shipping, the customer may receive multiple packages if purchasing from more than one Seller.
• Cross-Docking is a fulfilment concept wherein the Vendor or Seller of the item ships to your warehouse and the items are immediately combined for delivery with first-party items that the customer purchases from your catalog for consolidated shipment to the end-customer.

Benefits of Third-Party Selling to Online Retailers

As an Online Retailer, Third-Party Selling offers you the following benefits

1) Expand your Catalog and offer customers a much wider product range

Product range is a significant driver of GMV – the more you have to sell, the higher the potential value of your GMV. Especially when your first party catalog has obvious gaps.

2) Expand range, without increasing warehousing and holding costs

With Third-Party Selling, you as the online retailer, do not purchase or hold the stock. The stock is shipped directly to the customer or consolidated via your 3PL partners, or cross-docked prior to dispatch. This significantly lowers holding costs, thereby increasing your margin on these products.

3) Increase revenue through commissions or negotiates wholesale rates, depending on your preference and product range

Third-Party Selling offers several monetisation opportunities, discussed below. All of which deliver significantly better net-margin as compared for 1st party items, primarily because of the significantly lower holding costs. If priced correctly, commissions, rebates or margin from third-party products can offer significantly higher benefits.

4) Addressing range gaps and non-core products

Depending on the type of Online Retailer, addressing range gaps could either mean developing new product offerings, supplier engagements with new brands and distributors or development of own-brands. In many cases, these gaps could simply mean lost revenue potential as consumers look for products that aren’t being carried. The same can be said for stocking of non-core products – such as fittings, installation goods, assembly equipment, maintenance and repair items and operational commodities – customers would still need to purchase these items during the operational life of the product, but in most cases online retailers wouldn’t stock these items because the holding costs wouldn’t be worth it.

Third-Party selling offers a great strategic option to address range gaps, by simply identifying sellers who can list those products, without having to carry the associated stock or sink capital into inventory, coupled with marketing expenditure to drive sales and move stock.

The added benefit is that depending on the sales of these items, online retailers can then shift these products using trusted sales data, to first-party stock, or more efficiently. negotiate better rebate opportunities for sales targets on a monthly or annual basis.

5) Complimentary Products and Services

For online retailers of consumer electronic goods, furniture, outdoor goods, home installations, business furniture or electrical goods, industrial equipment, electricals, floor and wall coverings etc, their products would usually entail associated services including installation, insurance, accessories and fittings, measure and quote or the purchase of additional fittings.

By enabling Third-Party sellers of these products or services to be listed and purchasable alongside the main catalog items, retailers can offer their customers a more integrated and seamless buying experience, while also developing an ecosystem of products and service providers.

Monetising Third-Party Selling

Third-Party selling can be monetised several ways:

1. Commission-based model: The most common method is the commission model, where the platform charges sellers a commission on the Gross-Value of the sales. It is recommended that any shipping fee NOT be included in the commission fee, as this may negatively impact your ability to secure Vendors on the marketplace. Commission itself can be split into several types including:
   1. Seller Commission – Based on the sales value of the order
   2. Category Commission – Based on the product category
2. Wholesale model: In the wholesale monetisation model, the retailer effectively negotiates a price per product that is being listed (List or Cost Price). This price is stored on the platform along with the retail or sale price. When the item is sold, the Vendor or Seller receives the agreed List Price x Quantity purchased. This model is great for online retailers with significant customer base in a specific niche category, where they prefer to offer pricing discounts and promotion offers without impacting the value agreed with the Vendor.
3. Rebates: Rebates are another “add-on” monetisation model, alongside Commission or Wholesale Model. Rebates are extremely powerful and offer significant price competitiveness to the online retailer. A Rebate is effectively a percentage of total sales value generated for the specific Seller, paid-back to the Online Retailer at the end of a specific period, whether it is monthly or annually. Usually combined with marketing budgets, promotions and other channel incentives. When setting a rebate, Sellers would look to establish an agreed sales quota for that period, and the rebate is based on that quota (e.g. 5% rebate for total sales over $2m for the year, and 3% if less than $1.5m). Rebates should be flexible as they have a high degree of correlation with the product type and Seller.
4. Subscription-based model: Third-party sellers pay a monthly or annual fee to be able to list their products on the marketplace. Subscription models are a good “add-on” monetisation model for most online retail platforms, but tend to be the main monetisation option for Service Platforms.
5. Advertising-based model: Third-party sellers pay to have their products highlighted or promoted in certain areas of the marketplace, or to have their products appear at the top of search results.
6. Value-added services: The online retailer charges additional fees for value-added services such as order fulfilment, customer service, and shipping.
7. Transactional fees: Third-party sellers are charged a small transaction fee for each sale made through the marketplace.

Getting Started with Third-Party Selling

So what do you need to get started with Third-Party Selling? We’ve compiled an exhaustive list of the most crucial platform aspects required to turn your existing eCommerce store into a third-party sales rocket ship!

The Business Model

Ensure that you have clearly articulated the goals and business model of your Third-Party Sales Strategy – this includes:

• Target vendors within the first 3,6, 12 and 24 months
• Target Third-Party Catalog – specifically the categories of Sellers that you’re looking to onboard and the product ranges
• Establishing a clear product category taxonomy to ensure that your Seller Acquisition team knows precisely the product range that you’re looking to establish via Third-Party Sellers while also making it easy for your Sellers to integrate existing stores and map data between their systems and yours.
• Establishing a clear fulfilment strategy – offering Sellers the option of Drop-Ship or Cross-Dock depending on your business’s capabilities and the shipping efficiency and associated costs.
• Determine your shipping cost strategy for Third-Party items, will you be passing on the shipment of items to your customers for third-party items, absorbing the costs, consolidating shipments etc?
• Monetisation strategy
• Payout / Disbursement process and timeframe, as this is one of the most commonly asked questions by Third-Party Sellers – When and how will I get paid?
• Returns and RMA process for Third-Party items
• Invoicing, Tax-Withholding (if applicable) and Cross-Border disbursements

Selecting the right platform to drive your Third-Party Sales Solution

• Choose a platform that provides a comprehensive API suite or connector for your existing eCommerce store. At the minimum you will need to ensure that the following is supported:
  • Product Catalog sync
  • Pricing and Inventory sycn
  • Order sync
  • Fulfilment / Shipment sync
  • Vendor / Seller communications (if you would like your buyers to have the ability to communicate directly with sellers)
  • Promotions sync

• Seamless vendor onboarding with the ability to customise vendor onboarding forms to enable your platform to connect the data and information required to review and approve the seller to your eCommerce store
• An approvals process to review and Approve / Reject potential sellers
• A seamless online payout process whereby your Sellers can be onboarded for payout of their orders
• A platform that supports a wide range of monetisation options (as listed above) to provide you with the flexibility to create a monetisation plan that suits your business
• A robust, automated and accurate solution for calculation of payouts based on the range of monetisation options selected
• Comprehensive Vendor Dashboard and Seller Portal to allow your vendors to manage their profiles, catalogs, orders and shipments and to receive notifications of orders via the platform
• Robust connectivity options for your sellers to connect their existing eCommerce stores, PIM systems, ERP’s or product feeds
• Connectors to allow your Vendors to receive order fulfilment information directly from your eCommerce store, without having to login to manage their orders on your platform. The majority of Vendors already have several sales channels that they’re managing and they’re not interested in having to login to any more channels to manage orders. They expect centralised order sync and management from their existing eCommerce systems.
• Connectivity to retrieve shipment and tracking information directly from your Sellers, to update the order information on your platform with ease, so that customers can track their third-party orders
• Automated invoicing management taking into consideration partial fulfilment, order cancellations, refunds and other edge cases – ensuring that your customers are properly compensated while managing Seller payouts seamlessly.
• Seller assessment is vital for success, so ensure that the platform you select has processes to monitor seller performance including reporting for:
  • Time to fulfil – ensuring that Sellers ship their items within a certain timeframe of receiving the order
  • Vendor Review and Ratings
  • RMA processes with the ability for customers to leave detailed product reviews and reasons for returns etc
• Comprehensive customisable reporting built in – to give you the data you need to operate your Third-Party sellers.

What to be aware of when establishing a Third-Party Seller Strategy

When executed correctly , Third-Party Seller Strategy can deliver significant value to Online Retailers. The following points highlight the potential risks and things to be aware of when planning to execute this strategy.

• Quality of Quantity at launch: Assess your potential Sellers carefully, especially in the first two years of operation. Poor customer experiences with Third-Party sellers can affect confidence and review quality of your first-party items as well, especially when cross-docking, as delays in Third-Party fulfilment may affect when customers receive their overall packages.
• Establish SLA’s for fulfilment with Sellers and ensure that this is part of your onboarding contracts
• Track and monitor Seller Performance and Ratings / Reviews from customers to weed out low-performing Sellers
• Do not support back-orders, especially for consumer marketplaces and ensure that your Sellers are ideally providing near-real-time inventory as it is essential that customers receive the items they purchase rather than being notified of it being out-of-stock after they place their orders. This leads to dissatisfaction and loss of trust in the store.
• Be realistic and set expectations with your Sellers: Many Online Retailers who initially go down the path of Third-Party Selling over-estimate the value of their revenue potential and over-promise sales to their Sellers. Sales and industry data are good indicators, but temper and be conservative with expectations and build slowly.
• Establish a monetisation strategy that makes it easy for new Sellers to say “Yes”: From a Vendor / Seller acquisition standpoint, new Third-Party Channel platforms are usually risky for Sellers – they have to put in the effort to sell, manage their catalogs etc, so make it as easy as possible for them to say yes – do not charge a fixed / subscription fee for them to join your platform especially as it is unproved if it is a cold-start. Offer realistic commission agreements and focus more on rebates, if you are confident of driving sales, as this is the monetisation method offers the best cost/benefit mix for new Sellers.

Built with support for Adobe Commerce V2.4.3 and above and also providing support for Adobe Commerce Enterprise version, Omnyfy V4 is the new foundation from which we will continue to build and extend, with capabilities unique to V4 only.

Omnyfy will continue to support clients on V2 and will begin our migration of all V2 marketplaces to V4 in early 2022, we will be communicating with each of our existing marketplace clients about the migration schedule in early 2022.

These are just a small sample of the enhancements that we have delivered in V4. Omnyfy has also addressed a ton of minor bugs and issues that we felt were impeding the quality of our marketplace product to create the most stable version of Omnyfy ever.

One of the instant benefits for the consumers is that Online Shopping Centre Marketplace provides an opportunity to get their usual shopping done online, under one umbrella bringing more convenience and optimising delivery time and costs.

“The success of a marketplace comes from the ability of the marketplace to offer buyers and sellers something unique, a new way of exploring, engaging and transacting, that improves the experience for everyone. Omnyfy offers a turn-key marketplace platform with extensive customisation capability and flexibility to create any marketplace you want “, said Alexis Susser, GM Sales and Marketing at Omnyfy.

Learn how Omnyfy helps retailers, shopping centres, airports to build an online distribution channel by creating a multi-vendor digital marketplace.

Successful marketplaces such as Etsy, Airbnb, and Fiverr, prove that the marketplace platform is highly scalable and flexible to any business industry and niche. One of the reasons behind the rapid growth of online marketplaces is that retailers do not need an inventory list. With a collaborative economy, retailers can develop a booming business without spending a lot of money to purchase initial inventory which involves many risks.

We will continue to see more innovation when it comes to building and running online marketplaces. With today’s technology, anyone can launch their marketplace in a matter of weeks. However, the launch is just a start and more factors need to be considered for marketplaces to be successful. Among those factors are platform functionalities that vendors and businesses look out for. Let’s have a closer look at the criteria you should consider when choosing the best marketplace platform provider for your business.

1. Seamless vendor onboarding

Wide assortment provides a competitive advantage to the marketplace and often becomes the main reason why customers prefer to shop from your multi-vendor e-commerce platform. That’s why the success of your marketplace largely depends on the number of high-quality vendors and products you manage to acquire.

However, the vendor acquisition process is often not as easy as it seems. Successful vendors with a good range of competitive products usually don’t have an urge to joining additional distribution channels, especially if getting on your marketplace requires a lot of time or resources.

To remove this entry barrier, it is highly recommended to make sure the vendor onboarding process is simple and fast. Integration with third-party e-commerce software allows your marketplace to seamlessly fit into the vendor’s existing business ecosystem. With such integration, the marketplace owner and vendors won’t have to spend hours or days manually uploading their list of products, updating pricing and inventory levels. Instead, they will be able to simply pull all the products from their existing online store (e.g. Shopify, BigCommerce, Magento). Such a seamless onboarding process is one of the key factors, if not the main one, for getting more vendors on the platform and allowing the marketplace to scale.

2. Vendor order management

We believe that a powerful marketplace platform must also be easy for Vendors to use. A good marketplace software should provide you with tools, to make vendor order management seamless and efficient.

For example, Omnyfy offers a comprehensive management interface for Vendors to receive and fulfil their orders with complete control over the pick-and-pack process. Vendors receive notifications via email or through the Omnyfy Closer Vendor app every time a new order comes through. They can print out pick-and-pack slips for individual items or the entire order. Meanwhile, customers receive notifications at every stage of the fulfilment, staying informed throughout the process.

On top of that, thanks to the integration capabilities, vendor-owned stores (e.g. Shopify) get automatically updated with the marketplace orders, pulling in the orders from the marketplace, automatically updating the fulfilment status and adjusting inventory levels.

3. Vendor payout management

Payout refers to disbursing or paying out of funds received from a customer to Vendors. The ability of the platform to accommodate multiple fee types (commissions, fixed disbursement fees, transaction fees, transaction fee surcharge, category commission) is key to organise an effective vendor payout process. The flexible fee structure at an individual vendor level is also an important factor, especially for the marketplaces that want to tailor the fees and charges for individual Vendors based on negotiated rates.

4. Multiple shipping options

When a vendor sells a product or service on a multi-vendor marketplace platform, the business will take part in its fulfillment. 

When building a marketplace, owners must make sure platforms have the ability to integrate courier services to provide flexible fulfilment options. This ensures that vendors have a seamless experience when fulfilling orders for their customers. By identifying target vendors, the marketplace owner can come up with a list of necessary shipping options. The drop-shipping model and centralised delivery are the two most popular variations of the fulfilment model, however, if the marketplace platform can support a combination of both – that is the best scenario.

It’s also good to note what couriers the marketplace will support. Not all courier services will serve the user’s immediate vicinity of the proximity of the ideal customer base. Providing logistics services in the provider’s area or at least offering a way to inject a supported courier into the process is highly beneficial.

5. Comprehensive product management

Offering great product management features such as advanced search, should be a priority to help vendors and customers reach their goals with ease.

A sophisticated, multi-layered product catalogue is a must for any e-commerce store and marketplace. Advanced marketplace-specific catalogue features can help navigate site visitors through multiple vendors and hundreds or even thousands of products. For instance, Omnyfy’s marketplace catalogue allows a customer to compare products across different vendors based on defined product attributes and comparable values, which enables the marketplace to provide an excellent customer experience and help buyers find exactly what they are searching for.

Another thing to consider is product pages. Sellers on your marketplace should be able to quickly and easily create new product catalogues. Make sure that your sellers include descriptions, images, and details including availability, variations, delivery information, and more.

6. Multiple payment options

At the heart of e-commerce is commerce – and commerce cannot happen without an exchange of value. That puts a premium on payment gateways and payout terms, which is one of the main considerations when finding the right e-commerce software for vendors.

The preferred payment method of global online shoppers is eWallets, with 36% using this form of payment. Setting up a marketplace that supports multiple payment options, like a credit card, PayPal, or bank transfer, is a must.

In case the marketplace is in the business of selling subscription-based products and services, providing recurring payment systems can be a great solution. It enables automated payments so that the marketplace operator does not have to bill clients manually every month or so.

7. Scalability

One of the biggest challenges in developing an online marketplace is figuring out which business model works best for a particular business. Hence, if a marketplace owner needs to spend more time learning and improving their business, they can start with a Minimum Viable Platform. A lot of marketplaces choose to start small, while refining their unique value proposition, designing their transaction flow and expanding their vendor network.

However, it is important to think long-term and not get trapped in this initial stage. Once the business passes through the Proof of Concept Stage, the growth stage begins. It is extremely important that technology doesn’t become a constraint. The platform should be flexible enough to allow the business to build on functionality, pivot, and even branch out into other markets or geographies.

To make it possible, a marketplace owner should consider the flexibility of the platform at the start to make sure the tech has enough features to support all the possible scenarios the business may adopt in the future. 

8. Platform maintenance

There are a few other aspects of the platform that are hard to account for at the planning stage. However, such invisibility can sometimes make or break the marketplace.

One aspect is platform maintenance and sustainability. Before locking your business with a particular marketplace solution provider, it is important to explore how easy is it to operate and make changes to the marketplace after it is launched. You should ask yourself – how much can I do with the marketplace without involving the entire team of developers. This often comes to specific details on the platform. Can you do product-based marketing? How detailed can be SEO optimisation of vendor stores and product pages? Can you manage the content, e.g. update text or images on the marketplace by yourself, without engaging the tech team?

Here at Omnyfy, we see an increasing number of requests from businesses with already existing marketplaces. Only after the launch of a newly created marketplace, they discover that their marketplace platform has significant limitations or is difficult to manage. Sometimes, in this case, building a new platform with the right provider is easier and even cheaper than carrying monthly maintenance costs of a non-flexible marketplace technology. A lot of these businesses eventually decide to write off their marketplace as a sunk cost, while investing in a new one with more granular functionality. 

To avoid such waste, spend more time upfront, going through all the possible scenarios of your business, learning about the technology you are planning to use, its capabilities, risks, and limitations.

9. Security

Platform safety and privacy are important criteria, especially for larger companies and enterprises. This aspect depends on the technology provider’s internal policies, as well as the environment each marketplace uses. With SaaS marketplace software, all marketplaces are built on a shared environment. This means that any minor change to the platform may affect all clients and their marketplaces. While PaaS model provides each marketplace with its environment, ensuring the maximum level of security, privacy, and a lot of room for customisations.

There are a lot more criteria to consider when choosing between SaaS and PaaS model marketplace platforms. Read one of our articles to dive deeper and decide which one works best for your business.

10. Technical support

It’s always safe for us to assume that any technology will require technical support at some point. Therefore, the software you sign up for must have good customer support. Check reviews from other users to ascertain a marketplace platform’s level of responsiveness and level of technical support.  Doing this small but significant task will help you avoid anxiety and save you a lot of time in the future.

11. Pricing

Sometimes expensive does not equal quality. Quality of the platform versus the price point varies across the industry based on the business model and the strategy of the technology providers. Depending on what the marketplace provider’s go-to-market model is, your price might include huge markups passed from sales and marketing, while the platform itself might not satisfy your needs. To get the best value for money, look for product-focused companies that are constantly investing in their marketplace technology, adding new features and capabilities and, improving user experience. The right platform will provide you with a solid basis to build a successful and scalable marketplace.

If you have a marketplace project or would like to learn more about Omnyfy’s marketplace technology and its applications, reach out to have a chat.

View the full Webinar Recording

Here’s an overview of the Webinar.

Online retailers today are seeing record growth in online sales driven by Covid-19. There is an increasing appetite for online ordering from customers who are under lockdowns, working from home or who simply enjoy the convenience of buying online. However, for an online retailer, the sales growth leads to increasing costs being incurred in inventory holding costs, sourcing increased inventory, stock delivery and fulfilment.

The multi-vendor model enables online retailers to extensively expand their product offering and range by allowing third-party sellers to sell alongside them on a multi-vendor marketplace.

In this webinar, we looked at how online retailers can transform an existing single-vendor online store into a full-fledged multi-vendor marketplace. Hear from customers’ case studies and learn from marketplace experts as we provide you with a playbook to build and scale your own online marketplace.

Fabian Rebeiro

Founder & CEO

Omnyfy

Stephanie Tran

ANZ Partnerships

Stripe

Lee Blackmore

Digital General Manager

Tools.com

Key Takeaways:

• Learn how to expand the product range without the related costs of stock ownership.
• Explore the variety of shipping models and payment options to enable global fulfilment.
• Hear from customer case studies and marketplace specialists as we provide you with a playbook to transform your retail business from a single vendor to a multi-vendor marketplace.

Want to discuss your marketplace idea?