How to Create a Custom B2B Marketplace App Startup?
How can you create a B2B marketplace platform that businesses want to sign up to? In this article, we’ll take a look at how you can build a B2B online marketplace that will stand the test of time.
Last time we were writing about the types of funding rounds startups can apply to, today, we would like to dig even deeper into marketplaces. In the current economic climate, businesses must get the most bang for their buck. Many use B2B marketplace websites to find the best deals and build long-lasting relationships with suppliers.
If you’re thinking of launching your own B2B marketplace app, now’s a good time. The B2B marketplace industry is booming, with platforms expected to reach $3.6 trillion in sales in 2024, up from $680 billion in 2018.
If you’re considering creating a B2B marketplace platform, there are a few things you need to consider. We’ve put together this guide to help you in your journey to create a high-quality marketplace that’s focused on the user experience.
- What is a B2B marketplace platform?
- Examples of B2B marketplace startups.
- What’s the difference between C2C and B2B marketplaces?
- The different types of B2B marketplace platforms.
- How much does it cost to build a B2B marketplace app?
- Our top tips if you want to create a B2B marketplace startup.
- Create your marketplace with businesses in mind
- Do extensive market research
- Understand how you’ll make a profit
- In summary: are you ready to create the next big B2B marketplace platform?
First of all, let’s look at what a B2B marketplace website is…
What is a B2B marketplace platform?
A marketplace is a website or app that allows buyers and sellers to connect with each other, in return for a commission or fee.
While business-to-customer (B2C) marketplaces are aimed at end customers, business-to-business (B2B) marketplaces are focused on businesses selling products and services to other companies.
B2B marketplaces can be an excellent way for companies to find other businesses to work with, in one convenient place.
Examples of B2B marketplace startups
There are a lot of B2B marketplace platforms out there. It might be that you’ve used some of them already to grow your business!
Here are some that you might have already heard of, and some others that might be new to you:
- Alibaba – one of the biggest B2B marketplaces in the world, Alibaba lets businesses sell products to other companies. It specializes in allowing businesses to sell at high volume, and buyers can even negotiate directly with manufacturers;
- Amazon Business – while Amazon as a marketplace focuses on businesses selling to customers, Amazon Business (formerly Amazon Supply) was launched in 2012 to help businesses sell to companies and contractors;
- BuildingConnected – this B2B marketplace sells services rather than products. Businesses can connect with construction professionals to manage proposals and find subcontractors;
- Clora – a niche B2B marketplace specializing in life sciences, Clora puts businesses in touch with top specialists and consultants;
- Global Sources – similar to Alibaba, this B2B marketplace specializes in connecting businesses with vendors in China, Hong Kong, India, Vietnam, and South Korea;
- IndiaMart – another B2B marketplace like Alibaba and Global Sources, this marketplace focuses on India. One of its unique selling points is that businesses can provide their requirements, and Indiamart will put them in touch with verified sellers to work with;
- Joor – Joor is a B2B marketplace where clothing brands can connect with retailers to encourage them to sell their products;
- Kitmondo – Kitmondo specializes in buying and selling used machinery online, anything from industrial equipment to audio-visual equipment;
- Maker’s Row – this is a B2B marketplace platform where manufacturers and factories can connect with businesses to help them create new product lines;
- SupplyHog – this B2B marketplace focuses on hardware and building suppliers. Businesses can connect with other businesses to source the items they need, from power tools to plumbing spares;
- ThomasNet – ThomasNet is a US-based B2B marketplace that claims, 3M, Nasa, and Kraft among its clients. It lets businesses find industrial and commercial suppliers to work with;
- uShip – a global B2B marketplace, uShip partners businesses with transport and freight providers that can help them send items all over the world.
What’s the difference between C2C and B2B marketplaces?
We’re often asked if there is a difference between B2B marketplaces and C2C marketplaces – also known as customer-to-customer or peer-to-peer (P2P) marketplaces.
In C2C marketplaces, private individuals sell to other private individuals. Transactions made are typically smaller, and sales take less time to complete than in B2B marketplaces.
Marketplaces like eBay and Fiverr are typically seen as C2C/P2P marketplaces rather than B2B ones.
However, there is some overlap, and some C2C marketplaces can also be considered B2B marketplaces depending on who is doing the buying and selling.
The different types of B2B marketplace startups
As you can see from the list of platforms above, there are lots of different types of B2B marketplaces. Creating B2B marketplace platforms fall into two distinct types – horizontal and vertical. Let’s look at the critical differences between them.
Horizontal marketplaces sell a wide range of products to other businesses. Alibaba and Amazon Business are good examples of horizontal marketplaces as they sell lots of different items. By using these marketplaces, companies can buy everything from stationery and office furniture to computers and factory machinery components.
Vertical marketplaces are more niche and sell specific products and services. As an example, Clora can be seen as a vertical marketplace as it sells one service to one particular industry. As far as we’re aware, we can’t see any other marketplace offering the same service.
Which is the best type of B2B marketplace website to create? In our experience, it’s better to focus on one particular product and/or industry when you’re starting your business. Even Amazon started out by just selling books!
Once you see success, you can then expand your business idea by selling additional products and services if you want.
How much does it cost to create a B2B marketplace app?
It depends on the size of the platform and the level of functionality you want to provide.
In our experience, it can cost between $50,000 and $100,000 to create a B2B marketplace website. Costs you’ll need to take into consideration include:
- Website development (an off-the-shelf platform will be more cost-effective than a bespoke one)
- Payment gateway integrations
- Additional integrations (for example, review plugins)
- Project management, code testing, and quality assurance
If you want a corresponding B2B marketplace platform app, this will increase the cost.
Our advice is to always start small. Creating a minimum viable product (MVP) means you can launch your marketplace quickly and focus on the functionality that your customers want to see. You can then add additional features further down the line as your business grows.
Find out more about creating an MVP for your startup.
Our top tips if you want to create a B2B marketplace startup
Now you know a little more about B2B marketplace apps, what do you need to do to create one?
Here are some handy pointers that will help you create the best B2B marketplace website you can.
1. Create your marketplace with businesses in mind
B2B marketplaces need to function differently from B2C and C2C marketplaces. B2B buyers typically spend more money and buy more items.
When creating your B2B marketplace, you’ll need to consider:
- How you’ll let buyers pay for services. Which payment gateways will you use? Will you also give buyers the option to pay by bank transfer or by cheque?
- If you will have to identify checks and verification in place for security purposes and to provide peace of mind
- If you will offer price breaks if the buyer orders a certain number of products
- What if there will be a minimum order quantity in place
Speak to the businesses you want to target and ask them what they’d like to see and what functionality would encourage them to sign up
2. Do extensive market research
There are a lot of B2B marketplaces out there. It’s estimated there are over three hundred in Europe alone.
What does this mean for your startup? It means you not only need to see if there is demand for your B2B marketplace idea but also see if you have any competitors already working in that niche.
As we mentioned above, you’re more likely to see success if you start with a vertical marketplace. With a horizontal marketplace, you’re up against the likes of Alibaba and Amazon and will find it harder to compete with the low prices they offer.
A business model canvas or lean model canvas will help you plan your idea, identify your target audience and discover risks and opportunities.
Ultimately you want to see what you can offer the market that no one else can.
3. Understand how you’ll make a profit
It’s essential to understand how your website will make you money, and a B2B marketplace is no exception. There are several ways you can make money from buyers and sellers – here are some of the most popular:
- Charging a commission for every sale. This can be a percentage or a flat fee. You’ll need to decide if you’ll charge sellers, buyers, or both
- Charging a fee for every listing that is posted. Alternatively, you can charge for premium listings, when sellers pay extra to have their products or services at the top of the search results
- Charging a subscription fee to use the platform. You can have different subscription tiers to make your marketplace as appealing to as wide a range of people as possible
- Charging sellers a ‘lead’ fee. This is when they pay you for contact details if a buyer expresses an interest in the services they offer
- Offering a ‘freemium’ model where your marketplace is free to use, but buyers/sellers have to pay for additional functionality
Think about which monetization method will provide you with the most profit, but also entice buyers and sellers to use your marketplace platform. While a high commission will net you a lot of money, it may discourage sellers from signing up.
When you’re starting out, it’s always a good idea to entice buyers and sellers to sign up with lower rates. This can build trust and authority in your marketplace, and you can start to build a loyal customer base.
In summary: Are you ready to create a B2B marketplace platform?
B2B marketplaces are a great business idea as they can generate a lot of passive income and scale really quickly. However, it’s important to know that the average failed marketplace only has a lifespan of five years.
For every Alibaba and Amazon Business, there’s a Zirtual and an Adproval.
We hope this article has given you lots of helpful insight into creating a B2B marketplace website that will go the distance. As a reminder, our top two takeaways are:
- Start small – you can always expand on your ideas later
- Do your research – make sure businesses will want to use your marketplace before you start building it
Good luck, and remember, if you need some extra support with your idea, we’re here to help.
Want to know more about creating an online marketplace? Here are some other articles that you’ll want to read:
- Evolving from an eCommerce to a marketplace business model
- How to build a marketplace startup
- How to develop a SaaS marketplace software
- The different types of digital marketplaces
- The top ten online marketplace business ideas
- What is a web 3.0 marketplace and how do you build an NFT website?
- How to create a multi-vendor online marketplace startup?
We can help you create a B2B marketplace website or app
We have experience working with marketplaces of all types, meaning we can help you build a B2B marketplace that your prospective customers want to use.
Whether you need help getting funding or building that all-important MVP, we’re here to help. Contact us today to see how we can get you started.