Why B2B marketplace sits at the heart of a thriving ecosystem

B2B Marketplaces: A key enabler for new growth

What is a B2B marketplace?

At its core, a marketplace is an entity through which buyers and sellers can effectively and efficiently transact. It provides a platform to reduce friction for the provisioning of products, services, and solutions: connecting a distributed ecosystem of suppliers with an equally distributed ecosystem of customers.

Think of Amazon, which orchestrates a B2C retail marketplace – Amazon’s marketplace has created a site in which a host of different vendors, whether regional or global, major corporate or small/medium enterprise (SME), can compete directly with one another (and in some cases directly with Amazon’s own products) to reach and serve a wide scale customer base. Using the example of Amazon, we can therefore describe four key actors within the marketplace:

Key actors in a marketplace

B2B marketplace

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  • Customers: Amazon’s marketplace creates a simple tool through which users can seamlessly identify, evaluate, and purchase products from a wider range of sellers. These suppliers, due to competition, must continuously innovate to create value for customers or risk competing solely on price. This provides a strong proposition combining ease, choice, and value for the customer. For smaller enterprises and for more simple services (e.g. cybersecurity, productivity software) a B2C-style marketplace works well. Amazon provides a good example of a B2C marketplace – however, for larger enterprises requiring more complex, verticalised solutions, the Amazon “one click purchasing” capability may be less appropriate.
    The marketplace still acts as an entity within which enterprises can identify new, innovative, solution providers and evaluate different components/vendors but may act more as a discovery mechanism – it generates a customer lead for suppliers and a vendor lead for customers. The customer will go on to engage directly with a sales team or representative within the vendor, rather than purchasing and spinning up the service directly through the marketplace. This is because the solution sales cycle is complex and requires a deep knowledge of the end customer and vertical specific expertise. To generate revenue, the orchestrator in this situation would have to create a comparative tool pricing for the use of these larger players.
    Particularly for more fragmented industries with a significant number of SMEs, offering pre-integrated, out-of-the-box solutions still offers the orchestrator a strong revenue opportunity.
  • Suppliers: In the context of B2B, suppliers in the marketplace may offer holistic vertical solutions including end devices, connectivity, applications, infrastructure etc. or sell those capabilities as individual components. Through participation in the marketplace, these vendors gain a strong distribution channel to sell their solution. Furthermore, they can get to market with solutions much faster than a more traditional, vertically integrated route, which would require longer cycles of integration and testing between partners, more investment in marketing & sales engines, and the need to repeat the process with each channel/solution partner identified.
    It also acts as a platform through which to learn more about competitors, identify or even engage potential partners, and understand more about their end customer needs and drivers. The marketplace can therefore act as a tangible entity around which the supply side ecosystem can innovate. This is through varying levels of data and insights, collected through the marketplace, which the orchestrator may allow certain suppliers to access.
  • Orchestrators: Orchestrators help coordinate the underlying community of suppliers and customers, defining the dimensions of the marketplace (which we will discuss further in a later section of the report). They set the parameters and objectives of the marketplace (e.g. which suppliers to onboard to the marketplace and how, which customers to target), and bring additional value to suppliers and customers through insights, supplier and customer experience, and marketing and sales engines to build scale.
    As the orchestrator of the ecosystem, Amazon has leveraged these supply and demand side benefits to grow into the retail giant that we know today. It has successfully driven a flywheel to build scale with suppliers and customers, and subsequently monetised this scale through a variety of different revenue streams – we will discuss these further later in the report.

The Amazon flywheel for marketplace success

B2B marketplace

  • Enablers: For a marketplace to function smoothly, a flexible but resilient backbone of support systems is required. This includes everything from billing, to authentication, onboarding, fulfilment, delivery, settlement, etc. A digital marketplace can automate many of these functions, diminishing the friction of interaction between partners, vendors, and customers.
    Oftentimes, these enablement services will be managed by an orchestrator who has complete oversight of the marketplace. Going back to the example of Amazon, Amazon not only orchestrates the marketplace but provides enablement services to capture additional value and revenue streams. This is in slight contrast, for example, to Ebay, which orchestrates the marketplace between different sellers, but is less involved in the delivery and fulfilment of the order. There is, therefore, nuance around how much of a role the orchestrator may take in the marketplace, and whether they partner to deliver enabling capabilities or completely outsource them to others. Enablers are, however, essential for a functioning marketplace and drive simplicity and stickiness for all actors. 

In summary, the marketplace brings opportunities to each of the actors within it and helps galvanise a diverse and fragmented ecosystem around a tangible construct. It enables customers to reach new suppliers, suppliers to reach new customers as well as engage new partners, and the orchestrators and enablers to drive new streams of revenue growth.

Table of Contents

  • Executive Summary
  • B2B Marketplaces: A key enabler for new growth
    • What is a B2B marketplace?
  • Marketplaces as a B2B growth driver
  • The dimensions of a successful B2B marketplace in healthcare
    • Due to the need for solution certification, a healthcare marketplace will remain more closed and centrally controlled
    • The healthcare marketplace will encourage participants to collaborate while excluding competitors…at first
    • Telcos should create value in the marketplace by driving biodiversity
    • Telcos have the capacity to collect valuable customer data insights but must first develop their capabilities
  • The guiding principles for building a marketplace: Where telcos should start
  • Index

Related Research

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Four goals for the data-driven telco

Becoming a data-driven telco

There have been many case studies over the last five years demonstrating the disruption caused by “data-driven businesses”, i.e. those using insights to understand customers, automate processes, change their business models and drive new revenues. In the future, this concept will become an integral part of what it takes to compete successfully, allowing organisations to understand and run all parts of their operations, work with their customers and partners and take part in external activities in new ecosystems. This applies to telecoms operators as much as any other industry.

This research builds on a range of reports STL Partners has previously published on strategic topics related to telcos’ use of data, including:

This research turns to the practical topics of delivering on these strategic goals. The diagram below offers an overview of the drivers and barriers affecting delivery areas such as telco data management and machine learning (ML) in the short and longer term.

Drivers and barriers to being a data-driven telco

Source: STL Partners

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What capabilities should telcos develop?

Telcos are reasonably sophisticated users of data, but their particularly complex web of legacy systems requires a good deal of work around data management and governance to enable the extraction of data sets to give 360-degree view of the customer – and increasingly to provide training data for algorithms.

In the mid-term, telcos that are successful in selling IoT and becoming ecosystem players will require new A3 to deal with the increasing number of services, devices, price points and parties involved in providing service to a customer. Our research suggests that there is a range of new A3 technologies that can provide the automation and intelligence for this, as well as for the underlying data management processes.

In the longer-term, A3 will speed up decision making, impacting company strategy, new product and service creation, and customer experience. Humans will increasingly be supported by AI-, ML- and automation-powered tools in their decision-making. A similar progression will occur among competitors in telecoms, and in adjacent markets, increasing the complexity and speed of doing business. Besides integrating A3 into human workflows, working at increasing speed will depend on getting richer insights out of the available data with techniques such as small data and creation of synthetic data.

Capabilities for a data-driven telco

Source: STL Partners

 

Table of contents

  • Executive Summary
    • Capabilities telcos should develop over the medium term
    • What will telcos focus on in the mid-term?
    • Next steps
  • Becoming a data-driven telco
    • Short term drivers
    • Barriers in the short term
    • Long term drivers
    • Barriers in the long term
  • Availability of data
    • Use of data fabrics
    • Better data labelling
    • Rise of synthetic data
    • More intelligent data selection
    • Telco strategies for cloud usage
  • Equipping people
    • Augmented analytics and business intelligence
    • Decision intelligence
  • Work on governance
    • Governance across the telco
    • Agility in governance
    • Governance for AI and machine learning
    • Ethical governance
    • Improved measurement of governance
    • Governance in ecosystems
  • Index