The Cookie Apocalypse And The Future Of Marketing Attribution: Part II
Combating first-party data changes and the future of marketing attribution
B2B marketplace founders discussed key trends such as B2B BNPL, the vertical integration of marketplaces, and the promise of emerging markets
Global B2B e-commerce generates tens of trillions in transaction volume annually, but amazingly, B2B e-commerce penetration is still in its infancy. The vast majority of B2B transactions still occur offline. Yet there is evidence this is starting to change: during the pandemic, B2B buyers and sellers were forced to adopt digital sales channels as a matter of survival. These new habits appear to be sticky; according to a recent McKinsey report, 60% of B2B companies are planning to reduce their sales reps in the future as they double down on online marketplaces and other digital channels.
At BCV’s inaugural B2B Marketplace Founder Summit last week, we invited leading B2B marketplace founders, operators, and investors to discuss the future of B2B commerce. Speakers from companies such as Mirakl, Zetwerk, Billie, Resolve, and many others shared valuable lessons they have learned through building and scaling B2B marketplaces or the technology platforms that underpin them. In the coming weeks, we will publish several articles summarizing our takeaways from the summit. In the meantime, here are three key insights that emerged from our conversations.
B2B marketplaces are becoming end-to-end operating systems. Most marketplaces are founded with the simple aim of connecting buyers and sellers. But we’re hearing from B2B marketplace founders that such a goal is naive: B2B transactions are inherently complex, requiring online platforms to support the workflow before, during, and after the transaction. The best B2B marketplaces will become de facto operating systems for at least one side of the marketplace.
Founders serving a variety of verticals — flowers, seafood, manufactured parts, and food supplies — reiterated this idea at our summit. Beyond connecting buyers and sellers, many of them were pulled into a host of other capabilities that they didn’t set out to build initially: procurement support; invoicing and accounting; payments; financing; inventory management; vendor onboarding and risk assessment; insurance; and regulatory, tax, and compliance services.
“We began by putting restaurants in contact with farms and food producers, and now we’ve expanded into complementary services,” said Fabián Gómez Gutiérrez, founder and CEO of Frubana, the leading restaurant food supply marketplace in Latin America. “We have built a full supply chain. We have started to lend capital to our 60,000 restaurant buyers. Additionally, we are building payments and POS systems for both restaurants and the millions of farmers and food producers on our platform.”
“We’re an operating system for the floral industry,” echoed Andrés Cester, co-founder and co-CEO of fresh flower marketplace Colvin. “There is almost no limit to what our software could do for both buyers and growers.”
Emerging markets are fertile ground for B2B marketplaces. It’s not a coincidence that B2B marketplaces are sprouting all over the world, especially in developing countries: B2B marketplaces are filling a vacuum made available by nonexistent or inefficient supply chains. In developed markets, we’ve seen that established supply chains are usually good enough and while they may not be optimally efficient, they serve stakeholders’ needs well enough that digitization doesn’t happen as quickly. Just like we’ve seen with digital payments, developing markets will leapfrog developed markets in terms of B2B commerce digitization.
The vertically integrated nature of many B2B marketplaces is a consequence of this dynamic. For instance, in the US, most B2B marketplaces deprioritize logistics; some may have a warehouse, but the actual shipping and transport of goods is outsourced to third parties. Many do not manage inventory at all, opting for a dropship model. The bulletproof service quality of FedEx and UPS is a luxury unavailable to B2B marketplaces in the developing world.
Likewise, it’s not uncommon to hear that buyers in emerging markets are unbanked with no access to credit. B2B marketplaces are stepping in as local bankers to plug this hole, too. B2B marketplaces have a high degree of visibility into buyers and suppliers on their network that compounds with scale. By analyzing granular data on their transaction behavior and cash flows, B2B marketplaces can underwrite them far more intelligently than traditional financial institutions.
Yet the lack of financial and logistical infrastructure presents a challenge and opportunity for B2B marketplaces in emerging markets. They must build four businesses at once: a transactional marketplace, workflow software, financial services offering, and logistics capability, all of which are necessary to execute a B2B transaction seamlessly from end to end. Those who prevail, though, will enjoy deep competitive moats and economies of scale.
“In India, we kind of have to do everything at once, so we always intended to build a full-stack marketplace offering lots of different services,” said Amrit Acharya, CEO and founder of Zetwerk, a B2B marketplace for custom manufacturing. “We work with thousands of small manufacturers. Their businesses can be strapped [for resources]; they might not have enough staff to fulfill a large order, or no way to ship products out, so we have scaled up to help them with all of these challenges, and allow buyers insight and control into every step of the manufacturing process.”
B2B marketplaces and vertical SaaS are converging. B2B marketplaces generally don’t do a great job providing workflow software (yet); conversely, most vertical SaaS platforms for businesses don’t offer procurement today. But the product roadmaps of each suggest they are on a collision path in the next few years. The question is, which wedge will ultimately prevail as the superior approach to tap into global trade?
Software platforms that embed procurement marketplaces have a key advantage: established, loyal customer bases that already rely on their software daily to manage operations. They may influence decisions adjacent to procurement, but they lack expertise in vetting and onboarding suppliers.
On the other hand, B2B marketplaces are adept at acquiring buyers and suppliers at scale, but they usually have limited influence over a business’s operations outside of procurement. However, there is strong industrial logic for combining procurement software with that of other business functions. Procurement is inherently linked to many other processes in an organization, including cash flow management, accounting, supply chain and inventory management, merchandising, marketing, and more.
Will future tech behemoths of B2B commerce originate as B2B marketplaces, software platforms, or something in between? The answer lies in how well each group caters to the supply side.
“I often get the question: What is the priority, supply or demand? Supply is more important. If you don’t have supply, there’s no point in bringing demand,” said Adrien Nussenbaum, co-founder and CEO and founder of Mirakl, the leading third-party marketplace enablement platform. “To really master supply, it’s quite simple: your offering needs to make sense for them. If your day-to-day experience is not A+ for suppliers, if you can’t support all of the formats they want to use for pricing and shipping, if it takes them a long time to onboard…they will judge you on all of that.”
This is a unique moment for companies to land-grab supply, Nussenbaum argues. “Some 5–10 years ago, if you were launching a marketplace, the number of suppliers you could bring on was much lower because most were not digitized enough. Now there is a drastic acceleration of potential supply.” Founders should take note: the supply side is up for grabs across the globe and across verticals. The winners in the next decade will be defined by which platforms most effectively attract and retain them.
Combating first-party data changes and the future of marketing attribution
Part I: What are third party cookies and what are its future implications?
Buy-now-pay-later, or BNPL, has taken consumer e-commerce by storm, enabling shoppers to get the items they want today, but put off the pain of paying for them until tomorrow — at zero or very low interest costs. Since BNPL began popping up as an option at checkout via point-of-sale players such as Affirm, Klarna, and […]