Hokodo recently hosted a webinar tackling one of the most pressing topics for B2B marketplace operators – how to avoid the biggest mistakes when scaling a platform. Our VP of Marketing Lucy Heavens took the helm as moderator, providing thought-provoking questions for three panellists with expertise in B2B marketplaces:
We won’t lie, if you didn’t attend the webinar then you missed out. However, it’d be pretty selfish of us to keep all of Louis, Marc and Pierre’s brilliant insights to ourselves. In fact, there were so many great pieces of advice from the session that we’ve had to split them across two blog posts! Here’s the first five things we learned from the webinar.
1. Make sure that you’re operating a marketplace
This one may sound a bit obvious, but it is more common than you might think for merchants to incorrectly believe they are operating a marketplace, when in fact they run a much simpler e-commerce store or website. The main issues here are associated with the legal obligations of a marketplace, compared with a merchant. Marketplaces cannot legally store the money belonging to their sellers in their own bank accounts, and have certain other responsibilities that must be fulfilled.
Pierre’s advice? Before you’ve launched your platform, take a step back and assess your business plan. If you have suppliers and are selling your own products, you are likely to be a merchant. If you connect buyers with sellers and incorporate third parties like insurers, you may well be looking to launch a marketplace.
“One of the mistakes that I've seen is people who start thinking about those matters too late, and it just delays the project a lot,” adds Marc. “It may seem like lots of details, but it's absolutely fundamental.”
2. Think globally from the word go
One of the beautiful things about online marketplaces is that they’re relatively easy to take across the world. The problem is that many marketplace founders don’t consider their global expansion plans until far too late, causing all kinds of issues.
“From the start you have to think globally, so you don't have to change your platform year after year when you open in a new country,” Pierre explains. But on the flip side, most marketplaces have to start small, constrained to one region. It can be difficult to think about onboarding thousands of buyers and sellers across the world when you’re only just starting out.
“[Marketplaces] want to build a software product that scales across multiple countries, but, contrary to a basic product, having payments means that you also have different regulations to deal with,” Louis adds. “When you start to introduce payment terms you may have a financing component that comes into your marketplace. The regulation for financing is different in France, in Germany, in the UK. Just because you've cracked it in your home market, it doesn’t mean that it's going to work across all the other territories where you want to operate.”
3. Understand your buyers’ needs
For Marc, one of the very first things to consider is the buyer. Some of the questions he suggests asking yourself include:
- Who are they? Who are you trying to target?
- Are you trying to gain new buyers, new customers, or to better sell to your existing customers?
- Are you serving small and medium sized businesses or very large businesses?
- What are the unmet needs or the pain points you're trying to address?
- Is it that buyers want a single place, a one-stop-shop to get everything that they buy from multiple places today?
“Your marketplace, your platform, will have a different shape depending on the answers you find,” Marc adds.
4. Check your sellers
The next piece of advice gleaned from our webinar is around being strict in knowing and checking the sellers that you let onto your marketplace.
“I always speak about payments and know your customer (KYC) and regulatory paths,” says Pierre, “but if you don't do this homework from the very beginning, then you will have problems finding the right partners to help build your technical platform.”
According to Pierre, the most successful marketplace operators are those who develop a bespoke scoring system, allowing them to gauge whether a seller will enhance or mar their trustworthiness.
5. Get the balance right
According to Marc, there are two mistakes that can be made when it comes to onboarding the first buyers and sellers on your marketplace. Some operators adopt what Marc calls a “proof of concept approach.” They might, for example, choose to test their platform with just a few sellers, a handful of buyers and 100 products. To make matters worse, these operators often add this marketplace to their existing e-commerce website where they might already sell 100,000 products. With these kinds of numbers, the marketplace simply won’t gain traction.
“On the other end of the spectrum though there is the ‘let’s shoot for the moon’ approach, where you try to have the best marketplace, the best customer experience, right from the beginning,” Marc explains. “It's unlikely that you can achieve that right from the beginning, so you may actually delay a lot of your projects.”
Marc’s advice is to do your research to discover the minimum viable ecosystem of your marketplace, i.e., what’s the minimum number of buyers and sellers that you need to do business at a reasonable scale? Of course, there’s no one-size-fits-all answer here, making things significantly more difficult for would-be marketplace owners.
Want to learn more from Louis, Marc and Pierre? Catch up on the webinar now.