Why cross-border payment terms are crucial for marketplace growth in 2024

Hokodo

Fueled by the restraints of traditional financing solutions, the past several years have seen a sharp surge in demand for flexible payment terms solutions from buyers and sellers alike. An established shift towards online channels in business-to-business (B2B) trade was accelerated by the pandemic, only creating more pressure for simple, safe and supported lines of trade credit.

Simultaneously, B2B marketplaces continue to move through a period of significant growth and investment. These have emerged as ‘one-stop shop’ platforms for buyers to discover, assess and buy all the stock, materials, products and services required to run their businesses. In Europe alone, over 400 B2B marketplaces have already been established.

We recently worked with Point Nine to explore 200+ of these platforms and found no indication that growth in this space will slow any time soon.

Why marketplaces?

According to a recent BigCommerce survey, 60% of B2B buyers use marketplaces to make purchases. Meanwhile, research from Mirakl suggests that one third of B2B buyers use marketplaces to procure at least 50% of their business products and services. With just these two reference points, it becomes clear that the opportunity here is no small matter.

But B2B marketplaces aren’t without their challenges. According to Oro, a lack of real-time stock information (58%) and poor searchability of platforms (58%) are two of the most significant issues that buyers have with B2B marketplaces. Meanwhile, many marketplace operators are struggling to meet buyer demands for a seamless, B2C-like payment experience. This is a particularly significant challenge because:

  • Payouts must often be split between several sellers, with the marketplace also taking commission
  • Sometimes, payouts must be made in different currencies
  • B2B marketplaces are often international platforms, and different regions have their own payments laws and regulations 
  • The nature of B2B means that payment terms are expected as standard

For businesses engaged in online sales, marketplaces face a somewhat greater challenge in meeting buyer preferences across different regions compared to distributors or manufacturers. Specifically, 41% of marketplaces identified this as one of their most significant challenges. In contrast, 33% of distributors and 28% of manufacturers encountered the same struggle.

Why payment terms?

For B2B marketplaces, payment terms have emerged as a critical tool for sustainable and scalable growth. We recently surveyed B2B marketplaces across Europe and the US in partnership with B2B payments specialists Balance. Survey respondents identified three key factors that make trade credit a must-have for seamless cross-border operations.

1. Increasing Gross Merchandise Value (GMV)

Firstly, payment terms serve as a means to elevate a marketplace’s Gross Merchandise Value (GMV). Trade credit was widely acknowledged by respondents as a powerful tool for increasing transaction volumes and driving substantial revenue growth. The takeaway? It's not just about completing transactions; it's about increasing the value of those transactions.

2. Competitive Edge

Secondly, respondents stated that payment terms provide a competitive edge in the ruthless marketplace arena. According to a Gartner survey, 64% of respondents couldn’t tell the difference between one B2B brand’s digital experience and another. By offering flexible payment terms, marketplaces can distinguish themselves in a crowded market and win the business of buyers and sellers alike. The takeaway? Payment terms have become a compelling differentiator, giving marketplaces a distinct advantage in an increasingly saturated space.

3. Expanding the Ecosystem

Thirdly, respondents stated that payment terms are critical for successfully fostering stronger partnerships between buyers and suppliers. The takeaway? It's not just about local markets; it's about connecting businesses across borders and creating a global network of commerce.

Want to learn more?

Planning to launch your own B2B marketplace this year? With 75% of B2B companies actively developing marketplace strategies, the competition is heating up, so it’s more important than ever for marketplaces to be able to offer the payment terms that buyers demand – no matter where in the world they’re based. 

You’re invited to an upcoming webinar where Hokodo and Balance will explore the crucial role that payment terms play in fuelling growth of the global B2B economy. Join us on Wednesday, 28th February 2024 at 16:00 GMT / 17:00 CET / 11:00 EST to learn:

  • How to meet buyer demands for marketplace payment terms in 2024
  • How to accelerate growth of your marketplace by offering trade credit to international buyers
  • Why just 16% of B2B sellers think that it is ‘very easy’ to offer cross-border payment terms
  • And much more!
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