How to Build a B2B Marketplace: Essential Steps, Strategies and Insights

B2B marketplaces can have a massive impact on business processes. Does that mean you need to build one? Read on to learn when a B2B marketplace is worth the investment and the key factors to consider before making the leap.

1. UNDERSTANDING THE GROWTH OF B2B MARKETPLACES
2. WHEN IS BUILDING A B2B MARKETPLACE JUSTIFIED?
3. HOW TO BUILD A B2B MARKETPLACE
4. TECHNICAL INSIGHTS TO HELP YOU CREATE A B2B ONLINE MARKETPLACE
5. VIRTO COMMERCE EXPERTISE IN B2B MARKETPLACE DEVELOPMENT

B2B marketplaces have experienced explosive growth in recent years. Some companies use them to diversify their offerings by integrating complementary products and services from new or existing partners. Others launch them to streamline procurement and improve supplier interactions, significantly reducing operational friction.

Online B2B marketplaces are more than transactional platforms. They are strategic assets that, when done right, can not only improve operational efficiency, but also drive sustainable growth and provide a competitive advantage.

This guide outlines actionable steps for enterprises and SMBs ready to streamline operations, improve supplier relationships, and expand market reach through a dedicated B2B online marketplace. Discover the key drivers behind their growth, the motivations behind their creation, and the factors to consider when building a B2B marketplace.

Over the past few years, marketplaces' importance in B2B eCommerce has steadily increased. According to the 2023 B2B Marketplace 500 Report, there were 75 digital B2B marketplaces in the United States alone in 2018, growing to 500 in 2023 and projected to reach 750 in 2025.

The same report highlights that B2B marketplace sales surged to $260 billion in 2023, growing nearly six times faster than the entire B2B eCommerce sector.

In a study involving 3,500 B2B executives from 12 countries, B2B marketplaces were identified as the leading channel for sourcing and engaging with suppliers. Half of them have established or plan to develop their own marketplaces.

Why does this happen? Well, there are several factors at play.

For some, it was the pandemic that accelerated the transition to ecommerce transactions and the discovery of new distribution channels. For others, it was a long-in-the-making strategic decision after traditional sales outlets became inefficient or restrictive. Some companies launched marketplaces because of inefficient procurement processes and a lack of direct supplier interaction.

Whatever the reason, it's clear that B2B marketplaces can have a massive impact on business processes. Does that mean you need to build one? Let's examine when it's the right time to create a B2B marketplace.

After talking to hundreds of professionals over the years, we've pinpointed several scenarios where building a marketplace platform is beneficial. While these don't encompass every possible situation, they represent some of the most common marketplace cases we've seen and worked with.

In this scenario, you need a wide range of products and a large and diverse audience that you want to monetize and retain by offering them products or services from other vendors.

A vivid example of such a transition from a single-vendor platform to a multi-vendor marketplace is Amazon. Launched in 1994 as an online bookstore selling books directly to consumers, the company has expanded its offerings to include a broader range of products beyond books. A shift to a marketplace model occurred in 2000 when Amazon allowed third-party sellers to list their products alongside its own. In 2015, the company expanded the original marketplace concept to meet the unique purchasing needs of businesses by launching Amazon Business.

By opening your existing platform to other sellers, your competitors become your partners, and their products and services help overcome your portfolio's limitations. This, in turn, attracts more buyers, creating a virtuous cycle.

In this scenario, you may not need thousands of sellers as on Amazon: just a few strong sellers on the platform may be enough to attract a larger audience.

“The platform became a valuable lead generation tool, attracting a 300% increase in registered suppliers within the first year, solidifying our position as the central hub for the recycled building materials in our region.”

Jon Morgan , Former Head of Supply Chain at Waddell Manufacturing

Waddell Manufacturing, which specializes in recycled building materials for construction, first launched a marketplace as a better way to connect with suppliers. However, they soon opened the platform to other contractors and businesses so they could browse and purchase what they needed. "The platform became a valuable lead generation tool, attracting a 300% increase in registered suppliers within the first year, solidifying our position as the central hub for the recycled building materials market in our region," said Jon Morgan, Business Consultant and former Head of Supply Chain.

Another strong reason to start a B2B marketplace is the necessity to streamline procurement and improve operational efficiency.

Procurement managers interact with multiple vendors regularly. Those communications often happen via various channels, e.g., phone, email, and vendors’ websites. As a result of this scattered, time-consuming sourcing process, it’s hard to keep track of all the orders, monitor and fill up inventory on time, and respond to market demands.

By building an online marketplace, companies can bring all their vendors under one roof. This, in turn, can reduce time spent on sourcing and vetting suppliers, increase inventory visibility, and save costs by facilitating better price transparency and competition among suppliers.

One example is Second Skin Audio, which provides premium soundproofing solutions to B2C and B2B customers. They implemented their B2B marketplace to centralize their purchasing and supplier management. "The B2B marketplace has significantly improved the way we manage our supply chain and inventory. By integrating supply chain management tools, we've been able to monitor our stock levels in real time, predict supply needs and place orders proactively," said Sturgeon Christie, the company's CEO.

Another example is RubyHome, a high-end real estate agency that uses B2B marketplaces to source high-quality building materials, custom furniture, and cutting-edge home technology products.

“Our decision to utilize B2B marketplaces stemmed from the need to streamline procurement and ensure access to premium, reliable suppliers, which is essential when dealing with high-end real estate. These platforms have allowed us to uphold the luxury standards our clients expect.”

Tony Mariotti, CEO at RubyHome

Another kind of one-stop-shop solution comes from companies that once served as an intermediary between the buyers and suppliers and decided to automate their services by bringing them all together into one platform. For instance, Findaband, a live entertainment booking agency, created an online B2B marketplace to simplify the booking process for their clients.

“Our site serves as a central platform where event planners and venues can explore a variety of entertainment options. This marketplace streamlines the interaction between clients and artists, making it easier for both parties to find what they need. It also removes geographical barriers and allows for a wider selection of talent, which is especially beneficial in less urban areas,” explains Sam Browne, Founder & Creative Director at Findaband.

In addition, such platforms can enhance business communications and relations, providing a straightforward, transparent interaction channel for all parties involved.

If your company manufactures and/or sells unique products or services that don't fit into traditional warehouses or fulfillment centers, such as extremely large or heavy industrial equipment or highly regulated products or services, a B2B vertical marketplace may be the way to go.

In this case, vertical marketplaces can provide specialized product configuration tools, for example, that can be reused by multiple parties. They take on the capital costs of investing in niche digital and physical assets and offer their buyers and sellers the flexibility of using their services through their operational expenses.

Of course, these are not the only scenarios in which a company might decide to start a B2B marketplace. Even if you don't see yourself in the cases we've just shared but are still thinking about launching one, read on to learn how to build a B2B marketplace.

As with any complex project, building a marketplace begins with a discovery phase. This is where you define your target market and the core needs and pain points of the businesses you want to serve there. These pain points will later translate into features and functional areas for buyers and sellers in your marketplace.

It may also be a good idea to look at what other companies in your industry are doing and successful B2B marketplaces for references and inspiration.

You can begin your research by answering the following questions:

• What pain points are your customers (or the market in general) struggling with?
• What would make your marketplace unique? Why would businesses want to join?
• Are there existing marketplaces in your industry? How are they doing it? Are there gaps and opportunities you can fill?

Once that's clear, you'll need to decide on the marketplace's revenue model (subscription, commission, listing fees, or other) and strategies for attracting and retaining suppliers and buyers. Again, this may not apply to all the marketplace models mentioned above, but it’s better to address these issues upfront.

Finally, on the operational side, you'll also need to determine what business resources this project would require, including setting up a team or teams that would join in at different stages of the project and calculating the time for each stage to delivery.

At this stage, you need to think through all the technical specifications and requirements for your future marketplace, including technical infrastructure, technology stack, integration capabilities, core marketplace functionality, and other factors.

To kick off the process, you can ask yourself the following questions:

• What are your specific requirements (features, data hosting, security, etc.)?
• Are there industry standards for marketplace platforms in your sector?
• How well does the platform need to integrate with your existing systems?
• What is your budget?
• How fast do you need to get the platform to market?
• Do you have the technical staff to build and maintain the marketplace? If not, are you willing to hire or outsource?
• Can you handle ongoing maintenance and updates, or would you prefer a solution that provides support and managed services?
• How much control over your platform do you need?
• What is your long-term vision for the marketplace?

Answering these questions will help you determine the foundation of your technical infrastructure and whether it's best to choose an established B2B marketplace platform or create your own marketplace platform in-house.

Once you have the business and technical foundation in place, you can start working on the first prototype to validate the design and functionality concepts of your marketplace. At this stage, you need to focus on the customer experience to ensure that it reflects the baseline requirements of future users. This is also the time to identify problems and opportunities for improvement before developing more advanced versions.

Once the internal testing and refinement is complete, it's time to build the Minimum Viable Product (MVP), the basic version of your marketplace that you can release and share with a select group of buyers and sellers for testing and feedback. This is also the time to access the capabilities of your marketplace management platform and see if its technical infrastructure is sufficient for you as an operator.

After gathering and implementing the initial feedback from early adopters, you can then open up your marketplace for more users to test and explore. As the marketplace gets traction, you can analyze how your infrastructure handles increased user loads and transactions and introduce performance optimization and scaling measures.

It’s also the stage where you can add additional functionality to further improve new workflow for all the parties involved.

Finally, after the initial stages of B2B marketplace development, you will need to continuously analyze the performance of the marketplace and its impact on your business metrics. Here are some questions to ask yourself:

• How many active users do we have on a daily, weekly, and monthly basis? Are users engaging with the marketplace as often as expected?
• What is the retention rate of buyers and sellers over time?
• What is the total revenue generated by the marketplace?
• What is the cost of acquiring new users (CAC) and how does it compare to the lifetime value (LTV) of those users?
• How many transactions are processed through the marketplace?
• What is the average transaction size?
• How many active suppliers list products on the marketplace?
• What feedback are we getting from users about their experience?
• Are there any recurring issues or complaints that need to be addressed?
• Are there areas of the platform that could benefit from technology upgrades or improvements?
• What steps are being taken to improve data security and user privacy?

By tracking these metrics, you can identify areas to improve the overall performance and competitiveness of your marketplace.

At every stage of B2B marketplace development, there are multiple factors to keep in mind. We wanted to highlight a few key technical considerations that, in our experience, many companies tend to overlook when contemplating the technical aspects of the process.

Whether you’re opening up your eCommerce platform to third-party sellers or building a B2B vertical marketplace from the ground up, it's essential to consider your users' experience if you want them to stay.

Today's B2B buyers (read: millennials) are savvy and self-sufficient, and they expect a B2C-like feel from the platforms where they purchase products and services. That's why you must ensure your platform meets these modern buyer expectations with an intuitive and mobile-friendly interface, seamless navigation, advanced search and filtering, clear and transparent processes, timely support, and more.

From the suppliers’ perspective, a smooth user experience may mean straightforward and well-guided onboarding, robust sales tracking tools, analytics features, and more.

Wear your customer experience hat when setting up your marketplace's technology stack and functional requirements.

Your marketplace will likely not live in a vacuum. It must communicate smoothly with existing software, such as ERP systems, CRMs, and analytics, that your company, sellers, and buyers use. Plan ahead for the types of systems you want the marketplace to integrate with, and make sure the marketplace technology provider you work with has all the necessary setups in place.

Establishing strong security measures at the outset is essential for cultivating customer trust and loyalty in your platform and brand. This includes protecting sensitive business information, such as customer data, financial transactions, and proprietary product details, and complying with industry- or location-specific regulations, especially in highly regulated industries such as healthcare.

Just as your platform must communicate smoothly with other software, it must handle significant data, traffic or transaction fluctuations during peak seasons without sacrificing performance.

It must also adapt to constant business changes and customers' needs, such as expanding to a new region or introducing new product lines and services. That's why you must ensure your platform is robust and adaptable enough to handle those changes.

Another critical factor that is particularly important for B2B marketplace owners is how they onboard their suppliers. Even if you already have a pool of trusted suppliers that you simply want to bring into a one-stop shop, you still need to think about what capabilities they need, as well as how to vet and qualify them to ensure consistent quality and service levels.

From a technology standpoint, this may mean that you'll need to consider integrating robust supplier management tools that enable seamless data exchange, automate the onboarding process, and provide real-time monitoring of supplier performance metrics.

In addition, in highly regulated industries, it may also require the implementation of tiered access controls to ensure compliance and thorough verification of supplier credentials before allowing transactions or access to sensitive data.

B2B online marketplaces are more than transactional platforms. They are strategic assets that, when done right, can not only improve operational efficiency, but also drive sustainable growth and provide a competitive advantage.

Backed by 20 years of experience, Virto Commerce has a proven track record of building robust B2B marketplaces across multiple industries and applications. As a technology provider, we understand the nuances of marketplace architecture and its critical role in improving business processes and driving long-term success.

Virto Marketplace is an enterprise-grade B2B platform designed to streamline procurement processes, create new revenue streams, and expand product and service offerings. Built on Virto's proprietary technology framework, the platform offers over 60 out-of-the-box modules that allow you to create a fully composable and customizable solution tailored to your specific business needs.

To learn more about the platform, visit Virto Marketplace. And, if you’d like to read more about the B2B marketplace business model, recent trends, and market predictions, visit our Content Hub.