With the pandemic still raging in many parts of the world, selling online has become a must for small businesses, especially the ones that deal with developing countries.
The main beneficiaries of this major shift have been mainstream online B2B marketplaces such as Alibaba, DHgate, and Global Sources. These marketplaces have been there for more than 20 years, and now boast a huge worldwide network of companies.
If you do not know what they are, essentially you place an order in bulk for a certain product. The price already includes the terms of the contracts (Incoterms). In that respect, online B2B marketplaces are like B2C marketplaces such as Amazon, where customers place the order, pay, and wait that it is delivered to their door.
Although B2B marketplaces are widespread, they are not perfect and there are other options. A compelling alternative is represented by online B2B matchmaking platforms, supplier websites where businesses engage for the long term and not just for trading single items. A notable example is Globartis, a young but fast-growing B2B matchmaking platform based in Europe.
Here are 3 reasons why small businesses should prefer such type of platforms instead of standard B2B marketplaces.
First of all, B2B matchmaking platforms are much cheaper than B2B marketplaces. B2B marketplaces are intermediaries that control the transactions and charge a fee to place the order. For example, Alibaba charges between 2% and 5% for each transaction.
These means that if you sell 100,000 USD of goods, you may pay up to 5,000 USD in fees.
On the other side, B2B matchmaking platform resemble classified ads websites, meaning that do not control the transaction. As such, they usually charge a small fee for either posting or connecting to an opportunity (in the range of 50-300 USD), or an annual subscription fee (usually up to 2,000 USD), which gives companies unlimited use of the platform.
Long term focus
Since their business is based on recurring transactions, B2B marketplaces are not interested in encouraging long-term relationships between companies.
On the contrary, B2B matchmaking platform are built for doing just that. A practical example is the following. A construction company was contracted by a municipality in Germany to renovate an historic building. The company’s business was renovating exteriors, but not the interiors. The options were: 1) buy the necessary items and renovate the interiors by themselves, or 2) partner with a construction company specialized in renovating interiors.
They opted for 2). Whilst they were new to the area, they used an online matchmaking platform to source a partner with which to collaborate for all the duration of the works, i.e. years.
This would have been impossible by using a B2B marketplace, and the company would have still been left with a lack of competencies.
Since businesses do not like to pay fees, sometimes it happens that they try to circumvent the B2B marketplace and close the deal outside the platform. Yet this is not supposed to happen.
On the other side, B2B matchmaking platforms are designed for making businesses interact with each other. When posting an opportunity, companies are not limited to a picture, a price, and technical details. Rather, they should carefully describe who they are, what they do, where and with whom they want to do business and why. This way interested parties can contact them having already an idea of whether they are a good fit or not.
This process saves a lot of time and energy and encourages a smooth and healthy interaction between companies.
B2B marketplaces are the 800-pound gorilla in the sphere of online B2B trade, yet small businesses may find that, with the aim of building long-term partnerships, they may be better off by using B2B matchmaking platforms instead.
Often, small businesses look for a long-term distributor or a manufacturing agreement that will give them work for years to come. Instead of selling item by item on B2B marketplaces, they should try to find such partners on B2B matchmaking platforms, which are designed exactly for that purpose.