In the last few years alone, B2B marketplaces have grown at an incredible rate. The total value of merchandise sold through them, known gross merchandise value (GMV), for many is already in the range of hundreds of millions of dollars — or even billions. Their success is a good thing for distributors, say digital platform experts Alex Moazed and Nick Johnson. Their company, Applico, recently ranked the top 50 B2B marketplaces and the pair argue that independent distributors’ survival may depend on such e-commerce platforms.
In this week’s MDM podcast, I spoke with Moazed and Johnson about the factors that went into their rankings, as well as why they think distributors need to participate in multiple marketplaces to slow down the juggernaut that is Amazon Business.
“We think that the best outcome for distributors would be if there is not that dominant, multi-category generalist that has 40% to 50% of online sales in B2B,” says Johnson. “That’s a bad scenario in terms of an outcome for most distributors because there’s less competition.”
The better scenario, he says on the podcast, would be a situation more like what’s happening in China right now, where distinct verticals have several successful marketplaces each. Otherwise, one big marketplace that owns the market can act on some of distributors’ biggest fears: creating their own products, harvesting product data, and the like.
Aggressive growth
In the next two or three years, Applico’s estimates show Amazon Business will likely be bringing in about $75 billion a year in B2B distribution. “They’re going to continue to grow very aggressively; they’ve clearly made this a priority,” Johnson says.
Already strong in industrial supplies, they are growing in auto parts, medical supplies — hello, pandemic PPE — and have across-the-board aspirations. Should the company hit $100 billion or more in the next few years, it would be a flashing danger sign for independent distributors, Johnson adds.
The alternative would be if other marketplaces, such as those in Applico’s top 50 ranking, are able to grow quickly and reach tens of billions in GMV. “That’s a much healthier outcome for distributors,” says Johnson. “ … There’s still an opportunity for distributors to, say, help tip the playing field in favor of these independent marketplaces over Amazon dominating.”
Listen to the podcast to hear the alternative approach that Moazed calls “making a deal with the devil.” You’ll also hear his predictions on best-case and worst-case e-commerce scenarios for distributors that will unfold in the very near future.
The post Does the Future of Independent Distribution Depend on B2B Marketplaces? appeared first on Modern Distribution Management.
