“The B2B suppliers are seeing the success of B2C e-commerce sites and recognize that online marketplaces are a great way to reach customers. Companies like Amazon, Facebook, and Overstock offer aggregate marketplaces that have been attracting consumers for years, and more B2B buyers are looking for online destinations where they can source whatever they need.”
- James Messer, CEO and Founder, Gotransverse, in Forbes

This month in Forbes, Gotransverse founder and CEO James Messer wrote an article for Forbes detailing the recent trend in B2B marketplaces serving vertical industries. He covers why B2B marketplaces were slower to take off than B2C — and why they've taken off now — as well as the various types of B2B marketplaces that are taking off and the dynamic pricing models driving their success. We encourage you to read the full article at Forbes, but we’ll share a few highlights here.

The Rise of the B2B Marketplace

While many B2B suppliers initially resisted the marketplace model based on fears of margin compression, undercutting channel partners, and disrupting longstanding customer relationships, the sophistication of today's marketplace is changing. Coupled with the fact that today's buyers want the same B2B experience they get from their favorite B2C marketplaces, it has assuaged many of their concerns.

As such, there’s been a rise in B2C marketplaces that can handle dynamic pricing, complex RFQs, and custom orders, with broad product offerings and fulfillment options, delivery and fulfillment tracking, easy returns and refunds, and transparent pricing. Messer lists four types of B2B marketplaces that have gained popularity of late:

  • Product marketplaces
  • Time-and-materials marketplaces
  • Scope-of-work marketplaces
  • Corporate spinoff marketplaces

(Read the full article in Forbes to learn more about each type of marketplace.)

“In each case,” says Messer, “buyers get to choose from a broad range of suppliers who compete on features, price, delivery times, and other factors. The goal of the B2B marketplace is to simplify procurement and promote frictionless transactions.”

The Key to B2B Marketplace Success: Dynamic Pricing

“Although many vendors fear that transparent pricing undercut margins,” notes Messer, “applying dynamic pricing in a marketplace setting has many competitive advantages. But what are those advantages, exactly?

First, buyers are looking for the exact competitive, transparent pricing in B2B marketplaces as they've long demanded from the B2C marketplaces they shop. Dynamic pricing allows vendors to reset their rates as necessary to remain competitive in their markets while still maximizing margins. "It gives you a better understanding of the market and when to adjust pricing," says Messer. "It also helps maximize profits on every transaction by determining what customers are willing to pay and can be valuable when testing new products and new types of offerings."

Messer notes other dynamic pricing advantages include simplifying stock management by lowering prices on slow-selling products and raising prices on hot sellers to balance stock — or reducing prices on favorite items to improve the customer experience. Additionally, keeping pace with the competition through dynamic pricing helps businesses avoid underpricing their goods. Lowering costs enables more efficient market penetration when trying to reach new audiences.

Though we’ve shared the ins and outs of a wide variety of usage-based models, Messer says that, when it comes to the B2B marketplace, there are five dynamic pricing models we see most often, and he provides an overview of each in the Forbes article:

  • Cost-plus pricing
  • Competitor-based pricing
  • Value-based pricing
  • Conversion rate pricing
  • Time-based pricing

"Expect to see self-service B2B marketplaces become a permanent part of procurement and the supply chain," says Messer in conclusion. Of course, successful dynamic pricing requires suitable billing systems to power the agility, complexity, and volume B2B marketplaces need to drive growth. The Gotransverse intelligent billing platform is ideally suited for these marketplaces. Gotransverse is a scalable platform specifically designed to handle complex pricing, billing, and revenue management, supporting monetization at speed. Communications

To learn more about how Gotransverse drives growth through monetization — for B2B marketplaces and clients in a wide range of industries — we invite you to take a virtual tour of our billing platform today. Then, when you're ready, request a demo to learn more.