Minimizing B-to-B Channel Conflict Through the Online Marketplace Model

As the retail industry continues to transform, it's no secret that all sectors are looking for ways to minimize friction and improve the customer experience. While B-to-C retailers have been working on this for the past several years, B-to-B brands and manufacturers are just now beginning to realize the importance of connecting directly with customers and making it as easy as possible for them to transact. However, many think they cannot do so without creating conflict with long-standing channel partners.

To succeed in today’s selling environment where B-to-B buyers expect the convenient shopping experience they have in their B-to-C lives, B-to-B manufacturers must quickly look for ways to create direct relationships with customers. Otherwise, they risk falling behind and losing control of the customer experience altogether, all without severing the deep relationships with the channel and retail partners that have long been loyal to selling their products and solutions. The direct online marketplace model is one way to help manufacturers approach these critical abilities more effectively, while preserving a partner-centric selling ecosystem.

Based on a recent study, “Manufacturers Reap Benefits From Selling Direct,” conducted by Forrester Consulting and commissioned by Mirakl and SAP Hybris, which evaluates the current state of B-to-B manufacturers adoption of hosted online marketplaces and associated benefits, it's evident that manufacturers have only taken minimal steps towards direct e-commerce adoption. According to the study, this is due to “concerns over lack of experience with e-commerce, costs associated with building the required technology and potentially alienating their distributors.”

Notably, the study also found that manufacturers exposed to online marketplace selling are much more confident about their ability to manage the online buy flow. Additional notable findings from the study included:

• Manufacturers understand the need to connect directly with end consumers, but lack confidence in doing so. Only 35 percent of respondents stated they're “very confident” in their ability to convert site visitors to buyers, and only 34 percent said they were “very confident” they could properly manage their customers’ final purchase stages.
• Manufacturers have taken half steps toward enabling e-commerce for end consumers. The study revealed that 53 percent of companies say they're selling on third-party marketplaces or through channel partners, but relying on third-party channel partners interferes with their control of the customer experience as well as reaping valuable customer data and insights.
• Manufacturers with marketplaces say they're “more confident” in their abilities to execute critical functions through direct marketplaces.
• Manufacturers reported they felt 10 percent “more confident” at converting visitors to buyers through an online marketplace and 9 percent “more confident” at managing the final stages of purchase fulfillment through a direct online marketplace.

Direct online marketplaces can help B-to-B manufacturers mitigate channel conflict concerns by creating a new sales channel. Distribution partners can list their inventory of the manufacturer’s product on the manufacturer’s marketplace.

Before:

After:

In this model, all of the value chain players keep their traditional roles — the customer buys, the manufacturer produces the good, and the distributor ships and provides services. The only difference is that the customer is able to transact directly on the site where he or she is researching the product.

In conclusion, the study demonstrates that the online marketplace model helps manufacturers reduce friction for customers by enabling purchase and fulfillment directly on a manufacturer’s site, eliminating obstacles to completing a sale and creating a more consistent customer experience.

Adrien Nussenbaum is the co-founder and U.S. CEO of Mirakl, a SaaS-based online marketplace solution.