There is no hotter topic in business-to-business ecommerce than marketplaces. B2B marketplaces in all forms will be a big driver of ecommerce sales and transactions in 2020 and beyond.
Industry marketplaces that handle complex transactions between highly specialized buyers and sellers are launching or expanding in multiple vertical markets such as automotive, chemicals, and oil and gas, among others.
In the $14 billion aerospace parts market, Honeywell is out to prove that B2B ecommerce and a marketplace are a game-changer for how the industry does business.
In this question and answer discussion with Lisa Butters, general manager of GoDirect Trade, an online marketplace launched by Honeywell Aerospace, Butters discusses why and how Honeywell sees a lucrative new ecommerce business in the making—and why a digital marketplace will soon fundamentally change how buyers and sellers of aerospace parts interact.
Q: Why did Honeywell Aerospace decide to launch a marketplace for the aerospace industry?
A: Honeywell has a rich heritage in the industrial sector—but if you’ve read the news lately, it’s becoming more and more evident that Honeywell is earning a seat at the high-tech table. The fact that I’m running a software start-up inside a 100-year-old company is evidence of Honeywell’s commitment to software innovation.
When it came to launching a marketplace for used aerospace parts, Honeywell saw this as a golden opportunity to solve an unmet customer need.
Today, over $4 billion a year changes hands in the used aerospace parts industry and almost none of it is done online. In fact, it takes an average of four emails and two phone calls just to close on one of these purchases.
In an age where most people purchase something online before their first cup of coffee, Honeywell has been determined to figure out why this industry hasn’t moved to the digital commerce channel. And we’re not just solving it by bringing a stellar customer experience—that’s just table stakes. We’ve invested heavily in technologies like blockchain to digitally manufacture trust between the buyer and seller.
If Honeywell can solve this problem and bring buyers and sellers together in a purely digital fashion, then our marketplace can be at the center of all aerospace transactions across the globe.
Powering a marketplace that is truly the A-Z of aerospace, including the sale of parts, data and services, becomes a very attractive high-tech business endeavor for Honeywell.
Q: When did you launch GoDirect Trade and how did you build it?
A: GoDirect Trade was launched on December 18, 2018, so we’re just shy of celebrating our first birthday! Our first Minimal Viable Product (MVP) was delivered in 12 weeks (we develop using Agile) and we built it on the Adobe Magento marketplace platform.
Selecting an out-of-the-box platform to build on top of enabled us to launch and test our initial concepts quickly—versus the old-school development methodology which would be a two-year development project in a world where customer expectations and needs change weekly.
We’ve done significant customization to our marketplace and will continue to do so in the coming years.
Editor’s note: Agile software development is a set of methods and practices where solutions evolve through collaboration between self-organizing, cross-functional teams.
Q: How does GoDirect Trade work? Who uses it and why?
A: GoDirect Trade is the only online marketplace in aerospace that provides users with a “true” ecommerce experience.
Our buyers love the marketplace because we are the only aerospace marketplace that requires price, product images and paperwork in order for sellers to list products.
We set the bar high on our sellers so we can save our buyers time and effort in the purchasing process. Rather than quoting back-and-forth with price negotiations and phone calls, buyers can find a part and check out online each and every time.
Our sellers love the marketplace because it’s the only one out there that allows you to launch your own customized storefront in less than five minutes. Whether you’re a mom-and-pop shop or a multibillion-dollar enterprise, you can list products for sale and enter the ecommerce channel with ease. You can’t do this anywhere else.
Q: How fast is GoDirect Trade growing? How many buyers and sellers are there and what ecommerce sales are you expecting for 2019?
A: GoDirect Trade’s growth would probably make any start-up proud. There are four key overarching metrics that we really look at: User growth (we’ve captured over 30% of the user base in this industry), seller growth (we’ve hit 50 storefronts), search success (we’re at almost 75% which means that 3 out of every 4 users can find what they’re looking for on the site), and online sales transactions (we’ll hit over $5 million in sales by the end of 2019).
Q: What are you forecasting for ecommerce sales in 2020 and how will you achieve that goal?
A: By the end of 2019 we’ll hit over $5 million in online sales, which truthfully sounds like a drop in the bucket in such a large industry.
But it’s a start and we have aggressive goals to increase this amount by 5X by end of 2020 and an even more aggressive goal for 2021. The key here is trying to get the snowball going and to get our online sales to exponentially grow year over year. Achieving that goal will only be accomplished through simple economics:
Can our marketplace bring the demand (buyers) and the right supply (sellers listing product) to the industry?
We’ve got to get buyers buying parts, but they’ll only come if the right product is available for sale on the marketplace.
How we make this happen will be based on rapid execution of our product roadmap, aggressive onboarding of seller storefronts, and strategic collaborations to build out our ecosystem.
Q: You’ve described GoDirect Trade as a combination of Etsy.com and CarFax — can you explain that?
A: It’s like Etsy in that our sellers can launch customized storefronts within minutes using our seller wizard. It takes three easy steps to put information about your storefront, load your store’s terms and conditions and then upload listings for the world to see.
From a CarFax perspective, we’re like CarFax in that we try to provide as much history /part pedigree information on a serialized part as possible prior to the consumer making the sale. If you’ve ever bought a used car before, CarFax will tell you things like previous owners, if the car has been in an accident, or maybe it was driven regularly in the snow.
We do the same thing on GoDirect Trade, except we use blockchain technology to do it. Blockchain allows us to crowd-source part pedigree information but in a highly secure way. Now when users visit our marketplace, if we have information about a part to share, users can access all of it (for free) under listing details.
Q: What new marketplace features are planned for 2020? Please be specific.
A: We’re excited about the future and executing on a product roadmap that our user community is going to love and appreciate.
On the buyer side, we have a few major initiatives planned: First, early in 2020 we’re revamping the entire checkout process to make it simpler. Remember, B2B transactions are inherently more complex than the B2C transactions we’re used to in our everyday lives.
Purchase orders, attachments, customer master accounts, wire transfer information—these are all things that you must design for in a B2B transaction. Another area we’re focusing on is making it far easier for our buyers to connect their ERP systems to GoDirect Trade. Buyers don’t want to manage quotes and order emails in separate systems—through various APIs, we’ll be able to send buyer activity and transactions directly to their enterprise resource planning (ERP) systems to support centralized management.
On the seller side, our 2020 focus will be solely on making it easier for sellers to list products and manage their storefronts. Today, we have an easy listing upload process, but we have to really think about how to not just make it easy for a seller but almost effortless.
We’re currently developing a whole suite of tools for our sellers, including mobile listing services (which allows a seller to take digital pictures and quickly categorize/prepare the picture for upload), a free product image library, and APIs to allow for effortless connections.
Our mobile app is also another place where you’ll see big changes. Apps like Mercari have a great way of segregating the buyer and seller role within a marketplace environment—you’ll see GoDirect Trade head in this direction within the mobile space later in the year.
Q: What makes GoDirect Trade different and unique from Amazon Business and other general B2B marketplaces?
A: Aerospace is a very specialized industry. Not only does the industry move at a far slower pace in general, but it’s also complicated and heavily regulated: Remember, every time a part is sold, it needs to be safe enough to reinstall back into an aircraft so that passengers can safely fly.
I’ve seen both Amazon and eBay try to dabble in the aerospace sector, but it’s an area that they have not been able to penetrate with much success.
There are multiple hurdles for anyone to be successful in this niche: First, used aerospace parts are high dollar (the average transaction that goes through GoDirect Trade is about $10,000) so the consumer has to be confident that they’re buying it at the right price. Do you remember the used car industry fifteen years ago? Come to the dealership and I’ll make you a great deal? That is exactly how what it’s like in the used aerospace market today.
Second, the consumer buying the part has to feel confident that the part is meeting all the strict quality requirements. The platform listing the product for sale must have a mechanism for sellers to load the various quality documents dictated by the FAA and a way to enforce that sellers are loading the right paperwork.
Lastly, on the seller side, the thought of having a digital storefront is very foreign to most of them. For anyone to build a successful marketplace, we have to find a way to get sellers to digitally transform their back-end operations.
This means that sellers must feel compelled enough to sign up for the digital revolution and have price, product images and paperwork always available in a digital format. I think that solving these hurdles from an aerospace perspective is not going to come easy for anyone.
GoDirect Trade is backed by Honeywell, which has been a trusted name in aerospace for over 100-years. Not only do we understand aerospace and all the intricate requirements that come with the products, but we also understand software and the ecommerce channel. Our goal is to bring these two strengths together to build the No. 1 used aerospace marketplace in the world.
Q: What do you charge buyers and sellers to use GoDirect Trade?
A: Users can register for free on GoDirect Trade. Another cool feature is that all users that register become eligible for a free 6-month seller subscription. The seller subscription allows them to launch their own digital storefront so they can start selling online immediately.
At the end of the 6-month period, the seller is not obligated to keep their store open, but if they want to continue, they can keep selling for as low as $500 per month.
Q: What are your biggest challenges in building and growing GoDirect Trade and how are you overcoming them?
A: Our biggest challenge right now is getting sellers to sign up for the digital revolution. Back in the late 90’s/early 2000’s, Amazon went through the same growing pain.
You had so many brick-and-mortar stores that didn’t see the need to really sell through the digital channel. We are exactly in this phase with our sellers today. Setting a price, taking a digital picture and scanning all that paperwork takes a lot of work—and sellers really must be committed to changing their operations to support these requirements.
Because the used-parts industry has been successful at selling through emails and phone calls for so long, it’s hard to convince them that a new way will eventually come and replace the antiquated ways of today.
Q: B2B marketplaces are expected to grow exponentially in 2020. What is the future of vertical industry marketplaces such as yours?
A: I often say that if GoDirect Trade (Honeywell) doesn’t figure this out, I am 100% sure that someone will. There is no way that this industry will stay in the antiquated way of doing business forever.
I listened to a podcast once that talked about “timing” and how it’s really the driving indicator of success—even more so than the idea, funding or your start-up team. When I look at GoDirect Trade and the generational changes that are about to occur, I find myself more convinced that the timing of our marketplace is going to be the key to our survival and, ultimately, our success.
By 2025, Millennials will account for 75% of the global workforce; by 2020 Gen Z’ers will make up 20% of the workforce. If for one second you think Generation Z workers will place an order by calling someone on the phone, then you are in for a shocker. GoDirect Trade will become the marketplace and experience of choice for the future workforce that will demand a purely digital experience.
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