Getting an entire national or global industry to replace paper, phone and manual order placement and processing with digital commerce can be a daunting—and even improbable—task.
That’s because old, established industries such as automotive, aerospace, chemicals and steel that generate billions or even trillions of dollars in annual sales don’t change overnight. In some cases, this is because of the huge investment companies have made in their established supply chains and distribution systems that they may not want to change at all.
But if B2B marketplaces such as GoDirect Trade in aerospace, CheMondis in chemicals, FastMetals in iron and steel, and Farmers Business Network in agriculture have their way, old and outdated order placement and processing will be replaced by full-scale ecommerce, according to data and analysis from the new B2B Marketplace report series from Digital Commerce 360 B2B.
Dozens of vertical industry marketplaces
Five years ago, there were far fewer B2B marketplaces in vertical industries such as apparel, automotive and healthcare. But today, there are more than 70 B2B marketplaces in more than 13 diverse industries, according to research compiled by Digital Commerce 360 B2B.
And that number is expected to grow, especially as more digital technologies take hold throughout U.S. and global manufacturing and distribution, and as younger, more digitally driven purchasing managers push for more ways to buy business products and services online.
“Vertical marketplaces are becoming a bigger driver in B2B ecommerce because they are giving buyers and sellers new ways to interact online, and let customers research and buy very specialized products,” says Karie Daudt, senior commerce consultant at digital technology and services agency Perficient Digital. “They are proliferating in bigger numbers.”
Vertical marketplaces are in some ways just like broader marketplace platforms, such as Amazon Business, eBay Business and Alibaba. These marketplaces act as electronic forums that bring together buyers and sellers to research, find, negotiate and purchase goods and services online.
New tools for buyers
Many vertical markets, just like commercial platforms, also have a range of ecommerce tools offered by sellers that let buyers set up and manage accounts, customize order approvals and monitor spending levels. Other advanced ecommerce and digital tools from marketplace sellers let buyers integrate their purchasing systems with the marketplace platform, buy products or services and receive detailed invoices.
Building vertical industry marketplaces isn’t an entirely new concept. About 20 years ago, during the early heyday of B2B ecommerce, big internet exchanges were launching in big industries from automotive to aerospace, led by some of the biggest companies such as General Motors Co. and Ford Motor Co. in automotive and The Boeing Co. in jets and airplanes.
But the timing for such exchanges and portals was premature, and in most industries, they never took hold for a variety of reasons, including a lack of buyers, sellers, internet connectivity and ecommerce technology. And there was the dotcom crash of 2000 and 2001.
The rise of millennials
Today, more vertical marketplaces are opening for business in large part because business buyers in general, and millennial business buyers in particular, are looking for new ways to streamline their organizations’ supply chains and procurement programs and to research and buy business goods and services using big data, advanced analytics and more ecommerce, says Lisa Butters, general manager of GoDirect Trade, a vertical marketplace for finding and buying used aerospace parts.
“By 2025, millennials will account for 75% of the global workforce; by 2020 Gen Zers will make up 20% of the workforce,” Butters says. “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.”
Sign up for a complimentary subscription to Digital Commerce 360 B2B News, published 4x/week, covering technology and business trends in the growing B2B ecommerce industry. Contact Mark Brohan, vice president of B2B and Market Research Development, at [email protected] and follow him on Twitter @markbrohan.
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