B2B marketplaces as sales channels? In the article, we will consider why Ukrainian companies should pay attention to the possibility of running a grocery business on global B2B marketplaces.
Customers and sales channels are key elements of any business model other than the product.
If you have a brilliant idea for a product but don’t understand how or where to sell it, that idea is worthless. It is not enough to have a clear idea about the product itself – it is even more important to have a vision of the future business model for this idea. Even if you have an understanding of your target audience but don’t know which sales channels to use to reach potential customers, you run the risk of failing even with a cool solution.
The good news is that we live in an era of growth in Internet technology and online business, when you can use popular B2B marketplaces as ready-made sales channels to promote your products. This is the path our company Alpha Serve has chosen to sell its own applications. After launching our first test app for Jira at the end of 2018, in less than 3 years we have built a portfolio of over 25 plugins on the Atlassian Marketplace, Shopify App Store and Magento Marketplace. In this article, I want to share our experience on why Ukrainian companies should pay attention to the possibility of running a grocery business on global B2B marketplaces.
According to the Digital Commerce 360 report, B2B marketplaces have already become a big driver of business-to-business e-commerce growth. In addition, experts estimate that global sales through B2B marketplaces could reach approximately $3.4 trillion by 2024, compared to $680 billion in 2018.
What is a B2B marketplace?
Marketplace is a platform or marketplace where third party vendors or manufacturers sell their products or services directly to customers. As a rule, the marketplace identifies 3 main distinguishing features:
– Many sellers and buyers make purchase and sale transactions on a single platform, website;
– The marketplace does not have its own inventory;
– The buyer makes a purchase completely directly on the site without leaving it.
As mobile app users, we all know about Google’s PlayMarket or Apple’s AppStore for B2C apps. But very few people know that there are marketplaces for B2B applications, such as Shopify App Store, Atlassian Marketplace, Salesforce AppExchange and others.
A B2B marketplace often launches a major software vendor itself to sell their own products/services alongside third-party products and services, while developing the ecosystem through synergies. This gives third-party developers a unique opportunity to “parasite” on a strong brand of a global vendor (for example, Atlassian or Salesforce), getting de facto free access to a ready-made sales channel with organic warm traffic and numerous customers, as well as getting the opportunity to join an already developed ecosystem with clear rules and existing best practices.
In addition, B2B marketplaces make life much easier for app developers in terms of managing complex business transactions, such as supporting a purchase decision in a large company, managing licenses, issuing general billing and accepting payments, etc.
All of this opens up real potential for significant scalable growth for application developers and service providers.
What business opportunities are there on marketplaces?
For applications and B2B SaaS solutions, marketplaces can offer relatively easy and fast launch and scaling. Agree that using the existing infrastructure for a young project is much easier than building your digital presence from scratch. This is really a valuable proposition for those companies or developers who are looking for a niche for their own business or even to test hypotheses for a product without having a strong brand.
Access to global markets
B2B application marketplaces are usually all international. This means that launching your application on the marketplace means entering the global market. Let’s put it this way: yes, you may have difficulty conquering the market in some regions due to the adaptability of the interface or language, but in general, on a global B2B marketplace, you can get customers from all over the world and quickly collect their feedback. Access to global markets becomes much easier if your product joins an existing sales channel with numerous warm users who are looking for applications to solve their problems.
The world’s major B2B marketplaces have much more to offer developers than just a platform to sell apps. In fact, this is a proposal with a huge added value. What is it? The fact that you get access to a user community where you can collect insights about customer problems (to understand how to develop a product) or share knowledge about your solutions. You can share experiences and solve problems that you encounter during product development in the developer community. You can learn about marketing and sales best practices on the vendor’s blog. Join profile events both online and offline to gain inspiration and find new partners. Therefore, access to the marketplace ecosystem can be much more than just a sales tool for your business.
Product suitable for the market
Launching your app on a marketplace is ideal for testing an MVP and finding a product-market-fit at a relatively low cost. Yes, you still need to invest in MVP development, but it is important not to get bogged down in “finishing” the product to an imaginary ideal, but to launch with a basic version of the application and start collecting feedback. This way you can quickly check if the app idea has any commercial potential and get valuable input from real users on where to take your app further.
Shortened sales cycle
Gaining access to global customers of different sizes and industries is an invaluable boost to your application. Imagine how much money and resources you will need if you start promoting an unknown application from scratch on your own. In addition, you need to organize all the functions for complex B2B sales, including various payment methods (which is often a “bottleneck” for Ukrainian legal entities), customer support, license management, compliance… Marketplace, in turn, saves developers from these troubles and takes over these functions for a commission. This makes your B2B sales cycle shorter and the process much easier. This allows you to focus on your core competency, product development, rather than business operations.
You, as a developer, have the opportunity to familiarize yourself with the rules of work on the selected marketplace and find out its commissions “on the shore”, that is, before launching the application. It is always transparent and understandable. You can also look at the average prices of existing similar solutions and get an idea of the price targets for your product, thereby saving time on A/B testing. Based on marketplace inputs, you can assess the potential of the market, predict your revenue and margin, and even build your financial model of future scalability with an acceptable level of accuracy in numbers.
Despite the widespread misconception, launching your application on a B2B marketplace is not that difficult. Many of them do not require a registered company, which means that even a developer as an individual can launch his application.
Each marketplace has its own rules and requirements, but they are all doable. Everything starts with a binding partnership agreement or contract, so be sure to study it very carefully, as well as the rules for working on the marketplace. As practice shows, getting a “penalty” and being blocked for violating the rules of the marketplace is much faster and easier than publishing an application.
How to successfully launch your application on a B2B marketplace?
As you can see, launching an application business project on a B2B marketplace has a number of advantages. However, for example, there are over 3,500 apps on the Atlassian Marketplace, but not all of them are equally successful. When you are just starting out, it will be difficult for you to compete with the leaders in install growth. But in any case, there are certain things that you definitely need to work on if you want to become visible and succeed with your application.
Use product information
In this business model, content is a powerful marketing tool that needs to be used to the maximum. Don’t forget to do the following at startup:
– Fill out the product page as much as possible – the so-called listing. It must be precise and understandable. Focus more on user value than technical details. Remember that your solution will be looked for by end users, not technicians!
– Use screenshots from the app wherever appropriate to ensure the best possible visualization of the product. Edit a short demo video of your app based on screencasts so that potential users can easily get a clear idea of what the app looks like and how it works without leaving the product page.
– Use only unique texts and graphics.
– Complete all possible sections of the listing offered by the marketplace.
– Prepare high-quality and detailed product documentation. Be sure to give users detailed instructions on how to install, configure, and use your application. It is better to make a step-by-step guide with screenshots.
– Take care of the framework end user license agreement so that your future customers know what you are ready to offer them in terms of service and functionality in order to prevent them from falsely expecting a product and its support.
Use the power of analytics
In order to assess the viability of an app idea, you need to track the dynamics of installs. Use all the options provided by the marketplace: use Google analytics and conversions to know exactly who visits your page and performs targeted actions. Examine all available reports of the marketplace itself. Your goal is to collect as much information as possible in the first months after release.
Provide basic customer support
Even if you work alone and don’t have a helpdesk, your users need to know how to contact you if they decide to use your application. Where should they send their requests? Where can I contact support if something goes wrong? Or need help setting it up? You must have at least an email address for such cases. And don’t forget to check it regularly.
From the experience of my company, I can say that bringing your own product to the global market through a B2B marketplace is not such a difficult process. However, it can open up huge opportunities for your business. Marketplaces are very good for testing your app ideas and finding market fit. Take advantage of our experience and the above tips for a successful start. Don’t keep ideas in your head – share them with others by creating new apps!