Marketplace Crowding Brings a Sense of Caution - Modern Distribution Management

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Marketplace Crowding Brings a Sense of Caution

A recent MDM webcast discussion explores the proliferation of distribution-specific marketplaces and the nuance involved.
A recent MDM webcast discussion explores the proliferation of distribution-specific marketplaces and the nuance involved.

On June 30, MDM CEO Tom Gale and I hosted a webcast that featured two guest panelists from Applico: Founder & CEO Alex Moazed and Managing Director Nick Johnson. The duo are experts in the field of B2B marketplaces — the recent proliferation of which was the subject of our one-hour webcast.

It’s an interesting topic and one that MDM and distributors of all verticals will keep a close eye on, as numerous distribution marketplaces have popped up in recent years. It is crowding a field that is still dominated by Amazon Business and Alibaba, but those aren’t the only games in town anymore. Not by a long shot. Since just the start of 2021, we’ve seen marketplace launches from Berkshire eSupply (industrial products), Bluon (HVAC), Parts Town (OEM foodservice equipment) and Volition (industrial parts). ODP Corp.’s Varis platform (office products) looks to launch later this year.

What do all these new marketplaces have in common? They are industry-specific. Whereas Amazon Business, Alibaba and eBay for Business cater to all industries, the examples mentioned above cater to a specific niche, just like a specialized distributor. 

I gave an overview of these recent launches during the webcast, and during my research for their details I felt that it’s easy to get caught up in all this recent activity and feel a sense that the distribution sector is jumping right in to marketplaces with a Wild West scenario akin to college athletics’ current Name-Image-Likeness chaos. The truth is quite the opposite. As Moazed and Johnson pointed out, while the level of investment in marketplaces from distributors is certainly accelerated in recent years, it’s still coming from just a very small slice of the pie.

In the webcast, both Moazed and Johnson emphasized that B2B marketplaces aren’t for everyone, and that there’s much more nuance to consider before getting involved. I thought Johnson made a great point when he said that marketplaces are only one technology tool available to distributors, and that there are many other tech tools that may be better alternatives depending on a distributors’ size, customer base and supplier relations. 

Nick Johnson

“I think the wake-up call to distributors should be that there’s a lot more investment happening against you than for you,” Johnson said. “And if you’re going to try to fill that gap, that means distributors need to invest a lot more in tech that is going to help them rather than hurt them, whether that’s investing in marketplace models that are more distributor-friendly, or investing in enabling tech around your core business. The balance of disrupt vs. help is not in your favor right now, and distributors need to do more to fill that gap.”

Again, “doing more” doesn’t necessarily mean selling on marketplaces, which are just one option.

That being said, there’s a reason these and industry-specific B2B marketplaces are gaining traction. The Applico duo touched on how, in B2B, we’re seeing a much more fertile and robust ecosystem of vertical-specific marketplaces that are very strong competitors against the multi-category horizontal players like Amazon Business and Alibaba.

“For B2B marketplaces, it’s not a one-size-fits-all, ‘everyone looks like Amazon,’ race-to-the-bottom-kind of open marketplace,” Johnson said. “There’s actually some very different and interesting permutations of the marketplace model that works specifically for B2B where there’s more complexity in the transaction and people care about things other than just price and delivery in one or two days. There’s a lot more technical expertise and other things that might go into the sale and value-added services. Those factors helped give rise to different marketplace models that accommodate those different nuances of each of these verticals.”

That’s why some of these vertical-specific marketplaces look quite different than Amazon, Johnson added, and they are different in ways that can be much better or more conducive to distributors looking to participate.

Watch the free webcast here.

And speaking of webcasts: If you haven’t already registered for MDM’s 2022 Top Distributors Webcast — to air July 21 at 1 p.m. ET — you really should.

Further out, the topic of distribution marketplaces is just one of many areas that will be covered in MDM’s upcoming in-person SHIFT | The Future of Distribution industry summit, to be held Sept. 25-27 in Broomfield, Colorado, near Denver. We’ve assembled a stellar lineup of 30-plus speakers who will address a myriad of topics vital to distributors’ sales, digital and data analytics transformation.

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