As a technology infrastructure for B2B trade, we get two kinds of questions from two different customer segments:
- Classic retailers ask us how to replicate their historical success in the physical world in retail’s digital future.
- DTC brands and sellers ask us about what they need to break into wholesale, whether it’s about how to work with retailers, how to ship from the US to Canada, or how to handle online returns at scale.
To answer those questions, we came up with a list of 47 concepts that will help you learn more about what it takes to work with or scale retail marketplaces in 2021.
You can use this article to dive deeper into all the nuances you need to know in order to boost your ecommerce revenue, capitalize on wholesale distribution, and bring your brand and distribution into the future.
Working with marketplaces & platforms
- Marketplaces are central locations that allow interested parties to buy and sell products or services from each other.
- C2C marketplaces allow individual consumers to buy and sell products or services with each other.
Examples: eBay, StockX, Facebook marketplace
- B2C marketplaces allow businesses to list products or services and sell directly to individual consumers.
Examples: Amazon, Aliexpress, Mercato
- B2B marketplaces allow businesses to buy and sell products or services from other businesses. Most transactions are in bulk, wholesale, or need to hit a threshold or minimum order quantity.
Examples: Alibaba, Faire
- Buyers form the demand in a marketplace. In a B2B marketplace, buyers are other businesses, while in C2C and B2C marketplaces, buyers are individuals.
- Sellers form the supply side in a marketplace. In B2B and B2C marketplaces, sellers are businesses. In a C2C marketplace, the sellers are also consumers or customers.
- GMV stands for Gross Merchandise Volume. This measures the economic value of transactions or usage in a marketplace in dollars.
- Marketplace platforms are software companies that facilitate relationships between 3rd party suppliers and end customers. They enable their users to derive more economic value from the marketplace than the company itself does.
Example: Shopify, Convictional
- Marketplace aggregators are software companies that act as intermediaries and control the relationship between the suppliers and the end customer. The aggregator itself extracts more economic value from the marketplace than its users does.
Examples: Amazon. Google, Facebook
Working in B2B marketplaces
- Classic buyers in a B2B marketplace are businesses that have a direct relationship to the individual customer and use legacy technology like EDI, ERPs, and PIMs to manage their product and customer information. They tend to buy and hold inventory, have brick-and-mortar retail locations, and serve customers based on geography.
Examples: Walmart, Target, Best Buy
- Classic sellers in a B2B marketplace are businesses that supply goods to other businesses and also use legacy technology such as EDI and SFTP to transact with buyers. They are accustomed to getting wholesale distribution through classic buyers and other B2B partners. Selling direct-to-consumer may be a non-existent or small percentage of their business.
Examples: Calvin Klein, Nike, Holt Renfrew
- Modern buyers in a B2B marketplace are also known as the modern equivalent of the mall or department store. They tend to be vertical ecommerce stores focused on serving a niche audience. Most are cloud-based, API-first, and built on ecommerce platforms like Shopify, Magento, and Salesforce Commerce Cloud. Modern buyers may or may not hold inventory and have zero to little physical presence. Instead, they use an array of digital tools to maintain a streamlined supply chain and reach, retain, and engage a global base of customers.
Examples: The Verticale, The Fascination
- Modern sellers in a B2B marketplace tend to be digitally-native, vertical brands (DNVB). The majority of their revenue comes from a direct, retail relationship with the end customer. Because they are built on API-first platforms, they tend to struggle to work with EDI-based classic buyers. As a result, B2B represents a small or nonexistent portion of their distribution.
Examples: All Birds, Away
- Integration platforms for B2B marketplaces enable partners to trade with each other, whether they’re on EDI or API. Integration platforms also allow buyers and sellers to integrate external solution providers without replatforming their existing ecommerce ecosystem.
Ex. Convictional, Zapier
- Multi-vendor marketplaces are digital stores that curate products from 3rd party sellers. Behind the scenes, the marketplace might have a team or software that keeps product, inventory, and fulfillment information updated with its sellers’ information.
- EDI stands for Electronic Data Interchange and is a standard language or approach for systems to share information between companies. Most classic North American companies use the X12 standard. This uses numbers to identify document types.
- API stands for Application Programming Interface and is a method to simplify a software’s functions into a few lines of code. APIs allow companies’ systems to work with each other, without little to no compatibility issues and technical expertise.
Ex. Stripe, Convictional’s buyer/seller API
- Seller payouts refers to how and when a buyer pays the vendors from which it orders its inventory. The most popular methods of payment include cheque, credit card, and ACH.
- Microservices is a kind of systems architecture that uses APIs to silo each software service into standalone components. This allows for rapid switching of technology services, without the need for system-wide code changes and testing.
- Headless ecommerce describes how an ecommerce system’s backend content management systems (CMS) are decoupled from its frontend website. This is a subset of microservices systems architecture.
- Product information management (PIM) is a central database that stores a retailer’s product, inventory, and catalog information, including information received from its sellers.
- Payment gateways enable credit card transactions to happen between a buyer and a seller.
Example: Stripe, Paypal
- Seller onboarding refers to the buyer-led process needed to get a seller transactional in a B2B marketplace. The success of this process is measured by how quickly a seller receives their first sale from the marketplace. Depending on the industry, this can also be called “supplier onboarding’, “vendor onboarding” or “partner onboarding”.
- Seller enablement refers to a buyer’s capacity to onboard, integrate with, and manage 3rd party sellers.
- Service level agreements (SLAs) outlines the minimum requirements that need to be met, in order to maintain a trade relationship between two businesses. In the context of a B2B marketplace, the buyer typically has SLAs with the seller around order fulfillment and shipping timelines.
- Minimum order quantity is the lowest amount of a specific product or SKU that a seller will accept before they agree to fulfill an order.
- Wholesale refers to the sale of products in bulk quantities, usually for resale by a retailer.
- SKU stands for “stock keeping unit” and refers to the unique identifiers a company uses to keep track of its inventory.
- GTIN stands for “Global Trade Item Number” and is the series of numbers embedded within a barcode. This is an identifier used to differentiate products, globally. UPC and EAN are both kinds of GTINs.
- UPC stands for “Universal Product Code” and is mostly used in North America to identify products. A UPC is a requirement to list a product on Amazon.
- EAN stands for “European Article Number” and is the European equivalent of the UPC code.
Working with modern retail marketplaces
- Return rates are calculated by dividing the returned revenue in a certain time period by the total revenue in that same time period. The total returns are made up of refunds, exchanges, or store credit.
- Reverse logistics refers to a retailer’s process in facilitating the product return process.
- Bracketing is a retail trend where a customer orders multiple variations of an item from a store, in order to try them on at home. They then keep the ones they want and return the rest. This happens most often in the apparel and footwear industries.
- Content commerce is the strategic integration of relevant brands and media, in order to deliver a differentiated shopping experience for consumers.
- Brand incubation is a business strategy where an incubator, usually a classic retailer, acquires or buys a stake in a startup brand in order to help it develop and mature its products and business.
Example: Estée Lauder
- Crossborder shipping refers to the movement of commercial products by land, sea, or air between two countries, typically refers to trade between the United States and Canada.
- Packing lists contain the complete list of items in a shipment.
- Shipping labels contain all the information a carrier needs to fulfill the delivery.
- Omnichannel retail refers to a channel distribution strategy that brings the brand experience to the customer wherever they may be, online or offline.
- Merchandising refers to the promotion and placement of retail products.
- Consignment refers to an arrangement where a seller gives products to a retailer to sell. Once the products sell, the retailer receives a flat fee or a commission.
- Inventory turnover refers to the number of times a retailer is able to replace the products it sells in a given time period.
- Product listings are also known as catalogs and contain all the products that a buyer or seller has available for sale.
- Dropship is an order fulfillment business model where the retailer does not maintain inventory in-house, but instead, has their 3rd party seller fulfill customer orders.
- Blind dropship is a kind of dropshipping where the wholesaler ships products directly to the customer who ordered it, using the branding from the original retailer. This way, the customer receives the product, thinking it came directly from the retailer.
- Endless aisle is a feature of dropship fulfillment where a retailer’s product selection is no longer bound by what it can physically fit into a store or a warehouse. A customer can browse and purchase from all the available inventory of each 3rd party seller that a retailer works with.