Are B2B marketplaces finally entering their boom time in Asia?

Business-to-Business (B2B) marketplaces have become the next big thing that has taken over many procurement and retailing processes, and online transactions have evolved to enable businesses to procure almost anything in the market. A 2019 B2B online report predicts that online marketplaces will account for 40% of the global online retail market. Gartner estimates that within the next 5 years, 75% of B2B procurement spending will be done online.

Asia contains both the largest and fastest-growing eCommerce markets via China and India. The strong dynamism within Asia had prompted the rapid growth of eCommerce, especially in China as China’s share in global eCommerce retail transaction value to about 16 percent more than the United States. However, other Asian countries such as Japan and South Korea, having some of the largest shares of eCommerce retail sales, has also played a vital role in the rise of eCommerce. Also, the prevalent rise in mobile commerce has been observed, which is likely due to digital penetration rapidly improving in Asia, thus, the mobile commerce landscape in Asia has also been growing faster than the rest of the world.

The beginnings of Asia’s B2B eCommerce started with a strong focus on wholesale and cross-border commerce or acting as a business directory. These B2B marketplaces are led by markets where the source of manufacturing happens to facilitate wholesale distribution to the region or world. Many like Alibaba, Indiamart, Tradeindia, TradeWorld.Asia and Thaitrade offer wide category search across multiple industry sectors, more similar to the format of large online bazaar than the professional B2B marketplaces as seen in the US eCommerce landscape in healthcare (e.g., ZagenoMedinas and Vetcove), manufacturing or machinery (e.g., Big RentzIron Planet and Asseta), for example. However, this is changing in Asia. 

We are witnessing the emergence of the next generation of B2B marketplaces in Asia where enterprises are developing a focus in specific niches or geographic distribution. Examples include IndoTrading is a private marketplace dealing with construction and industrial supplies, supplybunny.com as a supply ordering platform for restaurants, bakeries, and cafes in Malaysia, and OfficeMate is an e-procurement site for office supplies in Thailand.

What do B2B Marketplaces in Asia look like? 

A few B2B marketplace business models in Asia have emerged over time. Some offer and sell a wide range of general products from multiple vendors and suppliers, while others could be niche and highly specialised in their industry sector. Some could offer rental or professional services as a way to address the trend of sharing economy and how people source for service offerings respectively.

Noting that category boundaries are not always sharp and separated by profile characteristics, we currently see five main types of marketplace. Each is defined by the nature of its wares and services, as well as by who holds contractual and warranty responsibility for them. For illustration, we include Asia-based marketplaces that are either seen as leaders or tend to be mentioned more frequently within the sector. 

  • Product-focused marketplaces. Product-focused marketplaces are the most common marketplace - it focuses on marketing and distributing items or commodities such as general supplies, consumer goods, and electronics. Zillingo, a 4.5 year old eCommerce that started as an online retail marketplace, has expanded into a B2B platform Zilingo Asia Mall and website which targets fashion wholesalers in Thailand, Singapore, Indonesia and other ASEAN markets. 88Spares was launched in April 2017 as an online marketplace and startup to specialise in selling spare parts for machinery in the textile and garment industries, to help factories save operational costs by cutting down middlemen and simplifying the purchasing process.
  • eProcurement marketplaces. A one-stop-shop that allows buying organisations and their suppliers to efficiently maintain a list of contracted goods and services with pre-negotiated prices, participate in electronic trading, to quickly order and buy the goods and services they need. Eezee.sg is a unified Singapore-based B2B marketplace for industrial goods and supplies. It offers B2B features such as instant quotation and product sourcing service, allowing buying companies to procure products and negotiate pricing with ease and efficiency while discovering products not readily available from its marketplace. Pantavanij, a leading Thailand-based online procurement and auction platform, services more than 20,000 B2B suppliers and $6 billion purchasing volume each year. Its platform streamlines the procurement processes via its source-to-pay software which connects sourcing, purchasing, invoicing, payment, and spend analysis, with added functionalities like electronic request form, Price per Performance auction and rRFX (electronic request for X services).
  • Service-focused marketplaces. An online service marketplace initiates, facilitates, coordinates, and concludes hiring and selling of services between individuals or businesses. In Asia, there seems to be more B2C or peer-to-peer service marketplaces such as Kaodim than B2B, but we are seeing more B2B entrants. CaterSpot is a digital B2B food catering platform, connects food caterers with businesses, offices, teams, events, and corporations, allowing them to easily source for food caterers to order large quantity of food or tailored meals for their employees. In Australia, Expert360 connects businesses with contracting and professional industry experts locally. In India, Sulekha links local service businesses to 30+ million consumers with 200k+ service professionals across 200 categories in about 40 cities. Both Expert360 and Sulekha serves both businesses and individuals.
  • Time-based or Rental-focused marketplaces. Airbnb is likely the most well known online rental marketplace globally. GorillaSpace, which operates in both Singapore and Japan, is an online B2B office and workspace rental marketplace platform that enables businesses to find both long-term office spaces and flexible workspace options, or a hybrid of both, with lease flexibility and competitive prices. It seeks to address a need within the commercial property market that is experiencing a shift from multi-year office space leases to more flexible options. Headquartered in Japan, Nishio Rent All proves that even a traditional construction machinery leasing company can adapt to changing market demands. Nishio Rent All now operates a Singapore-based online B2B rental marketplace platform where it allows businesses to browse their rental offerings and request for quotation via their platform.
  • Business catalogue or directory type of marketplaces. Business directory marketplace might seem like an odd one compared to the usual eCommerce marketplace platform. Fundamentally, the idea is pretty much the same with the exception that the platform serves to enable business connections, submit quotations but not spot transactions. Yellow Pages Singapore started as a traditional telephone book directory but re-innovate their business to yps.com.sg, an online business directory listing platform, driven by digital disruption and consumers’ transition towards online platforms. 

What is driving the Growth of B2B Marketplaces in Asia? 

Online B2B marketplaces offer several benefits. The users of B2B marketplaces enjoy faster product and brand discovery, greater transparency in product, service, and supplier availability — as well as in pricing and purchasing terms. The past barriers of time zones and geographical proximity have become irrelevant, making marketplaces truly global and year-round. 

Suppliers often enjoy better inventory management. Sellers of long-tail products would also benefit as marketplaces provide price transparency and detailed product information page which enables consumers to make a more informed purchase decision and comparison shop, solving headaches that are often linked to long-tail products such as scant pricing or product information.

Customers, on the other hand, receive more control over their transaction history, personal details, tracking of deliveries as well as a product catalogue. An online marketplace eliminates some of the redundant operations processes such as automating repeat orders and purchases, sending system-generated updates the order processing or inventory performance. 

Aside from the direct benefits to the marketplace users, the Asia general and eCommerce economy have also benefited tremendously from the growth of eCommerce and marketplaces.

  1. Driving improved economic efficiency and job creation in developing countries and least developed countries, offering a chance for them to narrow development gaps and increase economic performance. 
  2. Creating new investment opportunities as eCommerce offers new business opportunities, new distribution and delivery to access new markets and customers, therefore supporting investment. 
  3. Enabling small and medium-sized enterprises (SMEs) to go global as SMEs make up more than 96% of all Asian businesses and eCommerce helps in levelling the playing field and enables these businesses to gain international reach and potentially compete on a global scale. 

What’s Next for B2B Marketplaces in Asia?  

We anticipate more businesses to engage themselves with B2B marketplaces, be it as a marketplace operator/owner, supplier, buyer or ecosystem participant of marketplaces. Following similar trends in B2C retail and B2B marketplace developments in the US, we are seeing more new enterprise B2B marketplaces launched and operated by existing companies to increase market reach and distribution (aka B2B enterprise marketplaces). More two-sided B2B eCommerce sites will innovate to explore expansion into multi-vendor marketplace platforms and augment their product portfolio for a more holistic and integrated product and service offering to their customers. 

If brands choose to engage as a first or third-party supplier on marketplaces, they need to actively build their branding and set up an official presence on marketplaces as an effective way to manage the customer experience and to improve the brand image. Marketplaces bring new opportunities, but also greater risk exposure if branding is not managed properly on these platforms that draw buyers and consumers that are constantly being bombarded with competitive comparisons, inauthentic products, counterfeited brands and even fake reviews.

We have also observed that more marketplaces and eCommerce platforms are following Amazon’s expansion into private label brands. This move is strategically useful for market operators looking to increase their margins. Especially, as they know exactly which products sell best in which region, given the fact that marketplaces have sufficient collected data from third-party brands. However, this trend may only impact the B2C or retail marketplaces in the near term and be a watch-out concern for those in the B2B marketplaces in time as the market matures.

As a marketplace grows, its evolution to a marketplace ecosystem presents tremendous opportunities to add and integrate complementary value chain services such as trade financing, affordable credit facilities, insurances, warehousing and logistics, digital marketing or software development services that will service and benefit both suppliers and buyers. Marketplace capabilities can be significantly enhanced without the hefty investment of building out some of these complex offerings on your own, but by partnering with the appropriate experts in their fields. 

More B2B marketplaces are also demanding for a user experience that is above and beyond what buyers get from dealing with individual vendors. This user experience translates to not only the scale of offerings or the range of amenities and features offered, but the total experience: how interactive it is; how easy or convenient buyers feel about their purchasing or buying process; how indispensable the marketplace becomes to them; and how valuable it is in helping them perform their daily work and accomplish their business and even personal goals. 

Some marketplace capabilities have proven to be more valuable than others. For example, powerful digital and advanced-analytics capabilities are imperative to gain customer insights and formulate order management tactics or sales and marketing strategies. Customer’s purchase history, shopping or wish lists, and other preferences is not only convenient for customers; it also gives vendors and the marketplace valuable data to help improve customer experience. Advanced IT and logistics capabilities help provide faster throughput times and help reduce costs, offer competitive pricing.

Asia is presenting exciting B2B marketplace opportunities to the rest of the world. With a strong growth target, brands and marketplaces are no longer just focused on the B2C model. Instead, B2B channels are increasingly being developed to increase revenue and drive performance.

About The Author:

June Boo

Arcadier's Head of Group Strategy and General Manager of North America

With decades of business consulting,  strategy development and implementation experience across Technology, Retail and Hospitality, June’s involvement in multiple go-to-market successes now serve to enable enterprises wanting to leverage the next wave of eCommerce growth.