Platforms in B2B — Options for action for Wholesalers and Manufacturers
It is not uncommon for economists to argue that Europe has got a second chance within the framework of the platform economy in the B2B area and that it can compensate for what has been overslept in most B2C sectors — namely to create market-dominating platforms. In the long term, however, thanks to the “winner takes it all” principle, the platform economy tends towards oligopolistic structures, which is why, by definition, it will be reserved for very few to achieve the status of a market-dominating platform.
But what alternatives are there for providers in a digitized platform world?
OPTION 1: DO NOTHING
For the sake of completeness, this should also be mentioned as a conceivable option: Shutting oneself completely off the topic of platforms and completely ignoring them in the context of strategic orientation is unlikely to be crowned with long-term success for very few providers in B2B. The platform economy is already in full swing in numerous B2B sectors. In the area of C-parts and MRO articles, for example, the customer journey is already regularly influenced by platforms for three quarters of procurers from industry and trade. Accordingly, 90 percent of all production liaison dealers consequently expect that competition with cross-industry marketplaces will increase in the next five years. Anyone who still believes they can do without a valid answer to Amazon Business, Mercateo (Unite), Conrad, eWorldTrade.com
OPTION 2: BECOME A PLATFORM YOURSELF
In the analog world, wholesale acted as an essential aggregator of supply and demand between different stages of the value chain and thus assumed an elementary platform function. The principles of analog wholesale and digital platform economy differ so fundamentally that very few wholesalers have so far been able to transform their traditional positioning into the digital / hybrid age. Supraregional reach, (price) transparency and openness to the original competition — all of this sounds like the devil’s work for many wholesalers, but is one of the fundamental tools of the trade in the context of the platform economy.
All those who are still questioning these digital laws regarding their future viability and would like to wait and see, as pioneers assert themselves with their advances, one of the other three options for action is more likely to be advisable. Because courage, determination and a certain “first mover” claim are basic requirements in order to be able to become the digital industry infrastructure of tomorrow. Those who have these basic requirements should carry out a precise market, competition and customer analysis and look for inefficiencies across the value chain in order to derive clear USPs from this.
OPTION 3: DEVELOP DEFENSE STRATEGIES OR DEFINE BOUNDARIES
Those who do not want or cannot become a digital platform themselves should at least be able to clearly differentiate themselves from the platforms that already exist or are still being developed. For most wholesalers, this means nothing less than having to question the core of their own business model. Because while the aggregation of supply and demand as well as the mastery of product ranges and pricing are among the core tasks of wholesale business models, it is precisely these functions that are most threatened by digital platforms. Even more than before, holistic solutions must be developed and surrounded by sustainable business models. This changes key activities, role definitions, sources of income, customer relationships and much more.
OPTION 4: USE PLATFORMS AS CHANNELS / INFRASTRUCTURE
Those who want to go on vacation rarely begin to study the laws of aviation and acquire skills in aircraft construction. Rather, the existing transport infrastructure is used. Of course, this is also part of a valid option in the platform context. However, if you want to use the existing platform infrastructure to expand your reach into the digital space, you cannot avoid a clear platform strategy. In addition to the obvious advantages, there are also certain risks lurking in the use of digital platforms — including those of increasing dependency. Before wholesalers give this thought, however, it is important to check which platforms are actually suitable for their own business. For this purpose, two evaluation levels in particular have to be passed through:
a) Which platform-based business models exist and how do they differ?
What seems comparatively simple in B2C, turns out to be a serious challenge in B2B on closer inspection. Due to the extreme heterogeneity, the industry-specific characteristics and the lower regulation (compared to B2C), the B2B platforms differ in numerous points (target group, range, customer relationship, visibility, pricing, services, interfaces, …). Keeping an overview here and identifying the platforms in question requires systematic evaluation and assessment.
b) What does the customer journey of my potential buyers look like and what role does which platform play in this?
“A lot helps a lot” is, as is often the case, a bad advice — even when it comes to the selection of marketing and sales channels. Anyone who masters the platform business but forgets the one crucial platform that would ensure access to the desired target group has gained little. Also and especially when using existing digital platforms, a precise understanding of the customer is essential. Anyone who does not understand exactly which contact points their (potential) customers are heading to and which information / services / content / products they are looking for there depends on chance when choosing a successful platform. A precise understanding of the buyers journey of buyers and non-buyers should therefore be the starting point for every platform strategy.