Marketplaces aim to bring together many buyers and sellers. If they do, they bring value to both parties because buyers can find many sellers in one place, and sellers can offer their wares to many potential buyers.
The value proposition of a marketplace should be more than just bringing buyers and sellers together. It should help them work more efficiently.
Michael Eichinger, COO
Bay fixing systems
But that’s not enough to provide long-term value, says Michael Eichinger, chief operating officer of Bay Fastening Systems, a distributor of products that make things stick, like screws, bolts and adhesives.
“People want to make their jobs easier,” says Eichinger. “A market’s value proposition should be more than just bringing buyers and sellers together. This should help them work more efficiently.
That’s what Bay Fastening Systems is trying to do with its BaySupply.com marketplace that it launched in December 2021. The marketplace already offers many features designed to improve ordering efficiency, and more. are on their way. And there’s complexity at every step of the process, says Eichinger.
To start, BaySupply.com needs to import information into its system about all the products its sellers – 120 distributors and 130 manufacturers, with more joining every week – want to offer to the 45,000 registered buyers in the marketplace in September 2022. This includes product attributes, SKU numbers, pricing (including tiered quantity discounts), available inventory, and minimum order quantities.
Then, when a buyer requests quotes on an order, the quote request is sent to all sellers who can fulfill the order, and the system automatically fills in information such as the seller’s price, available inventory, and size. minimum order. This saves the buyer from having to go to multiple websites and enter all that data into spreadsheets, says Eichinger.
This quote management system has gone through half a dozen iterations, says Eichinger. A final version should be published at the end of October 2022.
Automated inventory feeds
Another ongoing project will enable the automated upload of vendor product data to BaySupply.com. This includes digital assets such as images as well as price, product attribute data, and inventory.
The project, called BayConnect, will allow vendors to automatically send data feeds from their internal systems, including their enterprise resource planning (ERP) accounting and inventory systems, Product Information (PIM) which tracks all information about each product, from website databases or Electronic Data Interchange (EDI) pipelines.
“The only effective way to integrate a long-term product is through automated connections,” says Eichinger. BayConnect is expected to go live in the first quarter of 2023.
BaySupply.com provides many other features designed to improve seller efficiency. For example, manufacturers can upload all of their distributors to the platform and ensure that the correct product information goes to everyone’s listings on the platform. Additionally, the vendor can designate which distributor is authorized to sell to customers in a particular geographic area so that quote requests are routed to the correct vendor.
The marketplace must also properly address a range of other requirements, including sales tax, regulatory compliance, order changes and cancellations. He also built an online chat tool to facilitate communication between buyers and sellers.
“He’s a monster of a task,” Eichinger says. “Every week is a new challenge.”
McFadyen Digital Inc. manages the development work for BaySupply.com, which is built on Adobe Inc.’s Magento software. McFayden Digital is an IT company specializing in e-commerce marketplaces.
A long-term vision
It took a big investment to develop BaySupply.com. Eichinger says it will take five to eight years before the parent company recoups that money.
Part of the ROI will come from the 9% commission BaySupply.com takes on sales made through the platform. Additionally, a 2.9% payment processing fee is paid to the bank that handles the credit card transaction or extends a line of credit to the buyer.
But, according to Eichinger, Bay Fastening Systems have other benefits as well. The marketplace boosts company awareness and helps drive offline orders.
The key to success is providing convenience, he says. Surveys show that B2B buyers prioritize convenience over price. A marketplace that makes it easy for buyers to get quotes from multiple sellers, find available inventory when needed, and close deals quickly makes life easier for sourcing agents, Eichinger says.
And it will help sellers, he adds, by avoiding a scenario where price is the only determining factor. Buyers often need products quickly. If they decide that BaySupply.com is the place to quickly find available inventory, they’ll start their buying journey there. They will then make decisions based on factors such as availability, ease of obtaining quotes from multiple vendors and automated approval workflows, as well as price.
Once many buyers and sellers participate in a digital marketplace, it becomes more valuable to all participants, creating the network effect that Eichinger sees as key to success. He likens it to Uber and Airbnb, which now have so many buyers and sellers that they’re convenient for buyers while providing great selling opportunities for sellers.
“Nobody is going to take down Uber or Airbnb because they created this network effect,” Eichinger says. “It’s the end game for any market.”
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