One of the questions I get asked the most in my role as Business Development Manager at Science Warehouse is ‘what is the benefit to my business in joining the eMarketplace?’
The conversation that usually follows is around the increased access to new business opportunities, ring-fencing existing orders, and the creation of an Omni channel sales approach. All of which are valid benefits of an eMarketplace, however, they are not the most important. When evaluating this route to market in greater detail it is clear the real benefits can be far more compelling and commercially beneficial.
Prior to joining Science Warehouse, I spent five years working in Corporate Banking managing a portfolio of business customers, primarily in the B2C space. Although there are several similarities between how a Business and a Consumer make their purchasing decisions, there are also a few key differences.
Typically, the sales cycle in the B2C market is much shorter than in the B2B environment. The consumer tends to buy in order to satisfy an immediate need, and is often willing to sacrifice the quality of information available and even the price they’re willing to pay. Whereas in the B2B space, it’s more about providing efficiency, expertise and quality data which can help nurture a long lasting relationship that tends to last months… sometimes years!
That is why I believe that one of the most valuable benefits of a B2B eMarketplace for Suppliers lies in the automation of the supply chain and the efficiencies which can be gained by streamlining the procurement process, which ultimately translates into significant bottom line cost savings.
Automating the supply chain process allows a Supplier to focus their attention on any necessary Product or Service improvements, whilst also concentrating on other value-added offerings.
An eMarketplace helps standardise procurement practices and allows a route to market which can be streamlined for multiple buying organisations across multiple sectors. According to The Chartered Institute of Purchasing and Supply, the average cost of processing a Purchase Order can vary between £37.50 – £70 for low value orders. This figure may seem unusually high, but when walking through the process, the costs start to add up: staff time, telephone calls, emails, stamps, stationary, even fixed costs like utilities should be taken into account. Online procurement can reduce the cost to between £7-£15 per order due to faster approvals and less discrepancies with Purchase Order and Invoice mismatches. Not only is it great to reduce your overall cost to serve, but imagine how empowered your workforce will be when they are able to spend less time handling disputed orders and more time focusing on things that can add value to your business?
As a Supplier, participating in an eMarketplace gives Buyers access to current Product and Service information, along with up to date pricing. This makes the requisitioners life a lot simpler and the benefits to the Supplier are equally substantial. By receiving accurate orders and reducing customer service related issues, cash flow will improve whilst reducing cost.
The Gartner Group estimates that a 5% reduction in operating costs has the same P&L impact as a 30% increase in sales.
Not only does an eMarketplace provide Suppliers with the ability to update their offering and add product information electronically, but it reduces delays associated with printing and distributing updated catalogues, meaning requisitioners have access to valid data at all times whilst eradicating outdated information. An eMarketplace might also be quicker than updating a website or eShop which could be being managed by a third party.
Furthermore, several eMarketplace providers also offer Suppliers the ability to access real-time Buyer data and valuable sales insights which can be a great mechanism for identifying new opportunities, spotting inefficiencies and financial forecasting.
The true value of an eMarketplace will vary from Supplier to Supplier, but in a world of mounting costs and increased competition, I believe improving efficiencies can be valuable to all.