Purchasing is not shopping

purchasing is not shopping
February 7th, 2019
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Retail and distribution, in both B2C and B2B environments, have undergone a significant transformation as part of the digital revolution. In the wake of the "pure players", marketplaces are beginning to emerge and are currently demonstrating spectacular growth. Two leading models—marketplaces and distributors—exist side by side in the procurement profession, where there are varying individual needs and requirements. Each model has its own advantages and limitations.

Two outwardly similar models…

Marketplaces and distributors offer the same service: selling products and services to professionals. However, they do not take the same approach. By definition:

  • Marketplaces (Amazon Business, Mercateo etc.) put buyers and sellers into direct contact with each other. This model is based on the oldest form of retail, such as traditional market places or fairs.
  • Distributors (Manutan, RS Components etc.) play an intermediary role between buyers and sellers by supplying, stocking and reselling goods or services.

Two basic concepts separate these models: control over and responsibility for the entire supply chain, from selecting the goods or services sold to product returns. Marketplaces delegate these processes to the manufacturers present on their platforms. Meanwhile, distributors handle them directly and, as a result, they are responsible for guaranteeing the quality of both the offer and the service.

Four major differences between marketplaces and distributors

When it comes to indirect procurement, the main criteria for professional buyers are the offer, product content*, support and price. If we look in detail at how each model works in these respects, the differences become increasingly clear.

 

Marketplaces

Distributors

Offer

Extremely large with many irrelevant offers

Guarantee the quality and origin of products

Controlled and selected (relevant offer with no redundant products)

Content

Often inconsistent and incomplete

Complete and qualitative (product descriptions, photos, data sheets, installation documents etc.)

Consistent (easy to compare several products)

Support

Inconsistent

Consistent

Product expertise

Ability to respond to calls for tender

Sales force to deploy framework agreements

Price

Competitive purchase price

Competitive total acquisition cost (contracts, negotiated volume discounts, optimising administrative costs, invoice management, deliveries etc.)

Tailored prices

 

The marketplace model is attractive because of its short-term advantages. However, it also has certain limitations in B2B environments, which have their own requirements. In particular, this may include supplier-related risks. With no real control over the quality or the origin of products, marketplaces may expose businesses to risks related to security or social responsibility, among others.

On the other hand, the distributors model is more suitable for professional purchases. This is because the distributor controls the entire supply chain, guaranteeing the highest possible quality of both the offer and the service. For procurement departments, this means improved management of indirect purchases. Indeed, going through a distributor allows procurement departments to reduce their supplier risks (e.g. counterfeits and manufacturing conditions) in addition to their total acquisition cost, while enhancing the user experience (product range and access to simplified content etc.).The marketplace model is attractive because of its short-term advantages. However, it also has certain limitations in B2B environments, which have their own requirements. In particular, this may include supplier-related risks. With no real control over the quality or the origin of products, marketplaces may expose businesses to risks related to security or social responsibility, among others.

Of course, distributors must face the challenges posed by marketplaces. They can do so by offering an increasingly large range of products, an exceptional online experience and additional services that highlight their expertise. Most distributors have anticipated these challenges and are now offering value-added services such as e-procurement, vending machines or even global solutions to optimise company purchases, such as Manutan's Savin'side®.

 

*According to the latest Avionos study, 43% of B2B buyers say that the lack of correct product content was one of their biggest challenges when buying online.

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