7 Hacks for Building and Scaling B2B Marketplaces

Published in

Point Nine Land

5 min readJun 11, 2020

Last week we hosted our first virtual B2B marketplace meetup, bringing together attendees from all over the world and 3 awesome speakers:

Gregor Stühler, CEO of Scoutbee, the leading European procurement platform
Matthew O’Connor, the CEO of AdQuick, a marketplace for outdoor advertising
Melissa Morris, CEO at Lantum, a marketplace for healthcare staff

Here are their top tips and trick for building and scaling B2B marketplaces:

1. Do things that don’t scale ⚒️

Marketplaces in their early stages generally lack the liquidity to be relevant enough for the supply side, they are not a priority. To overcome this, marketplaces generally need to find ways to initially hack the supply side. Very often this means doing things that don’t scale. At Instacart, where Matt from AdQuick used to work, they did this by going into grocery stores, buying all of their inventory and manually building grocery store catalogues. At AdQuick, they gathered information via attachments and emails and added it manually into their platform to generate their initial supply listings.

If you want to dive deeper into this topic, I recommend reading Paul Graham’s essay, Do Things That Don’t Scale, and checking out this list of unscalable hacks that marketplaces such as Airbnb and Doordash adopted in their early days.

2. Use data to derisk your proposition 📈

Large suppliers are often reluctant to work with small marketplaces that lack credibility. By leveraging data, marketplaces can build further trust and lower barriers to onboarding the supply side. At Instacart, they did this by providing potential suppliers with clear customer feedback (and 5-star ratings) and giving them unique access to customer data such as purchasing behaviour and frequency that they previously did not have. At AdQuick, they were able to leverage the fact that they already had the suppliers’ inventory and pricing data (which they had populated manually) as a hook to get them onto the platform.

3. Make sure you understand your users’ key priorities and KPIs and build accordingly 🔑

Only once marketplaces truly understand the key priorities driving their demand and supply side will they be able to build the appropriate tools and features. At Instacart, one of the reasons suppliers were hesitant to work with the marketplace was that they worried moving online would lead to smaller average basket sizes (one of their key metrics). Once the Instacart team understood this, they built features to help optimize for larger basket sizes, leading to higher supplier loyalty as a result.

4. Build for single-player mode 👾

One of the best ways of hacking supply is to build tools which are valuable for the supply (or demand) side of the platform even when there is no demand (or supply) on the platform. For instance, Lantum built tools to help hospitals manage their existing staff regardless of the additional supply on the marketplace. Likewise, AdQuick provided their suppliers with software to help them manage their own inventory more effectively, irrespective of whether they were interacting with potential buyers.

For more details on building for single-player mode, check out this article by Eli Chait on how the 100 largest marketplaces solved the chicken and egg problem.

5. Capitalise on existing relationships, don’t try to disintermediate them 👫

Many marketplaces struggle to gain real stickiness due to the demand side’s loyalty to existing suppliers. Particularly when it comes to services, buyers tend to value their relationships with existing suppliers: they want to work with people that they already know. In order to avoid disintermediation and increase stickiness, marketplaces should try (in many cases) to accommodate for these relationships rather than trying to break them up. In accordance with this, Lantum built software for healthcare organisations to help them manage their entire supply base as opposed to only managing the supply on the marketplace. Similarly, Faire incentivises suppliers to bring their existing demand onto the platform and doesn’t charge for the transactions that take place between the buyers’ pre-existing supply base.

6. Be flexible and constantly iterate 🤸

B2B marketplaces are still in their infancy and there is no clear playbook on how to build and scale them yet. What works for one marketplace or industry, might not work for another, so don’t be afraid to iterate particularly when it comes to take rates and monetization. Lantum, for instance, moved from being a pure marketplace and charging a commission to being a SaaS heavy platform which monetizes based on subscriptions as well as a take rate. This pivot allowed them to significantly reduce churn and increase lifetime value.

7. Make sure you get the organisational design right 🖥️

B2B marketplaces tend to be very complex. They need to balance both the supply and the demand side, whilst working with large and often undigitized stakeholders. As they scale, they will need to figure out how they move from the flexible organisational structures that are typical at the seed stage, to more formal structures and teams.

For more information on organisational design, check out Nobl Academy or Teams of Teams. Basecamp Shapeup also has some cool resources on the topic.

To get more detailed insights on the above, check out the videos from the event here: