Platforms 4 Future
Unlocking Network-Effects and driving sustainability in B2B marketplaces
Mercateo is Europe’s largest B2B platform; in this open discussion with Managing Director Lars Schade, we explored how the company unlocks network effects and leverages them to build defensibility against Amazon. Lars also shared with us how he leverages data and product information to give customers the possibility of more sustainable product purchases.
In our first episode of the “Platforms 4 Future” podcast, we had a discussion with Lars Schade, Managing Director of the Mercateo Group. Mercateo is the leading B2B procurement platform in Europe, established some 20 years ago, in the year 2000, and therefore one of the most experienced network based businesses in the market.
Two years ago, Amazon announced their entrance into the B2B market; this announcement created a lot of “yeah” on the demand side, but also a lot of “oh no” on the supply side : a lot of suppliers indeed understood the domination and disruption potential of Amazon. The main question was : which industry was going to be first? As we know today, there is no industry safe from becoming “amazonized”.
How focusing on the supply side helps Mercateo unlock network effects and compete against Amazon
Mercateo understood the impact straight away: they had a new competitor. But how could they win against such a dominator? Was there still room for Mercateo, or could there be a “winner takes all” situation in a few years?
According to Lars Schade, “Mercateo is designed as a network, and as such, you have to carefully consider both sides — supply side and customer side; in short, we get our customers from the suppliers“ This short statement unveils Mercateo‘s strategy in the competition with Amazon : focus on the supply side, not only the demand side.
In B2B, if you only focus on the customer side, you will not stimulate supply-side-network effects. Consequently, there will be no supplier who says to his customers, „please buy my articles on this marketplace“.
On the consumer side “B2B business is based on strong one-to-one relationships with individual pricing, services and advice. To get into the consumer-side you have to lower the process costs to give them an argument to move to a marketplace.”, Lars Schade continues. The main reasons for customers to buy via marketplaces are not lower product prices. They already have those low prices, based on their individual procurement contracts. But what is still high, are the process costs. A marketplace therefore represents a “one-stop-shop” solution to lower these costs.
What about the supply-side?
The immense potential of network effects are very well understood by Mercateo. But what motivates a supplier to join the platform?
Joining gives smaller companies a chance to digitize and compete. Alone, they could not afford it, and they don’t have the competence today. Now, when they join Mercateo, they can tell their customers: if you want faster and digitized processes, please purchase via the Mercateo platform.
In short : the platform is saving suppliers digital transformation costs. With “Unite” Mercateo supports this easy plug-and-play strategy, giving suppliers easy access to the marketplace and digitized processes to run their business.
Do you want to learn more about unlocking network effects, sustainability and platform leadership advices? Check out the whole article or listen to our Platforms 4 Future podcast episode via your favorite streaming platform.
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