Balancing Supply and Demand in B2B Marketplaces: Strategies to Drive Growth

As a marketplace leader, one of the biggest hurdles is managing the delicate balance between supply and demand, ensuring both sides of your platform are actively engaged.

But how can you master this balance to boost transactions and maximise revenue?

Are You Supply- or Demand-Constrained?

The industries that b2b marketplaces serve can vary widely in terms of structure and concentration. In some cases, it may be easier to attract buyers, while in others, securing suppliers could be the priority. This dynamic often depends on the background and expertise of the founders; some founders will be closer to demand side, whereas others to supply-side, which plays a key role in determining whether the marketplace will be supply- or demand-driven, and as a consequence which part will be more problematic.

You need to diagnose whether your marketplace is supply- or demand-constrained. Why does this matter? Because it will direct where you focus your efforts and resources. A supply-constrained marketplace struggles to find enough sellers, leading to unmet buyer needs. On the flip side, a demand-constrained marketplace may have too few buyers, leaving your sellers frustrated and underperforming.

So, how to understand that?

First thing you could do is analyse metrics that can help gauge marketplace health and address supply and demand constraints:

• Buyer-to-Supplier Ratio: If each supplier can’t keep up with buyer requests, you’re supply-constrained. Conversely, if there’s an oversupply of sellers competing for too few buyers, you have a demand problem;
• Fill Rate: This metric shows what percentage of buyer requests are successfully matched. A low fill rate is a red flag, suggesting supply shortages or inefficiencies;
• Search-to-Fill: Are searches translating into sales? A low ratio here points to a gap in matching buyers with the right suppliers;
• Supplier Utilization Rate: This tracks the percentage of suppliers actively fulfilling buyer requests. A low utilization rate suggests that either demand is too low or certain suppliers are not competitive, indicating a need to balance supply or improve supplier engagement;
• Cancellation Rate: This measures the percentage of orders canceled, often because of supply issues like unavailability, delays, or poor inventory management. A high cancellation rate is a clear indicator of supply constraints or mismatched expectations;
• Repeat Purchase Rate: This metric evaluates the percentage of buyers who return to make additional purchases. A low repeat rate could suggest dissatisfaction with supply availability, product quality, or service, highlighting potential gaps in meeting demand;
• Gross Merchandise Value (GMV) per Supplier: GMV per supplier measures the total value of goods sold by each supplier. A low GMV per supplier could indicate underutilization of suppliers, suggesting an oversupply issue or inefficient supplier matching.

This list is far from complete, but gives a first good indiciations of where are at, and so by zeroing in on these numbers, you can diagnose where your marketplace is losing steam.

Turn Metrics into Actionable Growth Strategies

Now that you know the status of your marketplace, what’s next? Here’s how you can take action based on whether your platform is supply- or demand-constrained.

Supply-Constrained. Market-node strategy.

I’d like to give a special thanks to my trusted advisor,

Javier Etxebeste

, with whom we discussed this strategy earlier. Was an amazing session and I am inspired to share it with a broader audience, as it offers a solid approach to marketplace growth and efficiency.

A market node refers to a specific geographic or sector-focused region within the marketplace, where supply and demand should be balanced to ensure liquidity. However it is a crucial step to build enough of supply in the area to cater every possible demand request. Main idea of this strategy is to build concentrated market nodes where there are enough transactions and liquidity to create a robust, balanced ecosystem of buyers and suppliers. Once a node is optimized, the marketplace can expand organically to adjacent areas or segments.

Why Focus on Market Nodes?

B2B marketplaces often face the challenge of ensuring liquidity — having enough transactions to balance supply and demand across various market nodes. By focusing on these nodes, marketplace operators can minimize the risk of expanding into regions without sufficient activity. A targeted approach ensures that each node maintains enough liquidity to serve the needs of both buyers and suppliers.

For example, in logistics or industrial goods marketplaces, gaining a foothold in a specific city or industry sector ensures a strong transaction flow. Once that node has enough activity, it becomes easier to scale into nearby regions or verticals while maintaining supply-demand balance.

Steps to Implement Market Nodes Strategy

1. Targeted Supplier Onboarding to drive Demand: Focus heavily on acquiring new suppliers in a specific node first and then drive demand, ensuring that there is enough balance to sustain transaction volume. This strategy creates a self-sufficient market node that can then serve as a foundation for future expansion.
2. Localized Marketing and Incentives: Run marketing campaigns in areas where the marketplace has strong market nodes. Offer targeted deals to buyers, based on your supplier capacity, in these regions to maintain engagement and liquidity.
3. Data-Driven Liquidity Monitoring: Use data to monitor the liquidity of each market node. Ensure that both sides of the marketplace (supply and demand) are sufficiently active to maintain smooth transaction flow. Once the node is self-sustaining, you can expand to nearby areas.

This market node strategy aligns with network theories seen in supply chain management, where building a balanced, interconnected network of transactions ensures efficiency and minimizes risks when expanding to new areas. By ensuring enough liquidity in each market node, the marketplace can achieve sustainable growth and high buyer/supplier satisfaction.

This strategy works best for B2B marketplaces that are geographically anchored or rely on building deep supply before scaling. This approach is particularly effective for:

• Ultra Local or Regional B2B Marketplaces — Platforms that connect local service providers or workers with businesses benefit from establishing a strong supply in specific regions before expanding. These marketplaces need dense supplier bases to meet local demand, ensuring reliable service delivery before moving into new markets.
• B2B Marketplaces with High Supply-Side Barriers — Platforms in industries with regulatory or logistical complexities require deep supplier relationships in specific areas. These marketplaces must focus on overcoming local barriers, such as industry regulations, before they can scale to new regions.
• Vertical-Specific B2B Marketplaces — Marketplaces that serve niche industries, such as wholesale or industrial goods, need to build concentrated supply nodes to create a self-reinforcing ecosystem. These platforms require a strong presence in one location to establish trust and credibility before scaling across regions.
• Service-Based B2B Marketplaces — Platforms that offer professional services or fieldwork must establish localised supply nodes to quickly fulfill buyer requests. Building a reliable, region-specific supplier network ensures service quality before expansion.
• B2B Marketplaces with Specialised Suppliers — Marketplaces that serve specialised sectors, such as manufacturing or aerospace, need to develop deep supplier networks in specific industries before they can scale. These suppliers are often highly specialized, making it essential to build trust and reliability in one area first

In other words — this strategy works well for B2B marketplaces that rely on localised supply to ensure service quality, ability to cater demand and operational efficiency before expanding geographically.

The supply node strategy doesn’t work well for certain types of marketplaces, particularly those that thrive on broad, decentralized networks or have global demand. Here’s where it falls short:

1. Pure Digital Marketplaces — For platforms dealing in digital goods or services, geographically concentrated supply is irrelevant. These marketplaces can scale globally from day one, as their products are not tied to specific locations
2. Specialised Service Marketplaces — In industries like custom manufacturing or specialised engineering services, where businesses require access to a broad network of suppliers with specific expertise, focusing on supply nodes in one region isn’t effective. Additionally, demand for specialized services is often elastic, meaning it can change rapidly based on project timelines or market conditions. To meet this fluctuating demand, these marketplaces require a flexible, global supplier base rather than a localized concentration of suppliers

In summary, this strategy is less effective for marketplaces that depend on digital networks or highly specialized service marketplaces where both decentralized suppliers and the ability to adapt to elastic demand are essential.

However, as is often the case with technology, the application of strategies is rarely black and white. This approach can absolutely be applied in pure digital marketplaces or specialised service-based platforms. Instead of focusing on geographic nodes, you can use service taxonomies as your “market nodes.” For example, by building a sufficient supply of niche specialists within a specific service category, you can replicate the same strategy — ensuring liquidity in one segment before expanding to others. Kudos to

Jonathan Lloyd

for this idea!

Supply-constriaed. Other strategies

Supplier Tools and Support
Provide suppliers with tools like inventory management systems, analytics, or marketing support to help them operate more efficiently and maximise their success on your platform.

Supplier Exclusivity Agreements
Offer exclusive deals or reduced fees in exchange for suppliers listing only on your platform, giving them visibility and lower costs, while ensuring supply loyalty.

These strategies help build strong, reliable supplier relationships and improve marketplace performance.

Demand-constrained. Site-satellite strategy.

B2B marketplaces often rely too heavily on a sales force in the early stages. While the common advice is to ‘build a partnership network’ or ‘hire top salespeople who can bring a blackbook’, I want to shed a light on an alternative approach. I believe one of the most effective digital strategies for this type of business lies in a bit different direction.

The site-satellite strategy in this context refers to creating multiple smaller, niche-focused websites (satellites) around a core platform. Each satellite site is tailored to a specific product, service, or demand category, with the goal of attracting highly targeted traffic and meeting specific client needs. These satellite sites act as demand generators, funneling interested users toward the main platform, and, on some occasions handling transactions independently.

Key Features of the Site-Satellite Strategy:

• Niche Focus: Each satellite website is designed to focus on a specific product or service category, catering to a defined target audience. For example, a B2B marketplace might create separate satellite sites for various products: if main platform is focused on selling construction equipment — each satellite can be focused on a specific type of equipment, while other group of satellites can be focused it’s maintenance services also separated by the brands of such equipment, each addressing the unique needs of that sector.
• SEO Benefits: By creating focused content around a particular good or service, satellite sites can rank higher in search engines for specific keywords. This improves SEO performance, driving organic traffic to the niche site. Over time, these niche sites can dominate specific long-tail keywords that would be harder to rank for on the main, broader site.
• Better User Experience: Satellite sites allow for a more personalised user journey. Instead of overwhelming users with multiple unrelated products or services on a main site, each satellite provides a curated experience focused on a particular need, which can lead to higher conversion rates.
• Cross-Promotion: While each satellite site targets a specific audience, there can be cross-promotional opportunities between the satellites and the main platform. Users from one satellite site can be introduced to related products or services via the main site, creating opportunities for upselling or cross-selling.

Example of the Site-Satellite Strategy Application:

Imagine a B2B marketplace that focuses on industrial supplies. The main platform might cover everything from manufacturing tools to office equipment. However, the company could create satellite sites that focus solely on specific categories, like:

- A satellite site dedicated exclusively to safety gear (helmets, gloves, etc.), targeting businesses in construction or manufacturing.

- Another satellite site focused on industrial automation (machinery, robotics), aiming at high-tech industries.

- A third satellite site for tools and equipment (power tools, hardware), specifically serving small and medium-sized construction firms

Each of these satellite sites would be optimised to capture search traffic for specific categories, engage a highly targeted audience, and lead them to either make a purchase directly or move to the main site for broader product options.

Where It Works Best:

• Highly Diversified B2B Marketplaces: When a marketplace serves several distinct industries or product categories, the satellite strategy allows each industry to have its own focused web presence.
• Service Marketplaces: Service-oriented marketplaces can use satellite sites to focus on different service categories, like freelance design or IT support, driving demand in highly specific service verticals.
• B2B E-commerce Platforms: Retailers with diverse product categories can use this strategy to attract specific customer segments by creating separate niche sites for different product types, ensuring more personalized shopping experiences.

The site-satellite strategy is particularly useful in complex marketplaces where distinct customer segments have different needs, helping businesses better target and engage with their audience.

And a few other strategies you would want to explore:

• Unlock New Market Segments: Expand into adjacent markets using your existing supply base. This allows you to attract new demand sources while keeping acquisition costs low.
• Omnichannel Engagement: Engage buyers across multiple platforms, such as social media, webinars, forums, while fostering a sense of community around your marketplace. Mix online and offline as later one is still needed.
• Cross-Sector Partnerships: Collaborate with platforms from adjacent industries to create integrated services, expanding your reach into new sectors and adding value for current users.
• Accessing deeper share of the wallet: try to increase TCV of your client by encouraging buyers to purchase complementary products and services. For example, if a buyer is purchasing equipment, recommending related maintenance services can boost the order size.
• AI-Powered Recommendation: Additionally, investing in AI-driven algorithms can enhance your search-to-fill rate by offering buyers smarter, more personalized recommendations. The faster a buyer finds what they need, the more likely they are to complete a purchase — leading to higher conversion rates and improved liquidity.

Predicting Future Supply and Demand with Data

Your marketplace’s future depends on data. Advanced BI systems and predictive analytics can help forecast demand surges, enabling you to onboard suppliers before a spike occurs. By analyzing historical data, such as seasonal trends or buyer behaviors, you can optimize inventory levels, ensuring you’re always ahead of market shifts.

Balancing supply and demand is the lifeblood of a successful B2B marketplace. By tracking key liquidity metrics and turning those insights into actionable strategies, you not only improve your platform’s efficiency but also fuel long-term growth. Whether you’re onboarding new suppliers to meet buyer demand or improving buyer acquisition through targeted marketing, the end goal remains the same: a seamless, highly engaged marketplace ecosystem.

Master this balance, and you’ll not only drive higher engagement — you’ll become the go-to platform in your industry.

And as always — if you like what we are doing or you would like to discuss this blog or you have an amazing busness or idea feel free to reach to me at ac@verb.ventures!