Predicting The Future Of Digital Marketplaces
- The U.S. B2B eCommerce market is predicted to be worth $1.2T by 2022 according to Forrester.
- 75% of marketing executives say that reaching customers where they prefer to buy is the leading benefit a company gains from selling through an e-commerce marketplace according to Statista.
- 67% strongly agree to the importance of B2B e-commerce being critical to their business’s advantages and results in their industry.
Digital Marketplaces are flourishing today thanks to the advances made in Artificial Intelligence (AI), machine learning, real-time personalization and the scale and speed of the latest generation of cloud platforms including the Google Cloud Platform. Today’s digital marketplaces are capitalizing on these technologies to create trusted, virtual trading platforms and environments buyers and sellers rely on for a wide variety of tasks every day.
Differentiated from B2B exchanges and communities from the 90s that often had high transaction costs, proprietary messaging protocols, and limited functionality, today’s marketplaces are proving that secure, trusted scalability is achievable on standard cloud platforms. Kahuna recently partnered with Brian Solis of The Altimeter Group to produce a fascinating research study, The State (and Future) of Digital Marketplaces. The report is downloadable here (PDF, 14 pp., opt-in). A summary of the results is presented below.
Kahuna Digitally Transforms Marketplaces With Personalization
The essence of any successful digital transformation strategy is personalization, and to the extent, any organization can redefine every system, process, and product to that goal is the extent to which they’ll grow. Digital marketplaces are giving long-established business and startups a platform to accelerate their digital transformation efforts by delivering personalization at scale.
Kahuna’s approach to solving personalization at scale across buyers and sellers while creating trust in every transaction reflects the future of digital marketplaces. They’ve been able to successfully integrate AI, machine learning, advanced query techniques and a cloud platform that scales dynamically to handle unplanned 5x global traffic spikes. Kahuna built its marketplace platform on Google App Engine, Google BigQuery, and other Google Cloud Platform (GCP).
Kahuna’s architecture on GCP has been able to scale and onboard 80+ million users a day without any DevOps support, a feat not possible with the exchange and community platforms of the 90s. By integrating their machine learning algorithms designed to enhance their customers’ ability to personalize marketing messages with Google machine learning APIs to drive TensorFlow, Kahuna has been able to deliver fast response times to customers’ inquiries. Their latest product, Kahuna Subject Line Optimization, analyzes the billions of emails their customers use to communicate with customers to see what has and hasn’t worked in the past. Marketplace customers will receive real-time recommendations as they are in the email editor composing an email subject line. Kahuna scores the likely success of the subject lines in appealing to target audiences so that marketers can make adjustments on the fly.
The State (And Future) Of Digital Marketplaces
Digital marketplaces are rapidly transforming from transaction engines to platforms that deliver unique, memorable and trusted personal experiences.
Anyone who has ever used OpenTable to get a last-minute reservation with friends at popular, crowded restaurant has seen the power of digitally enabled marketplace experiences in action. Brian Solis noted futurist, author, and analyst with The Altimeter Group recent report, The State (and Future) of Digital Marketplaces is based on 100 interviews with North American marketing executives across eight market segments.
Key insights and lessons learned from the study include the following:
- Altimeter found that 67% of marketplaces are generating more than $50M annually and 32% are generating more than $100M annually with the majority of marketplaces reporting a Gross Merchandise Volume (GMV) of between $500M to $999M. When the size of participating companies is taken into account, it’s clear digital marketplaces are one form of new digital business models larger organizations are adopting, piloting and beginning to standardize on. It can be inferred from the data that fast-growing, forward-thinking smaller organizations are looking to digital marketplaces to help augment their business models. Gross merchandise volume (GMV) is the total value of merchandise sold to customers through a marketplace.
- 59% of marketing executives say new product/service launches are their most important marketplace objective for 2019. As marketplaces provide an opportunity to create an entirely new business model, marketing executives are focused on how to get first product launches delivering revenue fast. Revenue growth (55%), customer acquisition (54%) and margin improvement (46%) follow in priority, all consistent with an organizations’ strategy of relying on digital marketplaces as new business models.
- Competitive differentiation, buyer retention, buyer acquisition, and social media engagement and the four most common customer-facing challenges marketplaces face today. 39% of marketing execs say that differentiating from competitors is the greatest challenge, followed by buyer retention (32%), buyer acquisition (29%) and effective social media campaigns (29%) Further validation that today’s digital marketplaces are enabling greater digital transformation through personalization is found in just 22% of respondents said customer experience is a challenge.
- Marketplaces need to scale and provide a broader base of services that enable “growth as a ” to keep sellers engaged. Marketplaces need to continually be providing new services and adding value to buyers and sellers, fueling growth-as-a-service. The three main reasons sellers leave a marketplace are insufficient competitive differentiation (46%), insufficient sales (33%) and marketplace service fees (31%). Additionally, sellers claim that marketing costs (28%) and the lack of buyers (26%) are critical business issues.
- Lack of sellers who meet their needs (53%) is the single biggest reason buyers leave marketplaces. Buyers also abandon marketplaces due to logistical challenges including shipping costs and fees added by sellers (49%) and large geographic distances between buyers and sellers (39%). These findings underscore why marketplaces need to be very adept at creating and launching new value-added services and experiences that keep buyers active and loyal. Equally important is a robust roadmap of seller services that continually enables greater sales effectiveness and revenue potential.