While platform businesses have taken over the top of the stock market, all of these companies (Apple, Amazon, Google, Facebook) have a primary B2C focus.
However, as connected tech expands into more and more industries, platforms are starting to take over B2B. Amazon’s B2B marketplace, Amazon Business, has passed several billion in revenue and is growing rapidly. And there are a number of B2B marketplace startups that are making inroads into traditional B2B distribution industries.
In order to take stock of this ongoing revolution in B2B, we assembled a list of all the B2B marketplaces that have raised $1.5 million or more in recent years. These are all active companies with traction and funding competing with traditional B2B distributors, in everything from fashion wholesaling to heavy equipment.
Here’s how things stand in the U.S.:
In the U.S., there are still relatively few B2B marketplaces with traction. The most notable segments are industrial heavy machinery, parts and equipment, and freight transportation. Each of these areas have multiple startups that are growing and have notable funding or backers.
In industrial heavy machinery, Iron Planet is the largest marketplace to date. It was acquired by auctioneer Ritchie Brothers for $758.5 million in August 2016 and has continued to grow its online auctions business since. In Parts and Equipment, New York City based Kinnek is the marketplace with the largest network, having raised $31.5 million to date.
Finally, Freight is the most active area for startups. Uber Freight, which launched in May 2017, is Uber’s newest business unit. Convoy, which has raised $80.5 million, was launched in 2015. These new marketplaces are also going up against more established freight companies like Coyote, which was acquired by UPS for $1.8 billion in 2015.
In the Wide category (meaning they carry several categories across different industries), eBay and Amazon Business are the incumbent B2C platforms that are expanding into B2B. Of the two, Amazon Business is gaining more traction and growing rapidly, particularly in the MRO and industrial segment of its marketplace. In September 2018, it was on pace to surpass $10 billion in annualized sales. Food distribution is also a likely next target, especially after Amazon’s Whole Foods acquisition.
Internationally, there are many more B2B marketplaces than in the US. By far the most active segment is Steel, particularly in China where there are a number of strong steel marketplaces like Sequioa-backed Zhaogang and Ouyeel. In the Wide category, Alibaba is the most notable player, but you also have more recent B2C competitors like Flipkart entering into B2b too.
Notably, activity in Freight is much less active than in the US, at least to date, while the focus on the Materials & Tools segment is stronger internationally.
Overall, marketplaces appear to have grown much faster abroad than in the US, where there are more established B2B distributors to compete with. However, as we’ve written before, this shift toward marketplaces is a secular trend that will eventually transform almost all of these traditional B2B distribution industries. For B2B distributors, you can expect the ranks of B2B startups and large platforms like Amazon entering the industry to continue to grow. For these incumbents, the best strategic response to this new competition is to embrace digital transformation and build a marketplace of their own.
Updated October 24th, 2018.
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