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. Now, B2B marketplaces have arrived, and they’re taking over B2B. There is now a healthy landscape of B2B marketplace startups with strong traction and growth.
And not to mention, Amazon’s B2B marketplace, Amazon Business, has passed $25 billion in revenue and is growing rapidly. At this rate, per Applico’s prediction in 2018, Amazon Business is on track to do $75B in annual GMV by 2023. Whether or not Amazon will dominate B2B to the same extent it does retail is yet to be decided. There are a number of B2B marketplace startups that are making inroads into traditional B2B distribution industries.
The top 50 B2B Marketplace ranking focuses exclusively on B2B product marketplaces that facilitate the exchange of goods between a business customer and a third-party distributor and/or supplier. This ranking does not include marketplaces for services and is focused on US marketplace activity.
We believe every startup in this ranking should be studied thoroughly by distributors and manufacturers alike. And quickly. Asset-inflation is on the rise according to Lending Tree’s Chief Economist Tendayi Kapfidze. Valuations for mid-to-late stage startups have dramatically increased. And now, many late-stage venture capital firms are shifting their investments to Series A startups, further exacerbating valuation inflation problems amongst earlier stage startups.
Applico has correctly predicted the growth in B2B marketplaces over the last several years and we believe the industry is on the cusp of a B2B commerce renaissance. Applico is actively advising major distributors and service providers in B2B distribution on how to better engage with tech startups. The more enterprises and startups work together, the worse off for Amazon and the better off for just about everyone else.
The Top 50 B2B Marketplaces in the United States
This top 50 ranking was created to help distributors and leading startups work together and prevent Amazon Business from diminishing their collective market share and future growth opportunities. Fortunately for free enterprise, there is a relatively small but growing cohort of B2B marketplace startups that can challenge Amazon.
For distributors and marketplace startups, it’s not necessary to compete with Amazon Business on their own. By partnering together, they can reach digital scale more quickly. Marketplace startups need scale more than capital – and incumbents need to embrace new digital business models more than ever before.
Here’s the top 10 B2B marketplaces in Applico’s Ranking:
The top 10 marketplaces in Applico’s B2B marketplace ranking
Click below to get the full top 50 ranking from the report.
Ranking Methodology: The following factors were weighed in determining the top 50 product marketplace startup rankings:
Scale – Scale is measured as traction in filling each side of the marketplace to generate both supply and demand. One of the best measurements of marketplace scale is GMV, gross merchandise value, the aggregate measure of total sales facilitated by the marketplace. Some industries like Agriculture – have very high aggregate marketplace GMV because the average order value (AOV) is much higher relative to other industries.
Monetization – Companies who monetized with a meaningful take rate scored at the top of the monetization criteria. A take rate is the percentage of each transaction that goes through the platform that the marketplace keeps as revenue. Being able to charge a meaningful take rate at scale suggests the marketplace provides a lot of value to both sides of its network and has strong defensibility. It also substantially increases the profit potential of a marketplace compared to other methods of generating revenue. Advertising revenue could also be another path for a marketplace to have a high margin revenue stream. Other monetization strategies such as a recurring subscription, value-added services, SaaS fees or revenue derived from being a reseller scored lower than companies who had a higher proportion of take rate revenue.
Competition – In our methodology, companies who successfully compete and grow in a crowded industry are favored more highly than companies who are operating in less competitive markets. Similarly, companies that are not one of the top two to three marketplaces in a crowded industry were ranked lower.
Competitive advantages/barriers to entry/moat – Companies that have successfully built competitive advantages such as meaningful scale, first-mover advantage, unique inventories, or are offering an attractive or unique arrangement for users such as credit terms, financing, etc. were ranked more highly.
Market size – Companies operating in larger markets with more greenfield opportunity were considered to be more favorable than those in smaller, more niche markets that have less potential GMV to be captured.
Capitalization – Companies who successfully raised meaningful capital to scale their platforms, as well as those that were perceived to be profitable, were ranked higher than those that had less success or traction in fundraising or generating sustainable revenues.
Investor backing – This metric was a minor factor, but companies in the rankings who successfully attracted reputable and successful investors were considered to have an advantage over their peers.
A Few Key Takeways
Agriculture has the biggest marketplaces by capital raised and valuation, but there are only two players, Indigo and FBN, and they are hybrid marketplaces, meaning they combine both linear and marketplace businesses.
Fashion marketplaces is the other vertical with $10B + in GMV. But similar to agriculture, a number of the leading marketplaces in fashion don’t charge as meaningful of a take rate as we see in other verticals.
Auto parts, general retail, food and healthcare are all large industries with meaningful marketplace scale. Not only are the marketplaces doing impressive volumes, they are all able to command some form of take rate with a healthy revenue-to-GMV ratio.
Electrical, building materials, metal and other niche B2B verticals are promising and we expect to see continued growth, even though they do not have over $1B in aggregate marketplace GMV so far.
The top 50 collaborative opportunities for distributors and startups to build B2B marketplaces to build market share
Amazon Business’s GMV compared to the top 50 B2B marketplaces
Insights on B2B marketplace verticals with ample room for growth
Glossary of B2B marketplace terms
Case studies of large enterprises successfully embracing marketplace models
Fundraising information and top VC firms investing in B2B marketplaces, and more
In addition to this report, Applico recommends you also evaluate our landscape of SaaS and MaaS (marketplace as a service) tool providers, not included in this report because they are not marketplaces, in the B2B distribution industry. These reports can be found here.