The folks at Applico publish great content on platforms, including a just-published report on The Top 50 B2B Marketplaces. You can download a copy here. Applico ranked the Top 50 B2B Marketplaces based on their assessment of:
- capitalization (e.g., traction, fundraising, or profitability)
- investor backing (small weighting to firms backed by successful investors)
The Top 10 B2B Marketplaces
The accompanying graphic lists Applico’s Top 10 B2B marketplaces. You can quibble with the list, but that is really beside the point for me. I was looking for themes and interesting companies, not rankings.
Two themes are evident in the top 10:
- Numbers 1, 3, 4, 7, and 10 are marketplaces targeted at retailers as buyers with wholesalers, or manufacturers/brands, as suppliers. Some are in soft goods, one is in marijuana (LeafLink), and one is in booze (SevenFifty). These marketplaces follow roughly the same business model: they are free to the buyer to order across suppliers. Suppliers pay either a transaction fee and/or a subscription software fee to participate. (I’m over-simplifying slightly.)
- Three of the top 10 companies are in the agricultural market: Indigo, Farmer’s Business Network, and GrubMarket. These companies have very different business models, worthy of another blog post someday.
- That leaves two “odd men out” in the top 10: VetCove, which helps veterinary clinics buy their supplies (Covid tailwind anyone?), and PartsTrader which helps repair shops buy parts, for insurance-claim-based repairs.
The Rest of the Top 50
The rest of the list is available here. I’ll summarize a few themes and highlight one company I know well.
4. The remainder of the top 50 B2B Marketplaces include more companies from the same industries as the top 10: retail, agriculture, and auto parts. The rest of the list also adds several industries.
- Healthcare shows up in various forms: equipment purchasing (Open Markets), home health care supplies (Parachute Health), Medina Health (surplus equipment), Net32 and SupplyClinic (Dental), and R&D labs (Quartzy and Knowde).
- Made-to-order parts (Fictiv and Xometry–the latter of which should have been much higher on the list).
- Niche replacement parts businesses in aviation (SkySelect), construction equipment (Gearflow), and semiconductors (Asseta). (The aviation parts business is worthy of an entire blog post some time.)
- Packaging (Lumi and Packlane).
- Various aspects of real estate: architecture (Architizer), lumber (Yesler), landscape plants (Landscape Hub), and interior design (DesignerInc).
- Steel (Bryzos and Reibus).
Not surprisingly, there are several commonalities between many of these marketplaces. All have large markets, fragmented buyers and suppliers, thousands of SKUs, and typically high volume, repeat transactions.
Bryzos: A Steel Marketplace
The company I know best on this list is Bryzos, a steel marketplace which I have had the pleasure of advising. Most steel marketplaces are sponsored by distributors or manufacturers who want to extend their product line by adding third-party sellers to their website. This tactic is usually not very successful, as the marketplace sponsor often competes with the suppliers it is trying to attract! Bryzos, on the other hand, is a true marketplace. The company does not take a position in the transaction. Bryzos directly connects steel products buyers (think oil and gas operators) or structural steel users (AEC companies) with steel distributors or mills.
Bryzos, like some other B2B marketplaces, connects two parties who may not know each other, and who may be making a large transaction not suitable for a credit card. This means many B2B marketplaces, including Bryzos, have to solve three distinct problems simultaneously:
- the “chicken and the egg problem” of getting buyers and suppliers on the platform
- curating the posted listings to make them comparable and easily searchable, and
- offering both payments and extension of credit.
None of these are easy problems to solve. And that last one eludes many marketplaces. Even with all the talk about embedded payments and finance, it is often just about enabling credit card transactions. These solutions do not work on $15k-$200k transactions. Bryzos has figured out how to accommodate these larger transactions by quickly and easily extending credit to buyers, so they do not pay for sixty days, while suppliers get paid after 30 days. Bryzos makes the transactions fast, seamless, and affordable for its users. This functionality also goes a long way to helping solve the chicken and the egg problem.
(Kudos also to LeafLink, which had to figure the same thing without using banks! Marijuana is still a pariah in mainstream banking.)