The last few The contracts have produced many successful markets. We moved from commodity market pioneers like eBay and Amazon to simple service markets like Uber, Lyft, Doordash, Upwork, Thumbtack, TaskRabbit and Fiverr. But why have not we seen many successful B2B services markets?
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Why many markets failed B2B service
Some may argue that companies like Or disc for remote work, Thumbtack, Fiverr, or TaskRabbit are horizontal B2B markets, meaning they provide access to different service providers. But while companies are already dealing with independents in such "horizontal" markets, most of these services have limited value and once for most service sectors. Failed to enable long-term trade cooperation.
Therefore, such markets have not provided more valuable services and have not provided a new model of how companies can purchase specific services on a large scale and on an ongoing basis. why is that?
Horizontal markets are stuck in the process of discovery
Horizontal service markets do not provide much greater value than customer satisfaction with quality service providers. In other words, they do not facilitate cooperation between buyers and suppliers, and they do not mind providing ways for the parties to cooperate more efficiently over time as they participate in follow-up projects.
In essence, the model on which these markets are built is not much different from the likes Craigslist, Which put UX convenient on traditional classified ads.
Complex B2B services require workflow and collaboration tools
In their article "What's next for startup companies in the Marketplace?Andrew Chen and Lee Jin found that there are many successful service markets because these offerings are complex, diverse and difficult to assess. It is difficult to identify a successful transaction in a service market because it is difficult to determine success.
One reason is that many service providers must often work together to complete one task for the buyer, requiring a complicated workflow from end to end. As a result, it is difficult for markets not only to provide their services but also to make them more effective for buyers and suppliers. If both buyer and supplier do not see a significant increase in efficiency other than initial matching, why would they continue to use the market?
The $ 50 billion translation industry is a prime example of complex B2B service markets. On the supply side, there are about 50,000 small agencies around the world responsible for more than 85% of this industry worth $ 50 billion. (Note that we refer to agencies here as suppliers, although they play on both sides.)
On the demand side, there are companies that need to translate text from one language to another. In addition to about 1,500,000 independent linguists working in the industry, many of them specialize more than specialists in other industries.
Anyone can find and hire an interpreter on Fiverr or Upwork. Both provide a wide range of language translators. However, the quality and cost of translation depends on the translator's translation tools as well as their experience on the subject.
Fiverr and Upwork do not provide computer-assisted translation (Never) And collaborative workflow solutions for their platform users. In addition, neither provides an effective way for all parties to collaborate and improve efficiency and quality continuously.
But the problem in traditional markets goes even further: translators and multiple auditors are often required to complete one job for the client. Multilanguage translation projects are more complex. Such projects require multiple service providers and cost estimates, as well as project management tools.
This is why building a B2B services market is difficult. Services markets should not only link buyers and suppliers, but must also provide tools to enable efficient and collaborative workflow that reduces wasted time and effort.
Horizontal markets suffer from low attrition
In addition to the problems already described, traditional markets face another problem that prevents them from growing and retaining market participants: Buyer and supplier attrition.
Many business services rely on frequent links on a regular basis. In some cases, the buyer and the service provider interact daily, requiring a different workflow from the markets of the markets being built.
Buyers and suppliers have little incentive to continue interacting on a platform without workflow solutions. They lack a means to improve service efficiency and quality, automation of collaboration, payment, paperwork, and other basic operations required for business.
This is why many traditional markets suffer from slow network effects and high attrition. (Network impact is what happens when a platform, product or service offers greater value as it is used.
Think Facebook, eBay, WhatsApp.) Why do not companies work directly with service providers outside the market after they are put up? What are the incentives that keep the service in the market? These are important questions that must be answered when building the market.
Traditional markets target extensive services, making it virtually impossible to provide workflows for buyers and suppliers. To move forward, successful service markets will be developed based on the SaaS business process. This will focus buyers and suppliers on projects and long-term interactions that serve the unique needs of cooperation and transactions in a specific vertical manner.
What makes the services market successful?
in a "The next ten years will be around market networksJames Corrier, Managing Partner of NFX Ventures, defines a new era of service markets, called market networks.
Network Market It is a platform that combines market elements, network solutions and workflow. A one-sided market is a market that requires multi-party coordination on the supply side to provide a complex service to a single buyer.
Market networks enable many buyers and suppliers to interact, collaborate and deal on the same platform. It provides users with industry-specific workflow solutions that enable effective and efficient collaboration in long-term projects. This reduces costs and leads to higher quality of services and increases the total value of all users.
But how do you build a successful network market platform? While the answer to that varies from company to company, here is our approach. We have been able to build a market network for the translation industry combining components: network, marketAnd Workflow solution.
Step 1: SaaS workflow platform opens high value collaboration
The first step is to build an effective complex market network to develop a user-friendly workflow. It may not seem like much, but it increases productivity by enabling teams to perform tasks that were previously impossible.