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Mastering B2B Channel Strategies

Mastering Channel Strategies: Optimizing B2B E-commerce, Marketplace, Dropship, DTC, and More

A Featured Session from B2B Online Chicago 2024 Highlighting B2B Channel Strategies

In a session titled “Mastering Channel Strategies: Optimizing B2B Ecommerce, Marketplace, Dropship, DTC, and More” at the B2B Online 2024 event, presenter Tom McFadyen, CEO of McFadyen Digital and author of multiple books on the topic of digital commerce, provided a deep dive into the complexities and strategies of modern B2B commerce channels. Tom emphasized the importance of organizations who transact B2B ecommerce having a well-rounded channel strategy that focuses on multiple paths to monetization and profit. Key strategies discussed included leveraging e-commerce platforms, marketplaces, dropshipping, direct-to-consumer (DTC) models, and other emerging channels.


Important Channel Orchestration Considerations

Enabling a consistent multi-channel commerce strategy is increasingly necessary to meet customer expectations and these key channel orchestration considerations help ensure a friction-free experience.

1. EDI (Electronic Data Interchange)
EDI is a long-standing method for exchanging business documents electronically. It is ideal for high-volume, recurring transactions and can automate the replenishment process. Even though EDI is an old technology, it is responsible for a large number of transactions on a daily basis and is something that must be factored into any modern B2B commerce equation because it remains so heavily relied upon.

Example: Walmart uses EDI to manage its vast supply chain efficiently, ensuring timely and accurate order fulfillment at scale.

2. B2B E-commerce Platforms
B2B e-commerce platforms offer businesses a way to sell products directly to other businesses online, forming the backbone of an organization’s digital transaction capabilities. These platforms integrate with ERP systems, PIMs, OMS platforms, payment gateways and more to manage orders, inventory, and customer data. Ever-increasing capabilities and improving architecture options can be confusing, but mean there are multiple options to fit every use-case. The key is to select the right technology stack to match your organization’s philosophy and future needs.

Example: Alibaba’s B2B platform – an integrated orchestration of dozens of curated technologies – allows businesses to source products globally, providing tools for secure transactions, communication, and logistics management.

3. Punch Out/Punch In Systems
Punch out systems enable buyers to access suppliers’ online catalogs directly from their procurement systems, streamlining the purchasing process. This is ideal when catalog integration and combined shopping lists are prioritized over multi-vendor checkout capabilities. Punchout enables each vendor to receive their own order under their own system while affording the customer the convenience of multi-vendor shopping.

Example: Ariba Network provides punch out capabilities that allow businesses to connect their procurement systems with suppliers’ catalogs for seamless ordering.

4. Marketplaces
Marketplaces, both distributor and manufacturer-operated, offer a platform for third-party sellers to reach a wider audience. They provide scalability and increased product offerings. Having a marketplace strategy is no longer an option, but a requirement for modern B2B businesses who expect to lead. Whether “pushing” to other marketplaces like Amazon, Walmart, etc. or “pulling” other sellers into a marketplace that you operate, or some combination of the two. According to recent estimates, approximately 59% of all global e-commerce sales are conducted through online marketplaces. (Ecommerce Times)

Example: The ChemDirect marketplace, developed by McFadyen Digital, allows chemical suppliers to reach new customers and streamline transactions through a single platform, disrupting a previously slow-to-evolve industry.

5. Dropshipping
Dropshipping eliminates the need for inventory management by having suppliers ship products directly to customers. It reduces overhead costs and allows businesses to offer a wider range of products. This model is often used for heavier and bulkier items that infrequently change and where price control is maintained by the site operator. Dropshipping serves as a compliment to the marketplace model from a short tail vs long tail offering perspective.

Example: Wayfair uses dropshipping to manage its extensive inventory, allowing them to offer a vast selection of home goods without holding physical stock.

6. Direct-to-Consumer (DTC)
DTC models enable manufacturers to sell directly to consumers, bypassing traditional distribution channels. This model provides manufacturers with greater control over branding and customer data. This DTC route can take multiple forms, including listing on marketplaces, creating a “house of brands” marketplace, or simply setting up a direct ecommerce portal from the manufacturer to the public. This often brings “channel conflict” possibilities, as distributors and retailers can be cut out of the process, so there’s an art to doing this successfully.

Example: Nike has successfully implemented a DTC strategy, enhancing its e-commerce capabilities and opening branded stores to directly reach consumers.

Key Takeaways and Conclusion

The B2B Ecommerce space is more competitive and demanding than ever, but with the right blend of channels and collaboration, each ecommerce ecosystem can be built to thrive and continually evolve. The most important things for B2B practitioners to be mindful of in 2024:

1. Innovate and Drive Efficiency
In the face of slowing B2B sales growth, businesses must innovate and drive efficiency to stay competitive. Embracing digital transformation and optimizing channel strategies are crucial steps.

2. Expand and Optimize Channels
Businesses should explore and optimize multiple sales channels, including e-commerce platforms, marketplaces, and direct-to-consumer models, to reach new markets and enhance customer experience.

3. Leverage Data for Insights
Collecting and leveraging first-party data is essential for gaining insights into customer behavior and improving decision-making processes.

4. Foster Channel Collaboration
Collaboration between manufacturers and distributors can mitigate channel conflict and create synergistic opportunities for growth.
Mastering channel strategies in B2B commerce requires a multifaceted approach that includes embracing digital transformation, optimizing sales channels, and fostering customer-centricity.

McFadyen Digital’s expertise in e-commerce and marketplace solutions provides a blueprint for success in this dynamic landscape. By staying agile and innovative, B2B companies can navigate the complexities of modern commerce and drive sustainable growth.

For more detailed insights and strategies, refer to McFadyen Digital’s publications or contact them at info@mcfadyen.com to be connected to a B2B commerce expert.

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