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Large groups: 4 steps to follow to start your e-procurement marketplace project

16 November 2021

Business Insight

The e-procurement marketplace is becoming an essential part of the business ecosystem of large groups because it allows them to streamline their purchasing processes. A major growth driver, this model meets the various challenges faced by purchasing functions: saving time, reducing costs, controlling expenses, digitising procedures, etc. So, if you too want to end inefficient processes and transform your purchasing to improve performance, here are the steps to follow to launch your e-procurement marketplace! The launch of a dedicated marketplace thus enables the operational management of purchasing to be optimised.

 

1. Clearly define your value proposition

By making purchasing processes transparent and favouring direct contact between suppliers and users, e-procurement marketplaces imply a fundamental repositioning of the purchasing function. The e-procurement platform leads to a disruption of the process: the operator moves from the role of “controller” between suppliers and users to that of “facilitator”. The objective is to structure and size an efficient organisation to operate the non-outsourced processes and manage the others. The operator has a strategic goal: to federate and control a business ecosystem. To achieve this goal, he must master 4 fundamentals that will constitute his value proposition:

  • Enhance its assets: good positioning in the value chain, expertise, and reputation.
  • Develop a value proposition that is broken down into a “customer” promise on the one hand, and a “partner” promise on the other.
  • Build a balanced offer of products and services to attract sustainable traffic and establish a recurrence of purchases, mainly through the “long tail” phenomenon.
  • To know the whole value chain of the ecosystem and to master who are the customers, the manufacturers, the distributors, the providers, and the partners.

It is only through its value proposition, the quality of its promise, and its ability to deliver on it, that the operator will take the lead in its market over the long term and protect itself from any risk of disintermediation. Of course, this control also allows the operator to develop its business volume.

 

2. Drawing up a business plan

The business plan is essential to all market projects. Above all, it constitutes an official document necessary to search for financing, whether internally with the management or externally with investors. The business plan is a synthetic and quantified projection of the business model. It mainly answers several substantial questions:

  • What will be the nature of the future business? Its value propositions.
  • What will be the business model of the e-procurement marketplace?
  • What will be the main cost items?
  • What is the strategy for achieving the objectives?

It is important to build a pragmatic business roadmap with iterative and progressive approaches, such as an MVP (Minimum Viable Product). When the platform is launched, this MVP brings together the project’s priority functionalities. It is then used to validate its viability or profitability.

For a successful business plan, there are several points of attention:

  • Delivering the right dual user experience. To engage both buyers and sellers, the quality of the user experience must be at the heart of the concerns. For buyers, the purchasing process must be frictionless; for sellers, onboarding, importing catalogues, and data synchronisation are essential. The challenge for the operator is therefore twofold: to bring the platform to life by creating two distinct user experiences for the end buyer and the seller.
  • Control costs. All costs must be planned: support costs, HR costs, outsourcing, technology costs, marketing and sales costs, etc.
  • Projecting revenue. In the context of an e-procurement marketplace, this step is crucial because the success of the project lies in the optimisation of the operational management of purchases. The notion of turnover is therefore not relevant. On the other hand, it is important to know the savings that the company will make thanks to the platform and to determine the ROI of the project.

 

3. Choose the right technology for your project

Once the business plan has been drawn up, the launch of the marketplace depends on the choice of technology or, in other words, the marketplace solution provider that will develop the platform. The operator must choose a partner that meets its business, technological, financial, and functional challenges. It is preferable to project the future partner in a demonstration of interfaces and presentation of functional roadmaps. Also, it is necessary to understand the economic model of the envisaged solution. Models based on a commission on the activity of the marketplace have a significant impact on the profitability of the project. Finally, the choice of a partner is based on the human relationship and the trust granted, to make this project a rapid and lasting success.

 

4. Set up a suitable payment solution

The final step in deploying your e-procurement marketplace is the implementation of a suitable payment solution. As a trusted third party between suppliers and purchasing managers, the operator is responsible for providing a convenient, secure, and compliant payment solution. It must also ensure that the system deployed corresponds to the specificities of B2B. For all these reasons, the implementation of a payment method can be a tedious operation, for which support may be necessary. In this respect, there are many advantages to turning to a Payment Service Provider, or PSP.

PSPs are companies licensed to provide payment services. Backed by a marketplace, the payment service provider handles both the provision of a payment interface for purchasers and the control of funds and money transfers for suppliers. As an intermediary, the PSP’s role is to authorise, regulate and secure financial transactions. As a true partner, the PSP accelerates and secures the deployment of your e-procurement marketplace.

 

Lemonway is an approved payment service provider and offers a solution dedicated to e-procurement marketplaces looking for a partner to reposition their purchasing function. Our teams take care of the management of your platform’s payment flows, within a secure and regulated framework. Do you have a project? Any questions? Tell us about your needs!