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What is the taxonomy of B2B marketplaces and how can the broader space be categorized in terms of categories?

Ameet Shah

Partner at Golden Ventures

We look at it in a couple of different ways. High-level, there are aggregators, managed marketplaces, channel marketplaces, vertical SaaS-enabled marketplaces, and then tech-enabled brokerages.

At the aggregator level, it’s just about curating supply and matching demand with that supply; Focusing on high-quality liquidity, creating efficiency in the market by bringing both sides together in one place, and then allowing for self-managed matchmaking. One example is Faire, where you're working with wholesalers and sometimes solopreneurs or brick-and-mortar stores that potentially leverage or buy into those services.

Then you've got managed marketplaces. Again, there's a big focus on curation. Not all players are fungible, so you have to have a vetted set of suppliers to deliver a specific set of services or products. These marketplaces are often supply-constrained, and there's more work done in brokering the transaction, whether it's a white-glove service or through some sort of SaaS tooling. Examples of this are Reibus, the steel marketplace, and Toptal.

A “channel marketplace” is a term we’ve coined describing the relationship between a master brand and the regional distributors or channel partners. The association is primarily around distribution. The brand control sits at corporate, but then you've got all these local distributors that handle everything from fulfillment, customer support, offering ancillary products that fit together. These marketplaces are designed to have no channel conflict, and you can preserve all your local relationships.

My personal favorite are these vertical SaaS marketplaces. They start as vertical SaaS software, then layer in a marketplace later on. Usually, it begins with a software solution that is focused on a highly technical business problem. For example, a software provider may give away or charge a very low fee for something that has high intrinsic value to a marketplace participant and has a low marginal cost to deploy. That’s a fancy way of saying: solve a huge pain point through software, give it away, and use that as a way to onboard the supply or demand side. Then, by aggregating both the supply and demand through this SaaS tooling, you're able to facilitate discovery on both sides.

An example is Notch, which works with food distributors and restaurants -- a highly fragmented market. The prices that restaurants make their decisions on are the prices they receive the previous week. Between the time they order and the time they receive the goods, the prices for the goods can change. Notch streamlines this process between buyers and sellers while also controlling payments between the parties.

Finally, there are tech-enabled brokers. Fundamentally, this is taking an existing agent, broker, distributor, or wholesaler and empowering them with technology. , and having them operate more efficiently than other players in their industry. This technology acts as a competitive advantage for that one broker.

Find this answer in Ameet Shah, partner at Golden Ventures, on the economics of vertical SaaS marketplaces
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