Digital marketplaces have long been associated with B2C organizations to provide consumers with a convenient, streamlined purchasing experience. However, don’t B2B businesses deserve the same efficiency in their transactions?
The answer is, of course, yes. As B2B companies begin to realize how a digital marketplace can broaden their networks and optimize supply chains, more of these businesses are turning to the web. Some industries have been quicker to adopt these eCommerce platforms than others, and as we discussed last week, the fresh produce market has been particularly hesitant to embrace this change in the past.
When stakeholders in the fresh produce industry add a digital marketplace to their selling and procuring process, they unlock a trusted network to expand their reach. Let’s uncover some of the other benefits of this new channel that challenge the common misconceptions about B2B digital marketplaces.
Building trust and simplifying in a digital marketplace
Though the fresh produce industry has changed exponentially in regard to food safety, packaging, produce availability and quality, the sales channels for fresh produce remain disjointed. As early as 1955, The American Planning Association highlighted how the growth of cities, advancements in transportation methods, and farm yield-improving technologies had all increased the complexity of the fresh produce supply chain. That historical framework remains today. A significant number of “middle men” maintain an active role and numerous transactions occur sub-optimally in our supply chain, which creates a window of opportunity for a digital transformation to optimize fresh produce for sustainable growth.
Considering the number of participants involved in moving fresh produce through the supply chain, has the industry changed that much since this diagram of supply from 1947?
Throughout all of these years, one thing has remained constant: the need for trust between buyers and sellers. Robert Verloop, a veteran of the industry and COO of Coastline Family Farms explained this in further detail.
“Trust and confidence in the produce industry between buyer and seller is, above all, most important,” Verloop said. “It's an understanding that the quality of the product you receive is what was promised and what you anticipated.”
The fresh produce industry knows buyers and sellers rely on a foundation of trust to ensure mutual success in the future.
“There’s a large portion of our industry that believes in the transactional aspect of our business being a day to day event,” Verloop explained. “The tone of buyers and sellers on some commodities - especially highly perishable ones - indicates whether the market is going up or down.”
There’s no denying that quality is of the utmost importance in the fresh produce industry - as Verloop put it, there’s a lot more at stake when a batch of perishable produce doesn’t meet quality standards than when a T-shirt arrives in the wrong size and can be easily swapped out. So, how does an anonymous marketplace like ProduceIQ ensure there is trust between all parties? Produce IQ uses an advanced vetting system for monitoring who is allowed to participate. It uses technology solutions to more accurately portray the product being sold. Finally, it ensures compliance by rewarding good performance.
Anonymity, an opportunity for increased trust
In the ProduceIQ marketplace, the listings and negotiation are anonymous until a sale is agreed upon. However, this doesn’t diminish trust between buyers and sellers. As a gated platform, growers are vetted for food-safety and quality standards along with their reputation in the marketplace. On the other side, buyers are vetted for their credit-worthiness, payment practices and reputation for receiving product fairly. The product is sold on the merits of its quality. Sellers provide evidence through photos and quality reports. Parties are able to directly negotiate for fair pricing while agreeing and complying with standardized terms. User ratings will be introduced in future phases to provide additional incentive for good behavior. ProduceIQ takes the guesswork out of trading with a new supplier or buyer by creating a secure, trusted network that is continuously monitored to ensure all stakeholders are adhering to higher industry standards.
Anonymity allows for buyers and sellers to confidently trade with a larger network without worrying that prices will be influenced by relationship biases. Of course, this is only one of the many advantages of utilizing an anonymous B2B marketplace for fresh produce.
Digital marketplaces serve as an additional sales channel
Digital marketplaces are never a complete replacement for traditional practices, but they can complement existing trading channels. When used in conjunction with in-person calls and RFP processes, a digital marketplace expands and strengthens the fresh produce supply chain.
Having an online option for buyers and sellers is especially important when the industry is forced to face unforeseen circumstances. The fresh produce industry is constantly trying to adjust for the unanticipated events that interrupt the flow of goods in supply channels. Verloop described how sudden weather events and terminated contracts can leave sellers with a shortage or surplus of products. On the other side, buyers may experience an unanticipated rush that leaves them in need of more produce to satisfy their customers quickly.
During these instances, the current supply chain falls short. There is too little time for extensive negotiations or to find new customers. Even if a new customer is found, the process to obtain a vendor ID to inspect for quality is not immediate. The supply chain needs to be more adaptable to accommodate these unfortunate surprises.
“You can only make so many phone calls or answer so many emails in a day,” Verloop said about the trading process. “If half or even a quarter of those don’t result in a purchase, the right platform allows buyers and sellers to have a higher likelihood of success [moving their produce].”
An anonymous digital marketplace allows each participant to test the market and buy or sell at different prices without recourse. If market supplies are tight, higher prices may be tested. If supplies are abundant, products may be sold quickly at low prices without broadly announcing that activity. This may create a situation in which buyers and sellers both win on hot deals for perishable goods.
An anonymous digital marketplace for fresh produce isn’t a platform shrouded in mystery, but rather a place for buyers and sellers to expand their network and optimize their supply chains even when faced with uncertainty.
Encouraging conversations with new partners
Adobe explained that today’s B2B marketplaces fall into one of two categories: niche players and market leaders. The former focuses on serving a niche community of users while the latter grows to provide a larger network to their existing customers. ProduceIQ has created a digital marketplace that accomplishes both. The platform specifically serves buyers and sellers in the fresh produce industry with the goal to expand the network as a primary benefit to its users.
“Digital marketplaces open up a lot more opportunities for conversation,” Verloop concluded.
The ability for buyers and sellers in the fresh produce industry to instantly expand their network and therefore their purchasing and selling capabilities has tangible value.
ProduceIQ is creating the first anonymous digital marketplace for qualified growers and produce buyers to directly negotiate. Connecting the right customer to the right product at the right time has never been easier thanks to advancements in technology and ProduceIQ’s industry expertise. Contact us today at info@ProduceIQ.com to learn more about adding the B2B digital marketplace to your trading processes.