By now, you have launched and promoted your B2B online marketplace platform. Also, have users in your marketplace, but how does this determine your B2B Marketplace platform’s Success and Growth? You need online marketplace metrics to measure them.
Industry changes and evolution are happening in the B2B online marketplace industry. Payment methods, market prospects, business strategies, and many other elements of this ecosystem are constantly changing. As a result, many businesses employ specific criteria to define and assess the performance and success of their online markets.
Sometimes things aren’t apparent as they seem. Since there are many Two-sided marketplace metrics, you must select them by seeing their worth and purpose. Answer this question, Which metrics are worth using, and for what?
Is there a chance that market metrics will no longer affect productivity but will instead stand alone as a thing? Of course, just as the B2B marketplace platform differs highly in terms of the product categories they offer and the demographics of their clientele, so do their benchmarks.
B2B Online Marketplace KPI can be measured by four factors,
Business Metrics
1. Metrics to measure B2B marketplace platform transactions
2. Metrics to forecast the business success of a B2B marketplace platform
Marketing Metrics
3. Metrics to analyze and grow user engagement
4. Metrics to evaluate user satisfaction
Metrics To Measure B2B Marketplace Platform Transactions
Your profit is calculated by the transactions that happened on the platform. So, let’s start measuring from the transactions.
It can be tempting to concentrate on the volume of transactions that could have an effect on your value proposition when looking at transaction-related metrics. Indeed, a lot of sellers like sites like eBay, Amazon, or Etsy since they have a greater average number of transactions per user.
However, the volume of transactions is only a vanity statistic because it offers no guidance on how to improve the functionality of your platform. To encourage long-term growth, we suggest concentrating on the metrics listed below:
Liquidity
The driving force of a B2B marketplace platform is Liquidity. How buyers and sellers interact with one another must be taken into account. Furthermore, this may be calculated from both the buyer’s and the seller’s perspectives.
Seller Liquidity
Seller Liquidity refers to the presence of sellers in a market who are willing and able to sell their assets or products. It indicates the ease with which sellers can find buyers for their offerings. Higher seller liquidity generally means there are more sellers actively participating in the market, which can result in smoother and faster transactions.
Buyer Liquidity
Buyer Liquidity, on the other hand, refers to the presence of buyers in a market who are ready and able to purchase assets or products. It represents the ease with which buyers can find sellers and make purchases. Higher buyer liquidity typically indicates a larger pool of potential buyers, which can facilitate quicker and more efficient transactions.
Average Order Value (AOV)
The value of this metric reflects the daily, weekly, or monthly average user spending on a B2B marketplace. Market owners can therefore clearly see the purchasing habits of their clients.
High AOV values suggest carefully thought-out one-time purchases. A low AOV suggests that customers may be more likely to make impulsive and frequent purchases. The following formula may be used to determine it:
Buyer-To-Seller Ratio
The proportion of the number of buyers served by each vendor. By calculating this, you can know whether your marketplace has more buyers or sellers.
This ratio is usually 1:3 for the new startups, but it will be 2-3 buyers for each seller in the stable marketplace. This ratio completely depends on the marketplace growth.
The buyer-to-seller ratio can be as low as 1:1, where the marketplace has one seller and one buyer. Also, it can be as high as 1:1000, where one seller serves 1000 buyers. So, there are no set ratios of buyers to sellers.
Repeat Purchase Rate
Another interesting transaction indicator is the ratio of repeat purchases. It reveals the proportion of your transactions that are from customers who have previously made purchases from your B2B marketplace.
You may spend more money on bringing in new customers if the proportion is larger. You acquire a client who is probably going to do business with you more than once. On the other hand, you can experience difficulties expanding if it is improbable that a repeat transaction would happen.
So far, you have measured your B2B online marketplace platform using transactions. Now it’s time to measure your marketplace business success.
Metrics To Forecast The Business Success Of A B2B Marketplace Platform (Business Metrics)
Gross merchandise volume (GMV)
The GMV of your platform represents the total value of goods and services exchanged over a predetermined time frame, like a month. It depicts the general size of your market and its development over time.
Client Acquisition Cost (CAC)
It is crucial to understand how much it costs to bring in a paying customer. This enables a startup to monitor the effectiveness of its marketing initiatives and determine whether any adjustments are necessary.
Client Lifetime Value (CLV)
CLV shows the amount of time a user spends using a platform before uninstalling it or ceasing its use of it. This value should not exceed the CAC. Because your growth is not sustainable when CLC exceeds the CAC.
Take Rate
The sum of all commissions, fees, and other monetization methods used on the platform’s transactions is a marketplace company’s revenue. The “take rate” is probably how you have heard about it.
The prices are available in a variety of forms, much like standard pricing models. They may be offered as a set or flexible commission, a flat charge, a percentage, or even a subscription-based model.
Setting a take rate that encourages supply and demand while also enabling the market to expand is difficult for a trustworthy B2B online marketplace. Finding the right take rate is essential since a take rate that is too high might lead to problems later on.
This rate’s value fluctuates according to the kind of goods or services being exchanged and the marketplace’s business structure. With the help of the following formula, you can calculate the rate.
Cost of Goods Sold (COGS)
Cost of Goods Sold (COGS) is the accounting term used to represent the direct costs involved in producing or acquiring the goods a company sells. It includes the cost of materials, labor, and overhead expenses directly associated with the production or acquisition of those goods. Calculating COGS helps determine the direct costs incurred in making or buying the products a company sells, which is essential for assessing profitability.
Gross Profit
Gross profit is a financial metric that represents the profit a company earns after deducting the cost of goods sold (COGS) from its total revenue. It measures the profitability of a company’s core operations without considering other expenses such as operating expenses, interest, and taxes. To calculate gross profit, you subtract the COGS from the total revenue.
Net Profit
Net profit, also known as net income or net earnings, is a financial metric that represents the total profit a company earns after deducting all expenses from its total revenue. It is a measure of the company’s profitability and indicates how much money the company has earned or lost during a specific period.
To calculate net profit, you start with the company’s total revenue or sales and then subtract all the expenses incurred during that period. These expenses include the cost of goods sold (COGS), operating expenses (such as salaries, rent, utilities, and marketing expenses), interest expenses, taxes, and any other relevant expenses.
So, next is the Marketing and Sales metrics. If your marketplace customers don’t feel satisfied with your platform, they have so many options to choose from. Thus, you can’t simply rely on your gut feeling about your customer satisfaction, you need to measure them. Let’s see this in the next chapter of “Key Metrics (KPIs) to Track the B2B Online Marketplace’s Growth.”
