How the symbiotic marketplace is accelerating procurement

The marketplace is an environment as old as commerce itself, where like-minded leaders meet, goods and services are exchanged, and innovations emerge. While our methods of buying and selling have evolved, economies still thrive on the basic principle of supply and demand. Companies have challenges, and vendors have solutions. But our modern marketplaces are digital, crowded and overly complicated, creating landscapes that are difficult for startups to enter and difficult for enterprises to navigate.

This reality has led to the emergence of an improved marketplace model, one that streamlines the connection between startups and enterprises and fosters more meaningful collaboration. It’s a simple idea – allow startups opportunities for growth, and provide enterprises an easier way to discover cutting-edge solutions. This mutually-beneficial arrangement is called a symbiotic marketplace, and it is revolutionising enterprise innovation. 

Why are digital marketplaces so popular?

According to McKinsey, four trends are driving the continued growth of digital marketplaces:

• Shifting market dynamics and higher consumer expectations for personalization
• Marketplace consolidation as more players continue to target similar consumer groups
• More value-added service offerings (and potential revenue streams)
• An ecosystem of e-commerce support spurred by tech-enabling services like Shopify.

While digital marketplaces themselves are not anything new, McKinsey found that marketplaces that offer participants “value-added services” are more successful and sustainable because they “unlock more strategic brand partnerships, boost profitability, and fuel reinvestment” in the future marketplace experience. These value-added services create the symbiotic marketplace, which has distinct benefits for startups and enterprises alike.

Benefits for Startups

Startups have their own unique struggles when it comes to marketplaces. We are living in an age of rapid technological progress with a global audience of potential customers, yet it’s this same landscape that can quickly overwhelm new entrants looking to carve out a niche. The truth is that it’s very difficult for any company (unless you become a vital or viral offering) to get noticed in a traditional marketplace. There are just too many providers out there offering too many solutions.

The majority of startups build something unique and sell only one or a handful of products, offering specialised technology and customised solutions. The real challenge for startups is access, and it’s tough for newcomers to make meaningful connections within enterprises that already have preferred vendor networks. That’s where startups can benefit from the existing relationships that a marketplace operator has already established, creating a bridge between trusted parties. 

And make no mistake, the whole system is based on trust – enterprises trust that the marketplace operator has the expertise to recommend the best solutions, and startups trust they will get better, more meaningful sales opportunities. With relatively low barriers to entry and more personalised support, there are very few downsides for startups to consider.  

Benefits for Enterprises

Enterprises have bigger budgets, larger teams, and more resources, but these advantages can also result in slower processes, limited flexibility, and an increased aversion to risk. It’s common therefore for decision makers to stick with the well-known brands, prioritizing size and reputation over spending time sorting through myriad smaller competitors. But the status quo stifles innovation, and it’s tough to be a leader when you’re using the same vendors as everyone else.

Let’s explore a typical scenario. You’re an enterprise CTO on the hunt for a password authentication product. You enter your search parameters in a traditional online marketplace (like Google or Amazon) and receive dozens of options, but how can you tell which is most appropriate for your business? Normally this is where industry analysts would help narrow the list, however, many smaller startups don’t warrant their level of attention. So, you’re left to select among possibly inferior choices while the startup with the best solution misses the chance for growth.

On the flip side, a symbiotic marketplace model is more bespoke, wherein the marketplace operator takes on the responsibility of connecting their enterprise partners with startups that offer complementary services. The enterprise might get fewer options from which to select than in a traditional marketplace, but they are much more qualified. When enterprises engage in a symbiotic marketplace, they are signalling to their customers that they are committed to finding the best solution for their needs. When enterprises engage with startups that they might not have otherwise been exposed to in a traditional marketplace, each will benefit from an influx of fresh ideas, agile thinking, and accelerated innovation cycles. 

Benefits for Future Innovation

According to JP Morgan and other industry analysts, B2C online marketplace sales are predicted to reach $3.5 trillion by 2024, and B2B sales could reach $3.6 trillion. While symbiotic marketplaces might take a bit more time to develop, they are leading to an exciting new dynamic between enterprises and startups. Enterprises can tap into a previously inaccessible goldmine of deep vertical experience and novel business models from startups, while startups can scale their disruptive technologies and create a culture of innovation within enterprises.   

In our increasingly complex and rapidly evolving business landscape, symbiotic marketplaces offer a unique “win-win-win” scenario for all involved – startups get the exposure they need, enterprises get the solutions they want, and marketplace operators strengthen the relationships they must have with both. It’s a watershed moment for startups and a game-changer for enterprise innovation.

Nitish Shrivastava SVP & Head of Products at Persistent Systems

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