Platforms are changing the rules of the economy. First in the B2C world, but soon in the B2B world as well, warns Peter F. Schmid, who since 2001 has led major players in the German platform economy such as Autoscout24, mobile.de and Parship. Since 2012, he has led the B2B platform "Wer liefert was" (wlw), which has existed as a reference work for the commercial economy since 1932, but has only made the transition to a horizontal B2B platform with Schmid. Platforms in the B2B world do not yet possess the strong positions that Amazon or Alibaba have achieved in the retail sector. But he sees no reason why the story from the consumer world won't repeat itself in commerce between companies.
Amazon Business is just as much on its way to the B2B world as Alibaba. But much like retailers, media or travel companies in Germany didn't understand 15 years ago how platforms sucked the margins out of their business, today the big industry players are reluctant to enter these markets. "When I look at German industry power and then see how few platforms German industry is involved in, it totally scares me. Especially against the background of experience from the consumer world, which is now in the hands of the Americans and Chinese," warns Schmid. The restraint applies to the development of own platforms as well as to an involvement in existing marketplaces.
Schmid rates Alibaba in particular as strong, even if founder Jack Ma is focusing on competition with Amazon at the moment. "In this battle with Amazon for the consumer, we have only seen the beginning. But let's not kid ourselves: Sooner or later, Alibaba will also tackle the B2B markets more strongly again. Alibaba has a big advantage - and that's the difference with Amazon: The Europe-Asia exchange is far greater than between Europe and the US. With a strong foothold in China, Alibaba can tackle B2B trade with Europe much more easily than Amazon. The market is huge," Schmid expects.
"We count on Alibaba every day"
He doesn't know when exactly Alibaba will focus on B2B business again. Only this much is certain for him: "It will happen soon. We actually expect it every day, because it would be a logical step. Alibaba will not give its competitor Amazon Business too much of a head start." Amazon's business division is growing at 20 percent a month at the moment; customers can now have products delivered within 48 hours for an annual flat rate via "Business Prime." Besides the U.S., Amazon has so far only launched the flat rate for business customers in Germany, where the first Prime trucks can now be seen on the streets.
The platform giants are not yet venturing into trading with machines. "Until Amazon and Alibaba also sell industrial products, it will - thank goodness - still take a while. There are several reasons for this, such as the complexity of the products, but also the reluctance of manufacturers. They have little interest, especially in the current economic climate, in offering their products with a price tag on an online marketplace. You won't find a German chemical pump with a price tag on the Internet. This is different abroad. Many machine manufacturers from Asia have no problem with this. But in order to conquer the world market, the products have to be found on the web and have to come with prices and availability. German manufacturers, however, are not yet ready. For them, aspects such as quality, service or availability play a greater role than price."
"German industry would be one of the beneficiaries of a platform strategy"
So what opportunities are there for the German industry to build platforms themselves? "The B2B sector is super fragmented and therefore offers many opportunities for other platforms. But when it comes to consumer-related topics, for example office supplies or drills, I'm super fast at Amazon Business or Alibaba. It is becoming increasingly difficult to compete with their experience and market power. It's a completely different story for more complex capital goods. We're still at the very beginning," says Schmid. At the same time, German industry would be one of the big beneficiaries of a platform strategy due to its export strength. "But in 2017, most products will still be sold at trade shows. You can't reach potential customers from Asia with this - but you could. This also applies to complex products whose functions will soon be easy to view with VR glasses. You don't need trade shows for that anymore."
Schmid wants to expand "Wer liefert was" into the largest B2B marketplace in Europe. Seven million products are now on the platform; the company generates 45 million euros in sales and is growing at a double-digit rate. In the spring, the Swiss investment company Capvis took over wlw. It fits the picture that this platform, like Scout 24, mobile.de or Trivago, has not remained in German hands.
He doesn't know when exactly Alibaba will focus on B2B business again. Only this much is certain for him: "It will happen soon. We actually expect it every day, because it would be a logical step. Alibaba will not give its competitor Amazon Business too much of a head start." Amazon's business division is growing at 20 percent a month at the moment; customers can now have products delivered within 48 hours for an annual flat rate via "Business Prime." Besides the U.S., Amazon has so far only launched the flat rate for business customers in Germany, where the first Prime trucks can now be seen on the streets.
The platform giants are not yet venturing into trading with machines. "Until Amazon and Alibaba also sell industrial products, it will - thank goodness - still take a while. There are several reasons for this, such as the complexity of the products, but also the reluctance of manufacturers. They have little interest, especially in the current economic climate, in offering their products with a price tag on an online marketplace. You won't find a German chemical pump with a price tag on the Internet. This is different abroad. Many machine manufacturers from Asia have no problem with this. But in order to conquer the world market, the products have to be found on the web and have to come with prices and availability. German manufacturers, however, are not yet ready. For them, aspects such as quality, service or availability play a greater role than price."
The goal of "Wer liefert was": Europe's largest B2B marketplace and central data hub
Crucial for wlw is the connection to the product databases. "Our vision is a central data hub. The manufacturer gives us the product data of his machines, and we distribute it all over the world so that as many interested parties as possible see it. Then one day we want to push that data to Alibaba or Amazon to help leverage their reach. In B2B business, you can't cover everything with one marketplace."
China isn't just Alibaba, either. "MakePolo is growing very strongly right now, Global Market or Made in China, which have a certain size and are all interested in a high exchange with Europe. We all think too small in Europe. Platforms need to have a global presence. We look at the platform market in China, which is very dynamic. No player is set there forever. The player that can bridge the gap to Europe for the Chinese buyer will get huge traction. We are totally at the beginning."
Platforms are changing the rules of the economy. First in the B2C world, but soon in the B2B world as well, warns Peter F. Schmid, who has led major players in the German platform economy since 2001, such as Autoscout24, mobile.de and Parship. Since 2012, he has led the B2B platform "Wer liefert was" (wlw), which has existed as a reference work for the commercial economy since 1932, but has only made the transition to a horizontal B2B platform with Schmid. Platforms in the B2B world do not yet possess the strong positions that Amazon or Alibaba have achieved in the retail sector. But he sees no reason why the story from the consumer world won't repeat itself in commerce between companies.
Amazon Business is just as much on its way to the B2B world as Alibaba. But much like retailers, media or travel companies in Germany didn't understand 15 years ago how platforms sucked the margins out of their business, today the big industry players are reluctant to enter these markets. "When I look at German industry power and then see how few platforms German industry is involved in, it totally scares me. Especially against the background of experience from the consumer world, which is now in the hands of the Americans and Chinese," warns Schmid. The restraint applies to the development of own platforms as well as to an involvement in existing marketplaces.
Schmid rates Alibaba in particular as strong, even if founder Jack Ma is focusing on competition with Amazon at the moment. "In this battle with Amazon for the consumer, we have only seen the beginning. But let's not kid ourselves: Sooner or later, Alibaba will also tackle the B2B markets more strongly again. Alibaba has a big advantage - and that's the difference with Amazon: The Europe-Asia exchange is far greater than between Europe and the US. With a strong foothold in China, Alibaba can tackle B2B trade with Europe much more easily than Amazon. The market is huge," Schmid expects.