The buyer-supplier relationship is viewed as a strategic component of commerce, procurement, supply chain management and the overall success of a business. Yet, the needs of both buyer and vendor are changing as supply chains globalize, and as transactions become more complex — and those needs are often at odds with each other, risking the integrity of buyer-supplier ties.
Corporate buyers will want to stretch out their payment terms and adjust vendor contracts accordingly. Suppliers won’t want to accept cards because of interchange fees and implementation costs. There are many ways that buyer-supplier needs can conflict, presenting an opportunity for third-party marketplace platforms to step in.
One of the newest on the market is HUBX, which launched less than a year ago with a focus on vendor empowerment. However, a successful B2B eCommerce platform cannot emerge without also addressing customer needs. While HUBX is far from the only B2B eCommerce marketplace in operation today, its most unique attribute, perhaps, is the anonymization of buyers and suppliers.
HUBX Founder, CEO and CTO Derek Wall said anonymity is a crucial component of managing both buyer and supplier needs, and doesn’t necessarily mean the buyer-supplier relationship goes by the wayside.
HUBX operates in the secondary distribution market, addressing the challenge of selling excess inventory that traditionally gets sold in a manual, fragmented fashion, according to Wall. Launching a platform through which buyers and sellers of that inventory can connect and transact streamlines many of the inefficiencies plaguing the space today. While buyers and suppliers can "connect," the HUBX platform keeps both sides anonymous from each other so transactions stay digital.
"The problem with the market is, once a seller is connected with a buyer, they don't need that [digital eCommerce] platform anymore," Wall explained. "The first transaction happens online, and the second transaction happens offline."
That progression adds further fragmentation to the market, and exposes both buyer and supplier to all kinds of risk.
Payments is one of the largest risks. Without a digital platform acting as a middle man, Wall said, vendors are at risk for delayed and late payments, paper check payments or another unideal payment process. Connecting with a buyer offline also means transactions must occur via a one-off basis (one purchase order per customer), whereas HUBX links vendors with a single, daily purchase order for a slew of orders, regardless of who placed them. Furthermore, the platform does not allow for returns, which cuts out the risk of chargebacks for vendors.
Corporate buyers, meanwhile, risk incorrect or delayed shipments, an occurrence that Wall said is not tolerated on the HUBX platform. The company can also provide customers with payment terms, while facilitating an ACH payment to a supplier upon delivery — addressing otherwise conflicting financial needs of each side of the transaction.
For both sides, fraud and regulatory noncompliance risks are rampant, from Know Your Customer (KYC) and anti-money laundering (AML) due diligence burdens, to payments or vendor fraud. According to Wall, B2B eCommerce platforms are an essential component of not only supporting the needs of both buyer and supplier (and, in some cases, finding a win-win situation for each side), but in keeping both buyer and supplier protected against these risks.
Even with a third-party middle man managing the risks and needs of buyers and suppliers, relationships between trading partners remain a critical component of B2B trade. Indeed, experts have said that the buyer-supplier relationship can have an immensely positive impact on both sides. Gallup analysis, published last June, pointed to opportunities in increased profit margins through vendor contract negotiations, coordination with suppliers on joint growth plans and a reinforced effort to meet end-customer demands — all of which cannot occur without a strategic buyer-supplier relationship.
However, research from Protiviti, published last week, found that, despite their potential, strategic buyer-supplier relationships are difficult to come by. Just under one-third of survey respondents said their vendor relationship programs are either ad hoc or non-existent, and more than one-third said it is somewhat or not at all likely that their organizations will move to de-risk their vendor relationships, despite rising external pressures and risks on global supply chains.
At the human level, despite reassurances from any platform to address issues of compliance and trade risk, trading anonymously may give corporate buyers and sellers a feeling of unease. To address this, Wall said HUBX is working on a patent that would integrate and facilitate anonymous communication between buyers and suppliers on its platform.
"It would allow our customers to communicate with [vendors] without knowing who each other are," he said. "We think that is the future of commerce in general."