Retail & e-commerce (2024)

1. AI bells and whistles

   Get ready to see self-described “AI-first marketplaces”, as e-commerce sites deploy the tech to handle customer conversations, get answers from unstructured data, detect buyer signals, customer sentiment and more.

   Some merchants are looking to AI to help fight fraudulent purchases, while in wholesaler-distributor buying circles, there’s hope the tech will usher in the death of the pricelist, with the rise of sophisticated tools able to create dynamic pricing based on recent behaviour and buying habits.

   A note of caution on AI marketing gimmicks, however. “Thinly customised GenAI content will degrade the purchase experience for 70% of B2B buyers,” says Forrester Research.

2. Rise of the B2B middlemen

   B2B marketplaces are growing in number in Europe — Dealroom counts over 250, many of which have started in recent years. Over 50% of European B2B marketplaces are based in the UK — Europe’s largest e-commerce market — and Germany, followed by the Netherlands (where 11% of marketplaces are) and France (9%). These four countries account for 76% of the B2B marketplace scene, according to Point Nine, due to the fact that they have established specialities for marketplaces to serve.

   A few of these are really big, but only 25 B2B marketplaces have raised over $20m, according to data from Point Nine.

   Europe saw its first B2B marketplace IPO in 2021, when online used-car wholesale dealer Auto1 debuted on the German Stock Exchange.

3. Data cleaners and green specialists can get ahead

   Data quality remains one of the big blockers for sales — 60% of buyers surveyed by business network Master B2B say that their biggest frustration with e-commerce is insufficient or inaccurate information. In other words, cleaning up data is a core issue sellers have to solve in order to create a good online shop.

   Startups are delivering data-polishing tools: Italy’s Sentric, for example, helps shops automate product descriptions, while Denmark’s Creative Force has developed a platform that helps e-commerce teams produce “faster, repeatable” content for their websites. The company raised an $8.9m Series A in October 2023 led by Hearst Ventures.

   There’s also growing pressure to be “sustainability-first”, with green credentials having a greater impact on purchasing decisions. New regulations such as the EU Packaging Waste Directive, which obliges the 27 EU member states to have a so-called extended product responsibility in place, are prompting e-commerce players to be more sustainable.

4. Personalisation push

   B2B e-commerce has been slower to embrace digital transformation compared to its B2C cousin but it’s “a myth that personalisation is for B2C only”, says McKinsey.

   B2B companies are turning to digital tools to cultivate closer relationships with top-spending customers and offer them unique messages based on their needs, customer profile, spending behaviour and interactions — both past and predictive.

   For example, Fashion Cloud has created automated reorder suggestions — also called “smart replenishment” — which ensures that stores have the products they need at any given time.

   Some see a bright future for e-commerce and virtual reality. Over half of items are returned because they are the wrong size: startups that help shoppers virtually try on clothes are in growing demand by big brands.

5. Fix the front or back end?

   For businesses looking to do an e-commerce makeover on a tight budget: where should they start? “Start with the front end because [that’s] where you make your money,” Patrick Friday, CEO and cofounder of Vue Storefront, told Sifted. The Polish startup, which raised €20m in March 2023, sells consumer-facing elements such as content management systems and search providers to big brands like German e-commerce store Berlin Brands Group, Swiss luxury watchmaker Zenith and French fashion brand Zadig&Voltaire.

   According to Vue Storefront’s Friday, “changing the back end is not going to make you sell more: it can improve your processes, it can improve your operations. This is what we are really pushing to the market, this kind of shift in the mindset.”

   Building B2B e-commerce sites can be quite different from creating B2C experiences. For one, B2C acquisition tactics like paid marketing and promotions have “proven largely unsuccessful” in the B2B world, according to Point Nine. “A bunch of B2B marketplaces have learned the hard way that acquiring users by applying typical B2C marketplace acquisition playbooks can lead to very churn-y cohorts,” the VC firm writes.

Who early stage startups are up against