An Interview with Fabrice Grinda, The World's #1 Marketplace Investor 📈
The FJ Labs founder speaks on B2B marketplace market penetration, the many tricks to making marketplaces work, and his accidental transition from being a tech founder to becoming a VC.
We hope you're all buzzing with excitement after last week's release of our highly anticipated Applico European Top 25 Marketplaces report. If you haven't had a chance to dive into the report yet, be sure to download your copy and discover the hottest trends and insights shaping the future of the marketplace landscape.
But the fun doesn't stop there! This week, we're thrilled to bring you another batch of valuable marketplace insight with our exclusive interview with the one and only Fabrice Grinda. Grinda is a prolific venture investor and the founder of FJ Labs. As a serial entrepreneur and seasoned marketplace investor, Grinda has his finger on the pulse of the latest marketplace trends and has helped launch and grow some of the most successful marketplaces in the world. Need proof? Simply take a look at the Top 10 venture capital investors list in either the European or US (2022 and 2021) Top Marketplaces rankings. FJ Labs takes the #1 spot on the list every year!
Join us as we delve into Grinda's wealth of knowledge and gain valuable insights into what it takes to build a thriving B2B marketplace in today's fast-paced digital world. You’ll find the full interview as well as some key excerpts linked below.
Do Marketplaces Monetize Differently for Distributors vs Manufacturers
Fabrice and I discussed the ways of monetization for marketplaces and if it varies in B2B depending on if supply if coming from distributors or manufacturers. Grinda explained that the ability to charge a take rate depends heavily on factors such as the fragmentation of the supplier base and the fungibility of the product being sold.
He gives an example of a German gravel marketplace from our Top 25 ranking called Schüttflix, where the ability to take an effective take rate is possible due to the smaller size of the country and the ability to transport from anywhere. It’s emphasized that the answer to the question depends on local market concentration and end user margin structures, and that testing and careful consideration are necessary for successful monetization.
“The more concentrated [supply] is, the lower your ability to take a take rate. Depending on where the end user margin structure looks like, there may be more or less elasticity of supply and demand. So you typically take your take rate on the more inelastic part of the curve on the buy side or the sell side.”
Are B2B Marketplaces Still in the Beginning?
On the current state of B2B marketplaces, Grinda explained that while B2C marketplaces such as Amazon have made significant progress with a 15-20% penetration rate, B2B marketplaces remain in their early stages with sub 5% and often sub 1% penetration rates across all verticals. Grinda believes that B2B marketplaces are at "day zero" and there is still much to be done in terms of digitizing supply chains, integrating ERPs and payments, and getting suppliers on board. I see this as good news for distributors and other incumbent players who have been laggard in recognizing the enormous potential for growth and opportunity in this largely untapped market.
“We're at the very beginning of B2B marketplaces … if you go Amazon and e-commerce in general, they're like 15, 20% of all online purchases. And if you look at all the supply chains for buying products in a B2B way, we're generally at sub 5% penetration and we're most often sub 1% penetration. And that's true in every single vertical … I mean, you name it, penetration of digital is de minimis. We're like day zero.
B2B Marketplaces Integrating into ERP Systems
Fabrice commented on how one of the key trends he's seeing is the integration of B2B marketplaces into the ERPs of both the supply and demand sides.