Logistics marketplaces are taking highly specialized areas by storm. With Container xChange, we’re building the first online platform for container logistics – more than 300 companies already find SOC Containers and identify partners on our marketplace. In this article, we share the challenges we face as a logistics marketplace and explain how we try to overcome them.
Chicken-and-egg problem
In the realm of marketplaces, the concomitant chicken-and-egg problem is inevitable. Demand from container suppliers on the platform drives users to join, but if there are no suppliers to begin with, where would the users come from? With xChange, we focused on shipping lines in the beginning before opening our platform for leasing companies, forwarders and container traders as well. They joined xChange to have access to a global equipment pool and avoid empty container moves. What made them stay on the platform though? Of course, shipping lines saw the number of members growing, and they made deals that saved them a good amount of money, but we think that an excellent customer service team is vital! To solve the chicken-and-egg problem, you need to go above and beyond to make sure the platform solves a problem for its users. That’s why we put much effort into helping every member individually and for instance, looking for potential matches on behalf of our members even outside of the platform to make sure they get a good deal.
Shifting the mentality behind legacy processes
“We’ve been organizing SOC Containers with emails and calls for years now, and we see no reason to change that” is something which sounds familiar to you? Shifting perspective of those long-time bosses who are still relying on paper order requisitions, hand-written stock reports and phone calls call can be a long process. It worked for them for a few decades, why should they change it? As a marketplace, you need to incentivize and outline that positive impacts by far outstrip the hassle of introducing and adapting to these changes.
For us, it was surprisingly no considerable challenge to convince the Managing Director of a shipping company to use xChange – the argument of saving money and time was clear enough so that they gave us a try. That’s only the first step, though! It took us some time to improve user experience and simplify processes to make sure companies not only sign-up but use xChange. The person that pays for the membership and the person that actually uses the platform is different – and you need to consider that to shift legacy processes.
Large stakes involved in decision making lead to long sales cycles
Unlike the decisions made in B2C or C2C marketplaces, choices made in B2B bear heavier responsibility, as it can affect the lifeline of the company. Stakes are higher, too. A simple decision by an employee can extend beyond an individual impact to broader implications on the department and even the entire company. For us, the average sales cycle is anywhere between 3 and 9 months – it requires patience, persistence and great success stories, brochures or demo videos to convince a group of multiple people involved in making decisions.
Many people ask us for a trial account – it is easier to convince your boss of something when you can show them how it works. For us, it is not possible to give away free trial accounts because our members go through comprehensive vetting processes before they get access to sensitive data on the platform. We solve this with live demos and screen sharing to show people how xChange helps their business in a “guided product tour”.
Technical integration or non-existing data standards
Members of xChange need to speak the same language! That might not be a problem for some industries, but most companies still rely on excel, self-made tools or old software and what makes it worse is that data standards are non-existent. It takes time to bring warehouses, shippers, agents, customs and the shipping line on the same level! However, speaking the same language, sharing data and having a certain level of data quality is essential when accessing a logistics marketplace! At xChange, we offer integrations via API and EDI, but there is no such thing as a “one-size-fits-all” solution. In order to technically integrate our customers, we need to customize the technical interface individually. We usually do that within 14 days for our customers to support those that have no huge IT-Team on their own.
We think, it is not about technology! Sharing data and integrating with service providers is still relatively new in shipping – that’s why it is about creating trust and being transparent with your customers! Tell them what benefits they get from a technical integration and show them how you use or store their data to make them feel safe and understand the benefits of technical integration.
Don’t forget the end user (focus on user experience!)
Logistics is fragmented, and processes are complicated as they involve multiple different stakeholders such as shippers, liners, agents and many more. For us, it was a huge challenge in the beginning not to overcomplicate these processes when digitizing them. It takes a deep understanding of the market and requires a lot of A/B testing to accomplish a good user experience in logistics marketplaces. Looking back it took us 1-2 years to understand the importance of good user experience! We focused too much on convincing Managing Directors but forgot to think about the actual end user who only works with a platform if it is easy to use.
Pass the test!
Marketplaces in logistics and platforms are new for companies involved in container logistics or shipping. It doesn’t not matter how good your solution is, your customers/ members will heavily test your services in the beginning. What happens is that companies heavily test you with edge cases first because they shift their core business on your platform, and it takes much effort to pass the tests and convince companies. At xChange, we try to overcome this with our customer success team which stays close to every customer, and we run a comprehensive onboarding and vetting process in the beginning to create trust.
