This week, two platform providers for marketplace builders, Mirakl and AppDirect, raised nearly $500 million in capital. Mirakl focuses on software for B2C and B2B physical goods marketplaces. Mirakl raised $300 million at a $1.5 billion valuation. AppDirect focuses on digital goods marketplaces and raised a paltry (joking!) $185 million. Each company has now raised over $400 million.
I have written a bit about Mirakl here, so I will be brief. Mirakl makes it easy for B2B or B2C manufacturers or distributors to build multi-vendor marketplaces. These capabilities allow Mirakl’s customers to compete with “he-who-shall-not-be-named” (Amazon or Amazon Business) or simply to move to a new platform business model as a one-stop-shop for customers.
Mirakl has a blue-chip customer base (see the partial list below), a modern technology stack, and experience helping large companies move to a platform model. This experience, including a layer of services for supplier recruitment, is a differentiator. A B2B marketplace without many sellers is of limited value. Mirakl understands that just because you build a marketplace, does not mean suppliers will come. And if they come, they may not know how to transact.
As you can see, Mirakl works mainly with large enterprises that already have an e-commerce front-end from SAP, Salesforce, Magento, or Oracle. So Mirakl is really helping more on the “back-end”.
Many retail B2C marketplaces have struggled because the in-store and online experience do not match the marketplace experience. (See this article from Marketplace Pulse which, by the way, has outstanding content.) Hopefully, Mirakl helps solve some of these problems. (Fortunately, these problems are less prevalent in B2B.)
Every retailer or distributor in the world has to have an “Amazon-strategy”; Mirakl provides a big part of that response. Very smart.
I’m ashamed to say I did not know AppDirect until I saw the company’s recent fundraising announcement. In overly simplistic terms, AppDirect offers both a front-end and a back-end marketplace capability tailored to digital goods–primarily apps.
Just as Mirakl can help a manufacturer build a marketplace and drop-ship items from third-party suppliers, AppDirect can help companies build and manage app stores for app subscriptions to third-party ISVs. If Mirakl answers the question “How do we compete with Amazon?”, AppDirect answers the question, “How do we compete with Salesforce, Apple, or Google?” Well, that may be overstating the case, but it does allow any company servicing SMBs (e.g., Telcos, Banks, payroll providers) to build an app store. And apparently many of them have, since AppDirect’s customer list is impressive. In fact, one Mirakl customer, ABB, appears to have a Mirakl marketplace for physical products and an AppDirect marketplace for digital goods.
AppDirect divides its product offering into two segments: Monetization and Management Services. Monetization services, as the name implies, are all about selling applications, managing resellers, and billing.
The second set of products, management services, are about administering a marketplace, providing digital rights management, and allowing single-sign-on across applications. These capabilities are, of course, unique to digital goods and potentially very valuable to buyers and sellers on the marketplace.
A company building a marketplace can likely provide much of the same functionality using Magento instead of AppDirect. After all, the successful Magento Marketplace that sells digital goods and is built on Magento. But, I’m guessing with Magento it would be more of a DIY project than many companies will want to undertake. AppDirect, on the other hand, looks pretty turn-key for selling digital goods.
Both Mirakl and AppDirect are well-positioned to help old-school companies adapt to the cloud and to a platform, marketplace, or ecosystem (choose your favorite buzzword) business model. That’s a nice place to be right now for raising funds, and more importantly, for signing up customers.