When I was starting Mammoth, I spoke to someone who had recently wound down their company after they had tried to build a marketplace for food ingredient buyers and sellers. It sounded like a great idea, and was something I had thought about myself given how hard it is for CPG brands to find high quality ingredients at the right price. What I’ve learned since this conversation is that so many people have tried to create this very same marketplace. Other similar marketplaces in my world of food CPG is a marketplace for co-mans. They never seem to work. And yet, everyone in CPG knows how hard it is to find a good co-man or a 3PL. Almost every brand you talk to seems to at best have a love-hate relationship with their co-man or 3PL, and at worst absolutely despise them. I even have a friend whose consulting firm is essentially couples therapy for brands and their 3PLs! So why hasn’t anyone created a marketplace that aligns everyone’s incentives and makes this relationship at least palatable?

To this point around incentives, it seems a good way to evaluate if a marketplace company has staying power is if all stakeholders are winning. If one stakeholder is really losing, it likely is not as strong a business. And there are varying degrees of winning or losing. Airbnb is an interesting example in that everyone wins but the other people who live near the actual AirBnB, so they spend time on mollifying the neighbors and banning parties.

In the case of a co-man marketplace or a 3PL marketplace or a supplier marketplace in CPG, the only real winners are the brands. They get access and pricing information that they never had before. There are so many more brands than 3PLs, Co-mans, and Suppliers that it is rare that these places are out searching for more brands to supply. They are often at capacity, or hoping to convert larger scale customers that are more predictable. This, and the opaque nature of information in this industry, allows them to retain some semblance of pricing power.

So what would make a marketplace like this a win-win-win? I’m not sure, but one thing almost all companies seem to want is to either get paid faster, or pay their vendors slower. Perhaps the AR/AP financing companies focused in a specific vertical, like food CPG, have the opportunity to create a supplier-brand marketplace, providing suppliers with accelerated AR payments and brands with access to vetted suppliers.

I also think companies like Odeko have this opportunity as well. Odeko started out as an inventory planning solution for SMB coffee shops, but impressively pivoted toward providing last mile delivery for key inventory items to their SMB coffee shop customers. By centralizing demand they were able to benefit from economies of scale that their customers could never achieve, driving down the cost of key raw materials like beans or oat milk or cups. Odeko not only provided a critical service, but also immediately impacted the profitability of their customers. Leveraging their unique position as the sole supplier for most of their customers, Odeko continues to vertically integrate their software offerings beyond inventory management. This position however also allows them to build out marketplace functionality, providing a Faire like experience for coffee shops looking to offer differentiated products.

Perhaps we will continue to see physical goods markets taking the same approach as Odeko - consolidate and improve a key piece of the supply chain, offer SaaS tools to enhance the experience, and layer on a materials marketplace to create a win-win dynamic in the market where there previously was none.