The Tradeshift business model

As you may have heard, in November, we were delighted to receive $17m of capital from a number of the most well-respected investment organizations in the world. A big reason behind this is our business model – something we’re really proud of for the value it brings everyone involved.

But what exactly is Tradeshift’s business model and how does a free B2B business network make money? And more importantly, how does it help your business model?

1. Create a network and experience that people want to use

Think about Apple’s App Store, Skype or Facebook. These are all tools that people take pleasure in using because they generate enormous value.

At Tradeshift, we want to connect every company on earth and help them do business more easily. The value of that network has the potential to be an order of magnitude more efficient and useful than the systems that went before it – just look at solutions like Tradeshift Instant Payments and how that solves cash flow problems or Tradeshift CloudScan and its ability to make 100% paperless e-invoicing a reality for all.

But once the network is complete, it also opens the door for anyone to make apps that run across the network and make peoples’ lives better in the same way. See a problem with the ways businesses interact? Solve it through Tradeshift.

The second aspect of this is that people will only share Tradeshift and encourage those they work with to adopt it if they are truly delighted by their experience using it. Most business software today is horribly broken and it’s time to change that – what comes next?

So if we want to build this network and help bring its value to the world, we have to make the best damn tool you’re ever going to see. Not just one that makes your life easier but one that makes you want to change the world with us.

This is a key first step in our business model.

2. Help Enterprises hit the ground running with Tradeshift

When you’re a growing supplier, setting up Tradeshift is very, very easy. Click here and see for yourself.

But if you’re an enterprise like the NHS and Kuehne + Nagel who has to handle hundreds of thousands of suppliers through Tradeshift, we can offer a helping hand through our knowledge of the system and experience helping others get up and running with their own partners.

Many other solutions revolving around charging the suppliers, we don’t get that and don’t agree with it. For suppliers, Tradeshift will provide free e-invoicing forever.

We believe e-invoicing has always suffered because current providers make e-invoicing platforms expensive or complicated to use. Our business model will only work if Tradeshift works for you, your business and your suppliers. Getting them onboard is crucial for us and it’s crucial for you too.

3. Provide added value

So, as you have seen, we have shaken up the entire invoicing world by offering free invoicing. But free never made anyone any money! We know that, as great as Tradeshift is, larger companies with complex financing systems will want to tap into the power of Tradeshift and integrate it into workflows and processes.

And we’re delighted that companies want to do this. Because we’ve made it so easy for larger businesses to get all their suppliers using Tradeshift, if they then want further functionality then we merely charge them a small flat rate fee to access our cloud platform. Unlike many of our competitors we don’t charge you on a per-transaction basis. We don’t charge set up fees either, and we don’t believe in making things complicated.

Another way we can add value to bigger companies is by offering access to our open APIs. We already have a number of apps – some free, some at a small cost – that allow you to add extra functionality. We’d also encourage you to build your own apps or get us to build custom, bespoke apps for your company too.

Helping you helps us all

So hopefully this gives you a bit more insight into how our business model works. We don’t believe in the tactic used by many other startups where you get something free for a while and then have to charge for it.

We believe in giving you a great free service and then, when you realise how awesome it is, giving you the option to add extra value at a small cost.

And it seems to be a business model that is working. Not only are we attracting more and more investors for Tradeshift, we are seeing businesses flocking to use the service.

We are hiring more and more employees and expanding our offices so that we can continue to innovate and provide all our customers – new and old – with the very best product that serves all their needs.

If you have any ideas for future services or features, I’d really encourage you to get in touch.

 

In the following video our CCO Christian Hjorth explains more about the Tradeshift Business Model.

About the Author

Christian Lanng

Co-founder and CEO of Tradeshift. He was instrumental in the creation of PEPPOL, the standardized framework for e-business used by 14 European governments. Christian is a member of the Global Agenda Council on the Future of IT Software & Services, World Economic Forum. He also serves as a young advisor to European Union VP Neelie Kroes.