Over the past decade, digital marketplaces have rapidly upended the dynamics of many established industries. The remarkable rise of companies like Uber, Airbnb and Amazon has challenged and reinvented the customer experience across transportation, hospitality and e-commerce -- transforming the way these industries do business.

Although consumer marketplace platforms have garnered more attention, underlying forces of user expectations and digital technologies are propelling similarly profound shifts in the business sector as well. According to Forrester Research, 93 percent of B2B decision-makers prefer to procure products and services through digital platforms. Further, 60 percent of business buyers spend more money on transactions when they engage with sellers through multiple online and offline channels. Marketplace sellers benefit as well; Suppliers can cut up to 90 percent of their sales costs by introducing self-service digital features to customers.

Digital marketplaces are moving to disrupt B2C and B2B industries alike. And the utility market is next.

Amid a landscape of proliferating competition and customer choice, energy providers are pursuing new and better ways to engage customers and deepen their relationships. They are also bringing new products and offerings to the market -- energy efficiency, demand response, distributed energy resources and more.

However, the process for customers to purchase these solutions and for vendors to sell them is fragmented and complex. Businesses interested in saving energy often face an uphill climb in determining which products to turn to, or which contractor can best address their specific issues. It’s equally costly and difficult for contractors to market their capabilities to potential buyers.

As a result of trends in other industries and new services coming to market, utilities are now offering digital marketplaces to their business and residential customers. Con Edison, for example, has deployed two marketplaces for customers -- one designed for commercial customers and one for residential customers. Energy companies are also entering the space in other ways. Engie recently invested in Serviz, which provides a variety of on-demand home services including energy-efficiency offerings.

Utility marketplaces are reimagining the buying process of energy management solutions, making it easier than ever before for utility customers to purchase energy-saving products and implement projects.

There are two emerging sets of marketplace categories: 

  • Project marketplaces connect customers interested in energy-efficiency solutions with contractors that can implement those technologies.
  • Product marketplaces are e-commerce-style websites where customers can purchase products for self- or contractor installation.

Selecting the right type of marketplace to deploy depends heavily on the end-customer segment that is being targeted, whether it is residential, SMB or large commercial.

In either case, digital marketplaces can improve the buying experience for utility customers in a few key ways, as detailed below.

Digital marketplaces increase competition for projects, driving down prices. When customers are able to obtain the best price possible for an energy-efficiency project, their expected return on investment increases and initial capital outlay decreases, improving their likelihood of completing transactions.

Transacting online is convenient. With the right suite of tools and services, a digital marketplace provides an easy-to-use solution for utility customers to communicate what they need, pose questions to vendors, evaluate offers, and track post-implementation performance. It arms them with the resources they need to navigate an intricate energy management cycle.

They provide greater selection and value. Businesses often consider specific criteria for energy-efficiency solutions in addition to cost. For example, an office property manager might prioritize ways to maintain a comfortable environment for tenants, or a hotel owner may seek to provide a certain mood and atmosphere in the lobby. A marketplace lets businesses consider multiple energy-saving projects and technologies so they can find the ideal fit for their needs.

It’s easier to vet sellers. Online marketplaces allow businesses to determine which contractors they would like to consider for their project. Customers can review their credentials and evaluate product performance and bids side-by-side, limiting any confusion between options.

These buy-side benefits, however, are predicated on a vibrant online marketplace -- with both adequate supply and demand. What’s in it for sellers, be it product vendors or contractors?

Digital marketplaces give access to new markets. Contractors can reach new customers through greater visibility into project opportunities. Sellers can market themselves to customers interested in their solutions across a utility’s territory, from under-penetrated segments such as small and medium-sized businesses to specific verticals such as restaurants.

Transacting online lowers costs. The digital interface and format of a marketplace streamline the sales process, significantly lowering customer acquisition and transaction costs. If utilities can use their customer relationships and data to garner interest, sellers reap benefits.

Sellers can easily differentiate themselves. A utility-centric marketplace provides vendors with the opportunity to distinguish themselves on the energy product dimensions buyers might care about. Whether it’s an energy performance score or including past case studies, sellers have room to position themselves appropriately.

It’s easier to vet buyers. Project marketplaces in particular take much of the heavy lifting off of contractors by presenting them with highly qualified opportunities. Customers indicate their interest in moving forward with projects, so contractors know that their time and efforts are being spent on quality opportunities vs. cold leads.

A digital marketplace can be a strategic advantage for any utility that is looking to deepen its customer engagement. To make marketplaces a success, utilities must ensure that they are delivering a strong user experience and creating sufficient value for the entire value chain. Before deploying this type of offering, it is essential to successfully market the value proposition of the marketplace to both customers and contractors by employing messages and offers designed for their needs. Upfront engagement is critical -- without a critical mass of buyers and sellers, the marketplace won’t reach its full potential.

Marketplaces will help utilities improve their customer satisfaction, increase adoption of programs and services, and if successful, unlock innovative business models to animate the market like never before -- allowing utilities to write their own disruptive story in the face of a changing industry.


Mike Kaplan is the vice president of product marketing for Ecova. Jenny Zhao, Zack Boyd and Chris Muth contributed to this article.