As a marketplace owner, there are two actions that form the foundation of your business: acquiring buyers and growing a quality seller base. Without these two pillars to ensure stability and growth, your business model will fail. To put it simply, a great marketplace is nothing without great vendors.
There is a lot to consider when it comes to selecting and then acquiring sellers. To help you on your way, we have compiled a few steps on how to set out a plan for acquiring, and keeping, the best sellers possible for your multi-vendor marketplace.
4 steps to attracting the best vendors to your marketplace
1. Understand your value proposition
Any marketplace’s value proposition must be defined for both key actors: the buyer and the seller. Setting up meetings with prospective sellers, buyers and industry leaders in the field of your prospective marketplace is a great way to get started.
A business’ brand - the personality and values that it transmits - is fundamental to its value proposition. A strong brand can be built through an effective marketing campaign that highlights the voice and principles of the company. Marketplaces typically want to transmit a message of trust - notably, that they guarantee fast and reliable delivery, the highest quality and the most diverse library of products possible in their particular niche. It is also important to remember that some marketplaces provide more visibility to sellers than others - for example, via seller profiles or seller modules on product pages. When this is the case, brand alignment with sellers becomes even more crucial, as they have a lot of visibility.
Thus, the way a marketplace chooses to work with vendors is critical: a brand that promises high-quality goods, for example, needs high-quality sellers. Establishing your core brand and value proposition as a first priority will help you to know which type of seller is the right fit for your company.
2. Define your vendor acquisition strategy
Once your marketplace’s value proposition and brand message are established, you can move on to developing your vendor acquisition strategy. The first step here is defining the target company according to size, industry or region. Next, profile your ideal vendor profile. Which decision-makers will you be reaching out to? Are they CEOs, e-commerce managers, marketers, distribution managers?
Your company might already have a network of providers and partners who can serve as a great base and starting point for the marketplace. If so, it is important to keep close contact with these first sellers, as they can provide valuable vendor feedback on your platform.
If such a network does not exist, or if you are looking to expand your vendor base, once you have your targets set, you can map out how you will identify and reach out to the vendors. Company databases are useful for identifying interesting companies and research can be carried out on LinkedIn to find contacts that match your needs. Following this, you should decide which method you will use to reach these contacts (cold calls, emails, paid ads, events etc.). Before reaching out, make sure you have prepared a clear sales pitch based on your vendor profile’s pain points, which you can use in your outbound campaigns.
3. Set out your marketplace vendor policy
Setting out a marketplace vendor policy is the perfect way to make sure that the seller and the marketplace will be aligned when it comes to product catalogue, performance, buyer expectations, brand and values. Besides obvious points, like price and quality control, other important factors must also be considered. Here are a few examples:
- Performance and SLAs.
- Product scope and prohibited items.
- Delivery: shipments and returns for goods marketplaces and service delivery for service marketplaces.
- Fees and payments — for instance, which payment methods sellers use and what their fees are etc.
For a multi-vendor business, setting everything out clearly will ensure that operations run smoothly.
While, as a marketplace owner, you should try to avoid micromanaging your sellers, setting a performance monitoring guideline as part of your policy will help to maintain a consistent quality of service. When conditions are contractually agreed, marketplace operators should be tasked with moderating and curating the catalogue, in order to make sure that standards are consistently met.
4. Reach out and acquire vendors
When you start reaching out to vendors, you will need a pitch that highlights how your marketplace addresses their pains and helps them to sell more of their products. For example, sellers are often preoccupied with upholding a quality service and do not have a lot of time to work on growing their audience. Your marketplace should provide them with the added promotion of an established and engaged audience.
Finally, when closing a deal, meeting the vendor in person goes a long way. The Airbnb founding team, for example, are known for having traveled across the US to meet their first suppliers when they were starting out. Important negotiations such as commission rates, credit periods, performance monitoring and T&Cs are better carried out face-to-face, especially in the case of larger sellers.
Having great vendors will help you consistently provide quality products and services and maintain client expectations. This, in turn, will help you to acquire even more great vendors — word of mouth and successful case studies can be a great booster. The road to success for any new marketplace undeniably has its foundation in quality sellers. To access a comprehensive guide on how to start a new marketplace business, be sure to download our Marketplace Launch Guide here.