Are you ready to leverage and lead with one of the most disruptive technologies – the Marketplace Business Model?
One of the most important parameters of the marketplace ecosystem is ‘value creation.’ And unlike traditional business models, where you generally spearhead your marketing campaigns towards a single target audience (i.e. buyers), marketplaces requires the right balance of buyers and sellers. Though a significant part of your value creation comes from buyers, you need sellers to cash upon the opportunities and produce revenue for themselves and the platform. It is about striking the right balance between creating the demand and meeting it efficiently.
When you create a marketplace app, one of the challenges you need to overcome is to build an initial customer base and get a certain number of sellers listed on your platform. Moving forward, you need to plan your marketing efforts and campaigns smartly around your target audience. If you prioritize your campaigns around your targeted buyers, you need to plan smartly, or it might delude your sellers’ trust and loyalty, and vice versa.
So, this article revolves around some tried-and-tested strategies and discusses the following two sections in detail –
- How to Grow the Ideal Seller-Buyer Network for your Marketplace
- How to Manage your Marketplace Ecosystem of Buyers and Sellers
The article uses a series of examples, anecdotes, and statistics to offer insightful information to the readers.
How to Grow the Ideal Seller-Buyer Network for your Marketplace
Investing in a marketplace business can be lucrative owing to the benefits the ecosystem offers. However, what good is a marketplace platform that cannot promise you decent returns?
The most crucial phase of a marketplace ecosystem is the initial phase when you start building the initial buyer-seller network on your platform. This phase is critical to the overall success of your marketplace business.
- Airbnb, a leading hospitality marketplace, started with attracting existing sellers from Craigslist. They used email campaigns and leveraged offline channels to attract sellers. With this, they managed to transform a huge network of newcomers into sellers by displaying them some imposing hosting opportunities.
- Amazon, the leading multiple-vendor eCommerce marketplace, started as an online book-seller platform. And with the growing customer base, it was able to attract independent sellers to join the platform. Today, it is one of the most successful and innovative marketplace platforms with an unparalleled buyer-seller network.
- Upwork, a prominent service-oriented marketplace excellently leveraged the IT services domain to enrol independent service providers, freelancers, startups, etc. It created a reliable bridge between the service providers and clients and cashed upon the opportunity meticulously.
There is a never-ending list of successful marketplaces who pulled it off in style and never looked back. But what to learn here is – what strategy worked for them and how you can make it resonate with your marketplace ecosystem!
1) Roadmap and Strategies to Build your Seller Network
Define your Ideal Seller Profile
Craft your ideal seller profile, which will help you give the right direction to your enrolment campaign.
Your ideal seller profile might vary:
By Business Nature:
- Business to Business (B2B) – Alibaba
- Business to Customer (B2C) – Amazon
- Consumer to Consumer (C2C) – Airbnb
By Marketplace Type:
- Physical Goods/Products – Amazon, eBay
- Service-oriented – Upwork
By Seller Characteristics:
- Independent Online Sellers – Already selling online, where you need to convince them to enrol on your platform.
- Offline Sellers – New and unfamiliar to digitization, where you need to convince them to go online and enrol them on your platform.
- Newcomers – New to the business, where you need to show them the opportunities in the particular business area and enrol them as online sellers/suppliers on your platform. For instance, Airbnb was able to attract this type of sellers by showing them great opportunities as a host, where they could turn their extra rooms into rental living spaces and make good profits.
Define the Channel to Find your Ideal Sellers
The more efficiently you can build your marketplace network, the faster you move towards business success. You can find the right channel to build your seller network through various strategies like competitor analysis, online research, offline references, etc.
- Etsy had highly-targeted sellers on the first day of its launch as it was able to connect and attract vendors from an already-existing community of independent craftsmen.
- Airbnb used Craigslist’s network to attract sellers from there. They also leveraged email marketing and offline marketing channels.
- Uber leveraged the offline marketing channel to enrol service providers in the initial phase.
Today, many new marketplace businesses employ a competitive analysis strategy to find the best marketing channel for their ideal sellers.
Tried & Tested Tactics to Attract Sellers
Show them Data-backed Benefits of your Platform:
For instance, Etsy’s eCommerce marketplace survey reports insightful seller statistics like:
- 40% of sellers started selling on Etsy without any funding
- 20% of sellers at Etsy worked full-time, while 65% made good sales working part-time
- 91% of sellers were female
- Etsy has a grand self-employed seller network
These statistics are convincing enough to attract new sellers to the platform.
One can boast about the list of features and functionalities his platform offers to the sellers, and the promotional opportunities sellers can benefit by selling on their platform.
You can also use written or video testimonials from your initial sellers to promote your marketplace app.
For instance, Amazon used its real seller experiences as testimonials to attract new sellers to its platform. It has worked immensely for the multi-vendor eCommerce marketplace.
Include Defined Seller Programs:
A well-explained onboarding process to your marketplace ecosystem can convince sellers to choose your marketplace. Employ well-defined seller programs to attract new sellers, where the sellers can understand how they can list themselves, sell their products/services and leverage the platform at its best.
One of the most important tips is to keep your seller policies as transparent as possible and accept regular feedback from your sellers to build trust and loyalty.
Unveil Opportunities for Newcomers:
For instance, Amazon’s offline marketing efforts helped many offline sellers make an easy entry into the online retail world through Amazon’s platform. It helped them add a second income source to their business and attracted other offline sellers to get listed on Amazon.
Another example is- how Airbnb helped property owners convert their extra or vacant rooms into rental living spaces by getting their hospitality services listed on its marketplace platform.
Catalysts to Boost your Seller-enrolment Campaigns
So, when you have developed the right strategy to attract highly-targeted sellers to your marketplace platform, you can use several catalysts to boost your seller-enrolment campaigns.
Some of the proven catalysts that might resonate with your marketplace ecosystems include:
- Marketplaces like Upwork kept their commission percentage very low in the initial phase to attract more sellers.
- Most marketplaces offer free listing and charge commission only for a successful deal/transaction.
- An ecosystem like LinkedIn offers free features and profile creation to users and charges only for its premium features. You can do this by finding the right balance between free and paid features.
- Some marketplace apps offer a free listing for some time so to make the seller habitual of the platform and then buy a paid subscription.
2) Roadmap and Strategies to Build your Buyer Network
Define your Ideal Buyer Profile
Akin to the ideal seller profile, you need to create the ideal buyer profile for your marketplace business. Your ideal buyers depend upon the services or products your marketplace offers and can vary under the parameters like age, sex, demographics, interests, buying characteristics, buying potential, common need, etc.
For instance, a marketplace like Etsy might target customers with a common interest in crafts, home décor, etc. But a marketplace like Amazon would target a bigger buyer audience of regular online shoppers.
Find the Right Marketing Channels to Reach your Ideal Customers
Most online marketplace ecosystems prefer employing different types of digital marketing channels to reach their target audience.
Some of the most popular channels include:
- Paid search ads for service-oriented marketplaces
- PPC product display ads for eCommerce marketplace
- Well-targeted social media ads on Facebook, Instagram, LinkedIn, etc.
- Email marketing campaigns
You need to find the right marketing platform that offers you a maximum reach to your ideal customers.
Strategies to Attract Buyers in the Initial Phase
Various marketplaces have been using different strategies to attract buyers in the initial phase of setup, these include:
- Amazon attracted initial buyers by starting as an online book-seller. After developing an initial customer base, it was able to attract sellers to its platform, and the rest is history.
- Many marketplaces offer incentives to buyers for signing-up on its platform, in the initial phase of their business setup.
- Many eCommerce marketplaces have offered free giveaways to initial buyers on its platform.
- Marketplaces like Unsplash offers limited free stock images to buyers, who if convinced can buy unlimited access to the entire stock.
How to Manage your Marketplace Ecosystem of Buyers and Sellers
As mentioned earlier, a hit marketplace ecosystem is about striking the right balance between your buyer and seller acquisition strategy. Unlike the traditional buyer-targeted business model, a marketplace’s value depends upon both entities, i.e., the sellers and the buyers. However, one of the most common mistakes marketplaces make, is prioritising one entity over the other.
In many cases, marketplaces attract huge gains by keeping buyer-focussed positioning. However, one needs to take caution that their approach doesn’t make the sellers alienated.
A Relevant Anecdote:
TrueCar (TRUE), a marketplace that lists 13,000 partnering car dealerships started with offering car buyers a platform to find the best car for them at a flat, no-haggle price. Once the car buyer accepts the car price, he connects with the TrueCar’s partnered dealership who owns the car, and there he can complete the paperwork through a hassle-free process and drive off.
TrueCar gained good popularity among the buyers for its buyer-focused approach that made it easy for customers to buy a car at the best price by eliminating the traditional car purchase hassles. The car buying process was made cheaper and less confrontational for the buyers, and it was perceived well across the buyer community. However, after some time, this buyer-focused approach made its sellers feel alienated. The cheap pricing and no room for price discussion started pitting dealers against each other and agitated hate for the platform. The major auto retailers revolted by starting a vocal campaign against the TrueCar platform and their share price dropped from $24, in Aug 2014 to $4 by Aug 2015.
This staggering drop in the share prices, awakened the marketplace’s decision-makers to reconsider their approach. And they were able to pull it off by making a balanced company positioning. The company made a Dealership Pledge, made dealership communications transparent, and gave major dealerships various opportunities to advertise better in future campaigns. Their efforts were able to push the share prices up to $21 by 2017.
Just akin to TrueCar’s story, many marketplace brands have made the mistake of prioritizing their buyers over their sellers in the past. And this has costed them adversely in many cases.
And therefore, it is crucial for you, as a marketplace ecosystem owner, to manage the buyers and sellers prudently on your platform.
Along with balancing your marketing efforts, your marketplace app must be developed such, to offer equally impressive user experience to both the buyers and the sellers. A bland user experience on the seller’s side might impede a seamless onboarding process for the sellers, while, a dull user experience on the buyer’s side means fewer sales and higher bounce rate. On one end, where you need to make the working experience delightful for your sellers, on the other, you are also liable to offer an impressive shopping experience to the buyers.
So, as you plan your marketplace business strategy, the above tactics will help you build your seller-buyer network, and manage your marketplace ecosystem efficiently. However, you would need assistance from an experienced technical partner to make and market your marketplace app with the right set of features, user interface and backend functionality for the admin and sellers.
Whether it is about discussing the right project scope for your marketplace idea, creating a custom marketplace app, or customizing your online app into a multi-vendor marketplace, you can feel free to connect with us today.