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Five things successful marketplaces do

Five things successful marketplaces do
June 29, 2016 Jill Holmes

Five things successful marketplaces do

By Jason Wyatt, Managing Director Marketplacer

If you want to create a successful online marketplace, you have to be able to provide an excellent experience that makes both buyers and sellers feel that they belong to a united community. This is especially the case when we’re talking about niche or vertical marketplaces.

As a marketplace owner, part of this involves the task of building a community of buyers as well as a community of sellers — to be successful, a marketplace requires both sides of the equation.

I touched upon this in a blog post called “Four Factors to Marketplace Success”, which looked more broadly at the fundamentals you need in place to make the establishment of a marketplace viable.

The four factors you need are:

  • Buyers and sellers
  • Scale
  • The right platform
  • A fragmented industry/sector

In talking about the need to attract buyers and sellers for your marketplace, I made the point that this involved a degree of community-building:

Successful online marketplaces tap into a community of shoppers, a tribe focused on a particular niche interest, one that is interested in purchasing products and services on offer from sellers. So there needs to be an identifiable group with the means and interest to purchase and on the other side of the equation, a pool of sellers (vendors, retailers, private sellers, etc) who can provide the products and services. That makes it a community of interest with a commercial dimension.

My co-founder, Sam Salter, and I had this experience with Bike Exchange, our first foray into online marketplaces.

Back in 2007, we identified two sets of communities, bike riders and bike retailers, and realised we could provide the complementary marketplace that would bring them together — the commercial dimension to that community of interest.

This is not always easy to do. It can take time, patience and determination to convince vendors to come on board to your new marketplace. And without them, buyers aren’t interested. Classic chicken-egg scenario.

In going about this task, there are five basic things successful marketplaces do:

  1. Create a strong value proposition for vendors

There’s no marketplace without vendors. A marketplace needs to be able to convince vendors of the benefits to their business in being part of a marketplace. A key component of this is being able to assure vendors the platform is secure, well-built, convenient, and provides an excellent end-user experience.

That wasn’t so easy to do when we were getting Bike Exchange off the ground because we were developing and tweaking much of the platform as we went. We could point to prototypes and beta models, but didn’t have the advantage of a seasoned, working model.

That’s changed now because Marketplacer has developed its platform to the point where it’s an easy sell to vendors. They can see the evidence of how well it works across five different marketplaces: Bike Exchange, TiniTrader, Outdoria, House of Home, and Tixstar.

Along with assuring the vendor about the quality of the platform for the marketplace, you need to be able to communicate to the vendor that this is about more than just setting up some basic e-commerce capabilities — otherwise you’re just talking about an e-commerce store. The niche marketplace is designed to be a destination of choice for members of a community, a tribe of shoppers.

Sure, there’s an element of competition on a marketplace in that fellow retailers will be on the platform as well, but this is a good thing for not only consumers, but vendors as well. It creates a beacon effect, drawing more consumers and qualified leads to the marketplace, and results in higher per basket spends than retailers generally get on standalone e-commerce store sites.

  1. Focus on bringing quality vendors on board

The next trick is to get the right sort of vendors on board. You might be tempted to chase vendors in the early days of getting your marketplace up and running, but be warned, a couple of bad apples could spoil everything.

This is because the early days of a marketplace rely upon positive user experiences in order to build brand reputation and momentum among consumers. The damage one rogue vendor can do in a marketplace of 20 vendors is proportionally greater than what that one rogue could do in a marketplace of 200 vendors. One bad experience could end up reflecting poorly on other vendors and damage the marketplace’s reputation before it even gets a chance to get established.

Quality vendors will do more to attract consumers, especially in niche product areas. Quality vendors will bring their standards and commitment to the marketplace, which will set the tone for what the marketplace becomes. Consumers pick up on that and are more likely to make your marketplace a regular destination because of that.

  1. Establish trust and respect

Related to the point about quality vendors, engendering trust and respect in your marketplace is important to do early on. This means you need to have your marketplace sorted in terms of legal and financial frameworks and agreements between the marketplace and vendors, as well as protections for consumers.

This extends to ensuring proper safeguards are in place for secure payments protocols and general site security. The marketplace needs to act as the trusted intermediary, establishing good relations based on solid legal and financial frameworks between vendors, consumers and the marketplace. Once again, quality vendors make this easier to do in the long run.

  1. Ensure the tech works seamlessly — across all devices

At the heart of the online marketplaces is the technology which powers it. Your marketplace might have quality vendors lined up around the block to join, but if the tech goes bad, so does the marketplace. Today’s consumers will not put up with poorly designed, difficult to use platforms that don’t deliver across all devices.

When we started Bike Exchange in 2007 and developed the underlying platform to power the marketplace, we quickly learnt about the importance of solid software development. We had a great team of developers who worked night and day to debug, test and tweak in order to create the very best platform possible.

Almost a decade on, Marketplacer is still committed to creating the very best software platform for marketplaces. We like to think we’ve done all the hard work so that you can get on with building your marketplace, quickly, securely and successfully.

  1. Create an excellent user experience for buyers

Buyers are what makes a marketplace tick, and for buyers to keep coming back you need to provide great a great experience. This includes excellent service from the vendors on the marketplace. To this end, it’s vital to give shoppers the opportunity to leave reviews about their experiences with vendors. The review system is one more means by which the marketplace can establish the checks and balances between buyers and sellers in order to create a platform that works for both. The marketplace should be made up of sellers looking to satisfy their customers and customers suitably satisfied. The review system is one important aspect of that equation.

Once you have the platform, vendors, protocols and processes in place, you’re ready to start providing the type of marketplace experience that will keep consumers coming back again and again. At this point you have to start thinking about how you strengthen the reach and cohesion of this community.

Creating a strong content hub is one component of this, as well as engagement on relevant social media networks. The possibilities here are really endless and depend a lot on your marketplace, but live events, pop-up stores and markets, and webinars are just some of the marketing initiatives you could consider. All of this should be geared to building that sense of community in your marketplace, which leads to a stronger and more loyal tribe for your marketplace.