Creating a marketplace is a sizable challenge that requires deep strategic reflection. Success in such a venture depends on multiple factors that should be considered in advance. At Octopia, we have capitalized on our experience as a marketplace operator to provide you with the best advice. To bring success within reach, here are the mistakes to avoid when creating your marketplace.
1. Launching without a business plan.
Before launching your project, it is important to carry out a study of the market and competition to establish a realistic business plan. Do not neglect this stage. Creating a marketplace involves significant investment: define your strategy and marketplace model. Be clear and precise in your positioning so as not to lose your clients and ensure that your project will succeed.
2. Thinking that technology is enough.
The business model for marketplaces is totally different to that for classic e-commerce. You cannot manage a marketplace like you manage your e-commerce site. While the choice of technology is important, do not fall into the trap of thinking that it is enough to successfully launch a marketplace. Having a technology solution with the necessary functionalities is a pre-requisite, but you cannot stop there. Without vendors, you will have few products on offer to attract and retain clients on your site. Technology and vendors are therefore two key conditions for your project’s success.
3. Having an incomplete range of products.
With your marketplace, you offer a one-stop-shop to your customers, who can make the majority of their purchases in a single place. It is therefore essential to offer them an attractive range that responds to their needs for a better customer experience. Enhance your catalog by developing your product offering both in terms of breadth (product categories) and depth (number of products). By defining the needs of your target buyers, you will refine your strategy in terms of product categories and the mix of vendors you will need.
4. Underestimating the effort needed to recruit and manage vendors.
Do not think that vendors will be naturally interested in the idea of selling on your marketplace. You must work to identify good vendors in connection with your brand’s DNA, then prospect them, offer them an attractive deal, recruit them and retain them. On average, it’s estimated that a vendor registers with a total of 2 or 3 marketplaces. Boost your vendors and support them to ensure that their sales performance on your marketplace is a key concern for them. Find our advice to recruit good vendors for your marketplace here.
5. Confusing vendor and supplier.
When you work with a supplier, you set your sales prices depending on the previously negotiated purchase prices. You are the one who handles the integration of the product range into your catalog, product stocks, customer relations and the payment model for the supplier. On the other hand, when you welcome vendors to your marketplace, they manage the content of product pages, their prices, stocks and shipping. We advise you to give general recommendations and rules to guide vendors, but you cannot control all these variables. That is why it is important to choose good vendors.
6. Confusing the role of distributor with that of marketplace operator.
Operating a marketplace is very different to managing an e-commerce site. If you think you can continue to use the same management method without adapting it, you are likely to fail. As a marketplace operator, you will need to moderate products proposed by vendors, identify and convince good vendors, boost vendors to have an attractive range of products, play the role of arbiter in customer relations between vendors and end clients, etc. Carry out tests and familiarize yourself with interfaces, the commission system, third-party vendor management, etc. to build a successful marketplace.
7. Minimizing the impact on your company.
Beyond vendor sourcing, you will need to mobilize dedicated teams to manage and boost vendors all throughout the year. You will need human resources to manage after-sales service, customer relations, finance, legal, logistics, etc. It is essential to rethink the processes and skills used up to this point. Creating your marketplace will have a certain impact on your company and teams, which you must anticipate.
8. Neglecting customer experience.
When launching your marketplace, make sure you do not minimize the user journey. Adding new products and vendors can complicate and disrupt your current structure. Rethink the experience of your customers to adapt the front-end of your marketplace to their needs, for fluid navigation in terms of design and ergonomics. Even if the products placed in the cart come from different vendors, the customer purchase journey should be simple and seamless.
9. Not worrying about last-mile logistics.
From the moment that product shipping is handled by vendors, you lose control over the quality of shipping and delivery. If your customers are not satisfied, it’s your image that is at risk. To have better control over this part, which is extremely important in the purchase experience, you can opt for vendor products to be handled by a fulfillment service. This guarantees quality delivery, and you will ensure the satisfaction of your clients.
10. Only counting on search engine advertising to attract clients.
To draw traffic to your new marketplace, you can opt for search engine optimization (SEO) or search engine advertising (SEA). SEA is very useful to quickly boost your marketplace’s traffic, when it opens for example. However, it is important not to rely solely on this driver, which is less than optimal in the long-term, as it is very expensive. Work on your SEO and organic listings to develop your brand’s reputation and obtain a certain amount of natural, free traffic. The aim is to find a balance between fast growth and natural growth, so that you don’t have to pay for each visit, which may not even lead to a purchase.