Communication: The most underrated challenge when operating a multi-vendor marketplace

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Head of Marketing

So, you've decided to build and operate a multi-vendor marketplace. But what does that mean?

As a multi-vendor marketplace operator, your job isn't to design, manufacture, or, in many cases, even hold inventory. You probably don’t store any goods. You likely don't own warehouses. And you don't manage your sellers’ workforce. 

Beyond building a beautiful marketplace website, what does a marketplace operator really do? If we had to boil it down to one word, it would be: communicate.

Communicate with sellers. Communicate with buyers. Communicate with shippers. Facilitate communications between buyers and sellers. Communicate with accounting, developers, platform providers, designers. You get the picture.

It takes a number of stakeholders to run a multi-vendor marketplace. Many of which you aren’t directly in charge of. 

That's precisely why collaboration is a critical, yet often overlooked, multi-vendor marketplace platform functionality. 

In this post, we'll:

  • Take a closer look at the role of multi-vendor marketplace operators
  • Explain why communication is essential to marketplace success
  • Run through common shortcomings in marketplace collaboration
  • Identify critical collaboration tools every multi-vendor marketplace needs

Let's begin!

A closer look: The role of multi-vendor marketplace operators

Before we get into the thick of our discussion on collaboration, let's take a closer look at the role of a multi-vendor marketplace operator and explore the synergistic business dynamic inherent to the marketplace model. 

Marketplaces have three or four sides:

There are buyers: These are, obviously, the consumers of your product or service. Your buyers dictate demand.

There are sellers: These are the vendors selling goods or services on your multi-vendor marketplace. Your sellers dictate your supply.

There *might be* shippers: Depending on your business model, you might also be dealing with shipping providers. Your shippers are responsible for delivering your end product.

There are operators: Or, in other words, you and your team! The orchestrator of market equilibrium. You must balance, fulfill, and grow both supply and demand — which means you must balance, fulfill, and grow both buyers and sellers. 

Welcome to your new role as the middle person.

Unlike traditional ecommerce sites, the function of a multi-vendor marketplace isn't to sell direct-to-consumer. It's to facilitate transactions between buyers and sellers. 

In many cases, being a marketplace operator is closer to being a logistics, marketing, and customer service company than being a goods/service provider.

Being a multi-vendor marketplace operator is about managing people. And if there's one thing that holds true no matter what business you're in, good people management is about frequent, clear, two-way communication.  

Why is collaboration critical to a successful multi-vendor marketplace — and where can it fall short?

Collaboration is critical to facilitating smooth transactions. 

Imagine if Uber just kept canceling your ride. Or the gift you purchased on Etsy just never showed up. As a buyer, you'd probably lose trust in the marketplace and the seller pretty quickly. As a seller, you'd be frustrated with the lack of ROI — and your tarnished reputation. 

As a marketplace operator, it's your job to facilitate transactions. But that means you could be responsible for communicating with sellers, warehouses, order management systems, product information managers, and shippers — for each and every one of your sellers. 

Talk about logistics management! That's a lot of communication — and a lot of opportunities for miscommunications to occur. What if a supplier runs out of a specific product? What if a seller has a question about a particular order? What if a buyer has a question for the seller? What if there's a delivery delay? What if there’s a return? What if you have hundreds of daily orders? What if you have thousands?

Should all these queries run through you? Probably not.

Unless you have a whole team of operators — which means a huge overhead that will only grow with time — collaboration tools become critical to the growth and operations of your marketplace. Established workflows are crucial to ensuring everyone involved in the transaction knows what piece of the puzzle they're responsible for, so that at the end of the day, buyers get what they paid for on time. 

Collaboration is critical to managing marketplace sellers — and therefore supply.

Marketplaces depend on sellers for supply.  But suppose your current marketplace process relies on manual intervention to keep shops updated. If sellers lack control over their shop, you can bet they’ll soon become frustrated. Anything from a misrepresented product or a buyer miscommunication might cause a marketplace seller to drop off.

Platform collaboration becomes critical if your marketplace puts the onus on sellers to autonomously manage goods or services. If sellers have a hard time reaching you to troubleshoot a platform issue, upload products to your site, or encounter too much red tape, marketplace sellers will quickly become disgruntled.  If sellers can't intuitively use your marketplace platform, expect your supply to dwindle. 

Our thoughts? Marketplace operators need to prioritize creating an intuitive and collaborative marketplace seller experience. Automating communication with sellers and enabling them to manage their shops easily is critical to keeping your digital shelves stocked.

Here are a few places where marketplace sellers can experience collaboration friction that might turn them off your marketplace. 

  • Onerous onboarding
  • External contract signing
  • Complex product uploading
  • Manual inventory management
  • Lack of customer communication
  • Manual shipping updates
  • Communication with marketplace operators in general
  • Manually orchestrated payouts

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Collaboration is critical to top-notch customer service and scaling your business.

It's common to think of "customer service" as "buyer service." After all, buyers are where the money is, right? But for marketplaces, buyers aren't the only customer. Marketplace operators need to think of sellers as customers too.

Marketplaces depend on sellers to scale the business, so you must woo sellers as much as you woo buyers. Without sellers, there can be no marketplace, no flywheel effect, no sales, no revenue. As a result, keeping sellers happy is essential to maintaining your supply. And the foundation of their happiness starts with streamlined collaboration. 

Of course, attracting sellers starts with marketing. But for the seller relationship to continue long term, marketplace operators need to romance sellers with a good customer experience.  

That means:

  • A marketplace seller portal that's built for seller needs
  • An interface that's easy to use
  • Operational support
  • Workflows that make selling easy

In other words, collaboration tools. 

An unsatisfied, frustrated, or logistically hamstrung seller will soon not be a seller. This means you won't have inventory, which means you won't have buyers, sales, or revenue. So, seller satisfaction is imperative to the success of your marketplace. 

Non-negotiable collaboration tools every multi-vendor marketplace platform should have

A word to the weary: Ecommerce platforms weren't made to support multiple sellers and stakeholders. As a result, they have no collaborative tools built-in. 

At Nautical, we believe collaborative tools should be woven into the platform. As a multi-vendor marketplace operator, you should be able to:

✓ Communicate within the marketplace platform
There should be two-way communication between operators, sellers, and buyers within a marketplace platform. If a seller has comments about a specific order, they should have direct and immediate access to you. Alternatively, if a buyer has a question, sellers have centralized communication tools that connect them directly to inquiring minds.

✓ Automate shipping and delivery updates 

Sellers should be able to send shipping and delivery updates to the marketplace so operators can relay updates to the buyers. Even better, the marketplace should integrate with the seller's shipping and tracking tools, automatically providing buyers with delivery updates. No seller effort required.

✓ Send real-time order alerts

Instead of relying on operators to manually pass on orders, your marketplace platform should automatically alert sellers to new orders so they can get started on fulfillment. 

✓ Manage inventory easily 

You don't want a customer to buy something out of stock or book a time that's not available. If applicable, your multi-vendor marketplace platform should easily integrate with your seller's inventory management systems or services calendar so they can take charge of their availability.

Closing thoughts

Operating a marketplace shouldn't mean you have to chase down stakeholders to make sure they're hitting their service level agreements (SLAs.) Nor should you feel like you need to smother sellers to keep them on board. A multi-vendor marketplace platform is built for vendor autonomy and collaboration. By equipping sellers to sell on your platform easily, not only do you improve the seller experience — but you'll improve your experience too. 

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