"Supply creates its own demand."
Jean-Baptiste Say wrote this quote two centuries ago, but it doesn't ring true for multi-vendor marketplaces. Functional multi-vendor marketplaces should bring supply and demand into equilibrium. Some eCommerce companies can fall into the trap of focusing too much on just one side—increasing demand for their product without considering supply. Or, as Say would have it, assuming a "well-stocked" marketplace will necessarily find its ideal customers.
So what is the first step in keeping your multi-vendor marketplace's supply in line with its demand?
The short answer is to find the right sellers for your marketplace. If your buyers and sellers aren't on the same page, your marketplace's balance of supply and demand can get out of whack.
Let's look into where to find the proper supply to support demand on your multi-vendor store.
Before reaching out to potential marketplace vendors, you need to complete some essential tasks, including:
First, you need to understand the goal of your marketplace. For example, are you a niche marketplace going vertical? Or a horizontal marketplace serving multiple target markets?
Once you understand your marketplace vision, you need to know your buyer target market. This will help you understand what products to sell and how to curate your marketplace catalog.
How do you do that?
Start with an Ideal Customer Profile (ICP), which describes your target market and includes information like demographics, behaviors, and needs.
Choose specific demographics to target: age, gender, income, education level, location, etc.
Once you've established your target market's demographics, identify their needs. What are they looking for? How can you help them achieve their goals?
The better you understand your vision and the needs of your target market, the easier it is to find the vendors that offer products or services that cater to your goals.
Conduct research to find the products your target market would like to see in your marketplace.
Start by sending effective surveys to your ICP. Follow that up with interviews or focus groups to discover your target market's needs.
Google Trends and social media platforms like Facebook and Twitter let you search for popular keywords related to your market, which can also help you understand the needs and interests of your target audience.
Once you understand the products your target market likes, you can identify your ideal vendor type. The type could be anything from "local organic food producer" to "global fashion brand."
As an example, if you are creating a sustainable goods marketplace, you need to ensure the vendors included in your marketplace certain sustainability criteria.
Creating an irresistible offer for potential vendors is as essential as your positioning to buyers.
Research your competition. Check their products or services, business models, monetization structure, and success rates. This allows you to make competitive offers to your potential vendors.
Provide vendors with data and insights to make informed decisions. Use the data you've gathered to create targeted offers that appeal to your vendors' specific needs and wants.
Three points to focus on:
If you have chosen to build your marketplace on a multi-vendor marketplace platform, share how native vendor integrations into ecommerce platforms, delivery providers, and emailing tools make selling on your marketplace a no-brainer.
In order to build a top-tier vendor target list that aligns with your customer needs, you'll need to know who you're looking for (which we discussed above) and where to find them.
Here are some ideas on where to source your vendors.
Some of the biggest marketplace sites, like Amazon, eBay, and Etsy, have top-sellers lists you can use for inspiration.
Check out the vendor lists from top-selling marketplaces and note any sellers that would be a good fit for your marketplace.
Online directories can also be an excellent resource for finding potential vendors.
For example, you can use sites like Crunchbase to discover local startups or small businesses in your area that might be interested in joining your marketplace.
You can always rely on a good Google search to help you find target vendors. Search for things like "best brands for X" or "fasting growing X brand."
Try Google's "People Also Ask" and "Searches related to" tools. These can give you ideas for potential vendors that may be a good fit for your marketplace.
Social media sites like Twitter, Instagram, and LinkedIn can also aid you in finding brands.
Search for relevant hashtags on Twitter and Instagram to see what's trending. Use LinkedIn's "Companies" search function to find companies that match your marketplace niche.
Additionally, joining social media groups and forums related to your marketplace niche can help you reveal potential vendors.
For example, if you have a marketplace for selling handmade goods, join relevant Facebook groups and forums like Handmade Artists Forum or Etsy Teams.
Your multi-vendor marketplace can be an opportunity for offline vendors to scale up their business and reach a larger audience.
Visit conventions and tradeshows in your area and ask vendors if they sell online and how they find new customers. Stop by local farmer's markets and speak with vendors selling through this form of offline marketplace. Consider hosting meetups to connect with local offline vendors.
Build a vendor landing page and run paid ads on social platforms if it fits your budget. LinkedIn, Google, and Facebook all have targeting options to help you reach your ideal vendor audience.
Tailor your ads for your target vendors. When writing ad copy, make sure to focus on the benefits of using your marketplace.
Answering these questions results in ads that resonate with your target audience and convince them to sign up for your marketplace.
Entrepreneur Jordan Steen covers how to use social media marketing effectively in this video:
Once you have validated your marketplace idea with target buyers and have committed supply (or a plan to source your own supply), it's time to build you a marketplace minimum viable product (MVP). An MVP is the simplest version of a product that you can create to test your hypotheses and gather feedback from users. It's about shipping a product with just enough features to validate your business idea and get feedback from early adopters (both sellers and buyers).
Think back to the origin of Amazon. The company bought books from distributors instead of holding inventory. That was their MVP. They didn't start as a horizontal marketplace, but instead focused their efforts on one product before expanding into others.
As you know, Amazon is now one of the largest online retailers globally, selling everything from mangos to tractors.
The keys to a successful MVP are flexibility and rapid iteration. Be prepared to pivot quickly based on user feedback as you work toward building a scalable marketplace.
You may find that your first hypothesis of the needs of your target market was incorrect or figure out that there is a much greater opportunity in selling a product you didn't initially have in your plans.
To learn more about building an MVP, check out this short video from The CRM Team:
The lessons learned during your MVP will allow you to gather numbers to share with the next wave of sellers you invite to join your marketplace.
Finding vendors who are a good fit for your marketplace is a challenge, but it's possible when you know what you're looking for and where to find it. Understand the importance of curating your marketplace catalog, and search for resources to help you find the right vendors for your marketplace.
With the right strategy in place and effective vendor management, you'll be able to build a strong network of vendors for your multi-vendor marketplace to delight your customers and boost your bottom line.