How to Control E-Commerce Marketplace Vendors

Once upon a time, a new species of sea urchin was discovered—not in the depths of the sea, but on the eBay pages.

Indeed, a previously unknown species of sea urchin was identified and named officially after it was found among other items listed on the marketplace.

This case demonstrates the extent to which an Internet marketplace can provide freedom to its sellers and their listings.

With more or less freedom prevalent, an effective vendor management strategy must exist at each online multi vendor marketplace.

The sellers interact with the customers every day, influencing an online shopping center reputation, traffic, and sales, being a marketplace's main competitive advantage—or the biggest concern.

Below is a Forrester Consulting survey that demonstrates the reaction of customers in a ecommerce marketplace where the seller delivers poor services:
ecommerce shopping mall
To keep the sellers as the main asset of your virtual shopping mall and to establish the policies and ecommerce tools to control them effectively, you need to build a detailed picture of what areas of the vendor activities you need to manage.

How to Manage Your Vendor Crowd—On Every Stage of Their Growth

The areas of seller activities you should control vary, depending upon the stage of a vendor life cycle within a Internet marketplace.

Sellers are joining the marketplace

At this stage, the sellers start using virtual shopping mall features and showcasing their goods or services.
Identity verification
Some online shopping centers prefer to obtain sellers' real identities information to avoid fraud and enable security and trust for web marketplace customers.

Freelancer—an e-commerce marketplace platform for freelance work—is encouraging its suppliers to verify their identity by providing the following information:
Internet marketplaces which are providing services that need a high level of trust to encourage customers to participate, usually pay even more attention to its suppliers' identity verification control—like Airbnb:
Without having a host's real identity data verified, it would be hard for a virtual shopping mall to convince the customers that they are safe while using complete stranger apartments.
Goods and services showcasing
Two important areas to control include items listing and services description.

The content (pictures and description of goods) is one of the main components of marketplace effective conversion process. It helps a customer to go through a conversion funnel conveniently and make a purchase.

Thus, the way sellers make their listings on an e-commerce marketplace platform should be well-managed and controlled.

It's good to have guidelines for vendors, which include required quality for pictures of goods they listed, item descriptions, and other components. This makes the procedure of moderating listings and the points that are under control clear for both—vendor and an ecommerce shopping mall administrator.

Airbnb instructions on how to list a space in a correct manner:
multi vendor support
Moreover, for a better listings control, you can establish a procedure for reporting inappropriate goods, like Flipkart:
multi vendor support services
Also, for the physical goods web marketplace, being able to manage and control seller listings effectively and quickly is the foundation of successful daily work.

Advanced ecommerce platform functions help to avoid being buried while moderating thousands of new items listed. Flexible marketplace platform features also let you use a different approach towards different seller groups. For example, it's better to moderate new seller items carefully, while for those which are the pillars of your ecommerce shopping mall, you may control new listings not so frequently.

Thereby, the guidelines for sellers and an efficient multi vendor platform tool for you to moderate listings is the perfect combination to control listings successfully.
Sellers' geography
Amazon in its Agreement has different "Amazon Contracting Parties" to collaborate with online vendors from different countries:
online shopping center
That helps to manage sellers that are operating under different requirements of their country law.
True Experience #1
Richard Barrett is CTO at Parcel Monkey, the world's most comprehensive global shipping marketplace website. As a technical co-founder, Richard has built a team and evolved the technology that's enabled the business to grow from a startup in 2010, to a global proposition enabling millions of people in more than 150 countries to ship packages at competitive prices.
internet marketplace
— Hello, Richard! Is it important to regularly communicate with your online vendors? Why?

— Absolutely. It's important to realise that as a marketplace, it's not just your vendor's reputation at stake, it's your own. Your job as a marketplace is to add value, not only by providing a platform for the transaction to happen, but also to give consumers the confidence to buy. Regular communication with vendors helps stimulate a sense of belonging and ownership over your brand. This in turn encourages them to deliver the quality products and customer service that you need to build the value proposition of your online multi vendor

marketplace.

— Do you think it's important to help your vendors market their products and increase sales? How do you do this in your marketplace?

— Marketplace models only make money if vendors are selling. Therefore it's in your best interest to help them to do so in any way you can. You can achieve this by creating features that build consumer confidence, for example product reviews. But you can also share conversion data with your vendors, helping them improve the performance of their existing products, or spot opportunities products or categories within your marketplace.

For us, this means ensuring our marketplace website is forever evolving, and telling our vendors which shipping lanes are converting better or worse than others, encouraging them to build products that fill the gaps and drive revenue.

— What is the most effective way to arrange the money flow in the online shopping center? How do you manage vendor payouts and commissions?

— You have to automate this process. First you need to ensure your back end ecommerce system clearly breaks down the components of each transaction. Secondly, by working with a payment partner that supports API driven payments, for example Adyen or Braintree, you can make the process of paying your vendors much smoother.

— What are the best practices to maintain good relationship with your vendors, convince them to stay with you and attract new?

— Bottom line is you need to ensure your vendors are making money. This means supporting them in disputes when they're not in the wrong and reinvesting your share of profits in marketing, conversion rate optimisation, search engine optimisation and feature evolution of your multi vendor platform. If you do a good job of that, existing vendors will see your Internet marketplace as a valuable revenue stream and new vendors will gravitate to you wanting their piece of the action!

Vendors are doing business

Here, you pay attention to how sellers work with customers, send proposals to potential clients—if it's a service ecommerce shopping mall, or interact with consumers while selling items.

The following points should be kept under control:

  • the quality of goods;
  • order processing;
  • the procedure of orders delivery—if sellers deliver goods independently.
Order processing can be managed with advanced multi vendor platform tools. The technology lets you control every step of the process from your admin panel.

A correct order delivery can be checked through the set of confirming documents, while the quality of goods is controlled using product samples, certificates of quality, and feedback from customers including polls within an online multi vendor marketplace.

In general, it's necessary to have a detailed list of things that are under control—from listings to delivery, for the vendors to have an idea about the level of quality required.

Amazon established such a list for all seller activities on the web marketplace for vendors to address it at any time.
marketplace support
Сustomer-oriented approach
Time of response, quality of additional info provided to a customer, and other components of customer relations, should be under control as well.

A powerful tool used in checking that is the customers' opinion.

The Amazon sellers biggest concerns Top-3:
marketplace website features
As the infographic demonstrates, feedback from customers is still one of the most effective instruments to control sellers' performance.

Establish a set of performance points. The basic requirements for sellers to stay on your ecommerce shopping mall may include the approximate time to respond to customers, transactions quality, and much more, such as Alibaba' example:
online multi vendor marketplace
Disputes and conflicts
In case of any misunderstandings between the customers and the sellers, an established report system should be in place for you to catch a conflict on its initial stage and to be able to solve it fast and track the seller attitude, and most importantly, the extent to which it was a vendor's fault.

A Freelancer dispute resolution procedure:
e-commerce marketplace platform
Transactions
To control correct transaction execution, the best way is to have access to sellers' dashboards. With this, you can log in and track all the activities at any moment.

Another important element is being able to separate orders between online vendors correctly. When a customer is buying from few different sellers, the most effective way is if you can handle a transaction both—automatically, to save loads of time handling hundreds of transactions within your Internet marketplace, and manually—to be able to resolve a particular transaction issue, if necessary.

If your marketplace platform system allows you to have full control of vendors' transactions and orders, it decreases the number of vendor attempts to abandon a marketplace as well.

Besides, having an accurate payment distribution tool that supports both automatic and manual payouts will help you smoothly manage money flows between you and your sellers.
Security and fraud
Etsy, a handmade goods ecommerce shopping mall with sound anti-big business values, had a controversy when customers found out that one of the marketplace sellers is not a craftsman, but a wholesale manufacturer.

Thus, for a online shopping center with a focus on a specific niche, it's necessary to control that all its sellers match the niche requirements to avoid fraud of this kind.

To avoid financial types of fraud, it's possible to adopt different approaches:

  • attach bank accounts and financial relationships data to seller profiles;
  • deploy multi-factor authentication;
  • validate identity by analyzing profiles on social networks.
Besides prevention, there are many ways to identify a fraud. As Jeff Jordan, an ex-general manager at eBay North America notices, the following are the main points to pay attention to, in order to avoid fraud on a e-commerce marketplace platform:

  • high-dollar activity;
  • an unusually high number of new listings from a certain seller;
  • recently changed email or a bank account, because this could be an account takeover;
  • a rapidly spoiling reputation score on the marketplace.
True Experience #2
Andrew Hamilton is the CEO of Coupit, a NEO-blockchain cryptocurrency platform and an open marketplace that allows businesses and individuals to market products and services, earn incentives and rewards, and enjoy the security of blockchain technology.
create a multi vendor website
— Andrew, is it important to regularly communicate with your vendors? Why?

— Communication with vendors is critical because it keeps operations running smoothly. It's important to understand what's working, what's not working, what could be done better. Our Internet marketplace is set up to enable vendors to submit comments and interact with the rest of the vendor community. Because we interact personally with our online vendors (rather than through an automated system like Amazon) and the blockchain technology verifies transactions, there is no chance that a reputable vendor will be shut down on our system.

— Do you think it's important to help your vendors market their products and increase sales? How do you do this in your ecommerce shopping mall?

— Helping vendors market their products is our highest priority. We do this by marketing across the entire network and using smart advertising that targets customers based on their buying history. The advertising is free on our e-commerce marketplace platform (not per-click), and our affiliate marketing program means that everyone is helping each other market to their customer base.

— What is the most effective way to arrange cash flow in the marketplace? How do you manage vendor payouts and commissions?

— Because we use a blockchain platform, payments are instant. Like Amazon, funds are held in escrow for retail transactions until delivery is verified but the hold time is much shorter than Amazon's two-week hold. Once a vendor has a history on our marketplace, the payments will not be held because we can verify credibility. The beauty of a blockchain ledger is that it's built on trust.

— What are the best practices to maintain good relationship with your vendors, convince them to stay with you and attract new vendors?

— An affiliate marketing program provides incentives and rewards for doing business with vendors, and it tracks those rewards to make sure they're redeemed. Consumers are more likely to remain loyal to brands that reward their patronage and encourage them to redeem their rewards.

Sellers are getting mature

When the sellers have established solid businesses on an online multi vendor

marketplace, the best way is to control that they keep the quality of service or goods on the same level without sacrificing it to a business scale and customers number.
Sellers Performance Standards
Sears in its Seller Performance Guide describes the standards and requirements its vendors should match:
eBay establishes the list of KPI for its sellers:
Also, you can motivate vendors to show better performance by demonstrating it to customers like Flipkart:
marketplace vendors
Besides this, the vendor control and management approach are based on a certain Internet marketplace type and concept.
True Experience #3
Jaspal Singh Nijjar, founder of the young "Makes Me Healthy" marketplace
start a marketplace website
Hi Jaspal! You have a fresh view on running an eCommerce marketplace. Share some experience in managing your vendors please.

— Is it important build a good communication with your vendors?

— A good relationship with your vendors is important so that they know the benefits of listing on your marketplace and how you can support them to grow their brand and sell their products. On larger ecommerce shopping malls like Amazon, vendors have little "human" interaction with the marketplace so it's important to communicate with them and keep them up to date so they know you are there to support them.

— Do you think it's important to help your vendors advertise their products? How do you do this in your Internet marketplace?

— Yes, as it's the products which make your online shopping center marketable in the first place to consumers. Depending on the type of a marketplace, paid ads, social media and niche specific promotions (like events) are important to gain exposure and sales.

— What is the most effective way to arrange money flow in the e-commerce marketplace platform? How do you manage vendor payouts and commissions?


— Split payment system like PayPal for Marketplaces would be effective as there will be less admin time once the number of vendors increases.

— What are the best practices to maintain good relationship with your vendors, convince them to stay with you and attract new vendors?

— Keep existing vendors updated and make sure they fully understand what features are available to them via your ecommerce shopping mall when it comes to admin, promotions, and listings.
For attracting new vendors I would say make the task of listing as easy as possible, in our case we are giving vendors the chance to list with us for free, and also we will fully set up their products and account so they can fine tune it and be up and running quickly. The less barriers there is to list the more vendors will be interested.

How to Approach Sellers' Management on Different Marketplace Types

Service-oriented marketplaces

One of the main difference of service-oriented web marketplace is the nature of its product. Showcasing services differs from listing physical goods.

There is no product photo to showcase; thus it's necessary to establish some certain points to describe service, and be able to control its quality level.

For example, on BlaBlaCar, a carpooling service Internet marketplace, the suppliers specify if smokers, small talks, music or pets are welcome, while sharing a ride.
successful online marketplaces
If this is defined and clear for both sides, that is, a vendor and a customer, then it is much easier to control vendors' performance and resolve all possible disputes.

Besides, on a service marketplace suppliers often actively contact clients with their pitching. Thus, it's necessary to keep a finger on the pulse regarding suppliers pitching activities, if they address the right customers with the right offers instead of just sending out spammy bids.

For example, if you notice bad-quality bidding from one of the suppliers, you can notify your supplier about it, to avoid losing customers, like Upwork:
Besides, there can be some certain KPIs to measure and control suppliers' performance.

Freelancer established a set of KPIs for its freelancers, and made it visible for customers:
top marketplace websites
Also, you can control professional level of suppliers through their background and previous project examples.
multi vendors
Many service-oriented online multi vendor marketplaces control their suppliers and customers contact sharing to avoid an online shopping center abandonment. To do so, Freelancer is reminding its sellers and customers while chatting that it's forbidden to exchange contacts. Airbnb is technically depriving its users of contact exchange through the chat. You simply aren't able to put any numbers including phone numbers, in a chat window.

To control supplier's service quality, you can run micro-projects on your ecommerce shopping mall, hiring cleaners or freelancers, or renting apartments.


Besides, to control suppliers of both offline and online service marketplaces, it's possible to implement interviews and skill tests.
Offline service marketplaces
Since it's impossible to control suppliers' performance if service is delivered offline, it is good to have a pre-defined checklist of points—the benchmark for the service. Thus, you can always control, together with customers, if all the checklist points are fulfilled.

MyClean has its 50 point checklist:
Another important point is that, for either offline or online service marketplace, you need to decide the extent to which you take the responsibility of suppliers' performance.

For example, a globally known caregivers Internet marketplace Care.com is not responsible for the conduct of any care provider, and it only works as a multi vendor

platform to find them. For this, it provides an appropriate disclaimer:
At the same time, Doctorondemand has its Code of Conduct. According to it, the ecommerce shopping mall is not only controlling its suppliers' (doctors) professional level, but is also organizing a training program for them.

Business-to-business marketplaces

On a B2B web marketplace, the consequences of improper supplier behavior negatively impact not just an individual customer purchase, but the whole business results.

Thus, for a B2B multi vendor marketplace, it's a must to vet and control its sellers.

Below are the seller activities points that are crucial to controlling:

  • the speed of delivery;
  • the delivered goods condition;
  • number of legal disputes, their resolution rate;
  • a company background.
Globalsources, the B2B physical goods online shopping center, is implementing supplier pre-screening services:
b2b marketplace platform
The Verified Suppliers have had at least 3 visits from the web marketplace inspectors, and they successfully underwent a complex financial audit procedure. Besides, the ecommerce shopping mall is checking the state of factories and the quality of goods.

Amazon is yet another example. For its B2B Internet marketplace segment, it is using gated items to prevent listings until sellers provide serious evidence of their business activities, distributor or manufacturer invoices, business licenses and other necessary documents.
True Experience #4
Rajesh Meena, CEO at CraftFurnish.com
build multi vendor marketplace
— So, Rajesh, do you think it is important to regularly communicate with your vendors?

— We aim to teach our vendors to manage things by themselves. To do that, you may need embedded video guides for them to understand to to upload products, process orders and use other important features.

— Do you think it's important to help your vendors market their products and increase sales? How do you do this in your marketplace?

— You should give preference to new vendors in showcasing their products till they get their first order. If they don't get orders too long, they are not motivated. You should also give your vendors a technical ability to promote their products themselves.

— What is the most effective way to arrange money flow in the e-commerce marketplace platform? How do you manage vendor payouts and commissions?

— We pay our vendors on a monthly basis. Looking forward for the upcoming PayPal for Marketplaces integration in CS-Cart Multi-Vendor so that vendors could get payments instantly.

In our case, a vendor can purchase a credit to run their online store, which will be deducted once the order is placed for them. This way we can avoid regular payouts to vendors and the online shopping center has cash to run promotions for vendors.

— What are the best practices to maintain good relationship with your vendors, convince them stay with you and attract new vendors?

— Only giving vendors regular sales is the major reason for motivation. Training vendors so that they understand all the features of your online multi vendor marketplace is also important (many vendors do not understand how to effectively use all the available features).

So, seller control and management activities include two levels:

  • seller performance requirements, policies, rules—as a regulatory framework
  • technical tools and services—features to implement control and management

To control sellers effectively, for any type of Internet marketplace—service, B2B, or physical product mall—it's necessary to establish clear and transparent requirements to all elements of seller activities, from goods listing to response time, to order delivery.

This would help vendors to have a clear vision on what points they should match, and for you—what points you should keep under control first.

To ensure and control that the vendors meet those requirements on a daily basis, be it transaction or customer relations, advanced e-commerce marketplace platform features is the most important instrument.
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