Marketplaces will continue to see interest and adoption in 2022. In the second half of 2021 we saw three prestigious firms release deep-dive reports, signaling a tipping point in 2022: The Forrester New Wave: Marketplace Development Platforms, Q4 2021; McFadyen Digital’s Marketplace Suite Spot Report; and IDC’s Market Glance: Digital Commerce Software, 4Q21.
Creating a marketplace is no longer just the domain of deep-pocket companies like Wayfair, Walmart and etsy. With the advent of headless commerce and API-driven marketplaces, and platforms like Salesforce, Adobe Magento and Shopify, retailers looking to layer in a marketplace to sell first- and third-party products have never had it easier.
I talk to retailers every day who are seeking to understand how a marketplace with third-party sellers can work, and what’s involved with getting it operational. Common questions about the process include how to think about a marketplace strategy, and what resources are needed to ensure its success. While a lot has been written about why a marketplace approach is valuable, there’s a dearth of information about best practices from people who have been there.
I reached out to two customers who leverage marketplaces as a core part of their commerce strategy, and asked what advice “current me” would give “past me” on the front end of their marketplace journey.
Setting Internal Expectations, Realistic Timelines
Lisa Kennelly, CMO at Fishbrain, was responsible for adding a commerce layer to Fishbrain’s vibrant global community of 13 million anglers. Commerce seemed a natural next step and a marketplace the most commonsense strategy, especially given the natural product recommendations from the community. Fishbrain’s marketplace offers over 80,000 products from 350+ brands in fishing/outdoors. While Kennelly deems it a valuable endeavor, it didn’t come without some challenges. Her advice if she could go back and do it again:
“Be patient! Be patient!” Lisa said. “Even if you outsource as much of the tech and development as possible, there’s a learning curve and it takes the organization time to adapt. It’s also important to set very clear internal expectations about a realistic timeline to achieve traction. These are areas I would have spent more time putting structure around.”
Kennelly said a year and a half in, Fishbrain has a much clearer 360-degree picture of all the levers it can pull to drive growth: Marketing, supply, demand, plus an overview of the competition and how those forces can impact. “If you’re a retailer exploring a marketplace solution for your business, a great starting question is: Who are your anchor sellers/partners who will open the door to the rest?”
Consider the Post-Purchase Customer Journey
When asked what he would do differently if he were to implement a marketplace today, Justin Hillberg, former managing director at outdoor lifestyle brand SurfStitch, shared critical operational learnings. He provided specific considerations regarding the customer experience and third-party seller strategy and execution.
“We probably didn’t fully consider upfront the operational differences of running a marketplace at scale,” Justin said. “We thought it was more of an overlap with our existing base ecommerce business. If I was to set up a new marketplace, I would consider it differently. The customer experience is different, especially post purchase. We underestimated how to transition existing customers to receiving multiple parcels from multiple partners. We didn’t do a good enough job upfront communicating the post-purchase journey.
Justin said SurfStitch is much better at it now, but initially the customer service line did light up with questions like why an item shipped out of order even though it was included it in the shipping confirmation and at checkout.
“It took a little while for customers to understand we are now shipping from different pools of inventory,” he said. “You can handle a lot of these details upfront when doing the technology integration, and it’s important to focus on the operational part of the business when you’re setting up the strategy.”
Staffing Considerations for Seller Strategy
Justin said SurfStitch realized it needed a different set of competencies in the team. They started out with traditional category managers onboarding marketplace vendors, but it was slow out of the gate because it’s a different skillset.
“You need a real salesperson and a seller-centric methodology to onboarding new sellers,” he said. “We changed the process and hired dedicated business development managers purely focused on acquiring and onboarding sellers and managing that relationship. If I was to do it again, I’d do that up front and build out that team and have them trained and ready to go. Then when you go live with your marketplace strategy, you’ve got a dedicated onboarding team.”
Be Ready to Educate Sellers
Third-party marketplaces offer a big advantage and opportunity to sellers. It opens up new distribution channels, avenues of product discovery, access to fruitful industry partnerships and the ability to grow the customer base and the bottom line. But curated marketplaces outside of Amazon are still quite nascent, with a lot of confusion about with whom to partner.
“A lot of sellers we were approaching about our new marketplace on SurfStitch didn’t see us that way at all,” Justin said. “So, we had to educate, inform and convince them it could be a really good opportunity for them.”
Overall, marketplaces are a fast-emerging commerce strategy that affords flexibility in speed of testing and iteration that other channels can’t provide. As with many things in life, the hardest step is often the first one and that’s making the decision to move forward.
“We underestimated some core things upfront but ultimately it wasn’t a deal breaker,” Justin said. “We could still go live with the marketplace and learn those things along the way and iterate. The most important part is just getting started and you’ll figure it out.
Coming in with an engaged, active audience, Surfstitch was able to quickly learn how they were responding to the new marketplace. The vocal enthusiasts had no issues providing ample feedback on their experience.
Jim Stirewalt is U.S. President of Marketplacer
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