The Secret to Marketplace Commerce Success

Reimagining retail experiences for an increasingly digital future. 

Unless you have a crystal ball, you probably can’t predict the future. Which is why it took many by surprise when recently some incredibly iconic retailers filed for Chapter 11 bankruptcy.

Was unsold inventory the sole reason for the failure of these titans of retail? The answer, not surprisingly, is not entirely. Failure to pivot from a brick-and-mortar operating model to a world that is increasingly orienting itself toward digital commerce, including B2B and B2C marketplaces, provides a more comprehensive explanation for what has happened in these unfortunate, high-profile cases.

Inventory Overload

Inventory is a remnant of the brick-and-mortar based retail world. In the pre-internet era, stores stocked physical goods to catch incoming customer demand. When people walked in, retailers were hoping they had what customers wanted on their shelves, but they didn’t know what customers would buy (at least, not with any degree of precision). What’s worse: they didn’t have any particularly scientific methods of learning to help guide future purchase decisions.

However, for the most part, it worked. There were limits to consumer access to goods, so to an extent they had to buy what retailers had on offer. But we’re in a post-internet world, with seemingly endless consumer access to goods. Which means to sell inventory today, retailers need to be quite confident about what customers will buy. And for most retailers confidence isn't that high.

It’s easy to see why this system doesn’t work for consumers anymore, and how precarious it is for retailers. In a parallel universe, production and fulfillment would match customer demand. You’d have manufacturers and brands making products at the time of an order and they would ship it directly to customers. For commoditized products, you might have pockets of distribution centres with global coverage that could fulfill online orders within a couple of hours.

This seemingly futuristic commerce model already exists today. It’s called marketplace.

B2B & B2C Marketplaces

In very simplified terms, marketplaces connect supply (sellers or vendors) and demand (customers). The party in the middle of the transaction, the marketplace, captures a relatively small amount of the value created in the transaction.

As with any new option, implementing and launching B2B and B2C marketplaces comes with potential pitfalls to watch out for to prevent a smart business model from turning into a costly series of error corrections. From experience, the most commonly overlooked and yet important factor to consider is how seller’s experience partnering with marketplace retailers.

Because customer experience is derived from a marketplace’s seller experience, the key to a successful marketplace implementation is seller enablement. Forcing sellers to upload inventory CSVs once a day might seem reasonable at first, until one day it isn’t and you oversell product, resulting in an unintentional but terrible customer experience.

What is Seller Enablement?

Seller enablement is the internal capability that marketplaces unlock by using technological infrastructure, expertise, and education to onboard, integrate, and manage third-party brands and manufacturers (i.e. “sellers” or “vendors”) in B2B trade.

Seller enablement is a competitive advantage for marketplaces. If you don’t have proper seller enablement built into your marketplace stack, your customer experience will lose to the marketplace that does. And since marketplaces tend to be winner-take-all, it pays to have seller enablement as the centrepiece of your go-to-market strategy.

Having a platform that can easily onboard and integrate a seller in minutes rather than days and which can automate the entire order fulfillment process (from syncing live inventory to receiving orders into their existing systems and sharing fulfillments) seems a bit too good to be true— and with some platforms, it can be. That’s why choosing the right platform is so important.

The Value of Seller Enablement

Convictional has spent several years building the technology that enables marketplaces to turn their seller onboarding checklist into what feels like installing Candy Crush on their iPhone.

Investing in seller enablement capabilities unlocks a great deal of value for marketplace retailers, including:

• Expanding product assortments to be more relevant to current and future customers.
• Augmenting owned/bought inventory with a direct vendor fulfillment model (‘drop ship’).
• Reducing inventory and fulfillment costs and risks for online orders.
• Automating inventory reordering/replenishment.
• Building a trade network with existing vendor relationships.

Your current and future sellers will want a dead-simple way to onboard, integrate, and manage their relationship with you. Answering those needs is seller enablement.

Modern & Classic Sellers

Convictional has been intentionally designed to work for two categories of marketplace sellers: Modern Sellers and Classic Sellers. Often, B2C and B2B marketplaces work with a mix of both Modern and Classic Sellers, but the requirements to enable each kind of seller will vary significantly. Not understanding your current and future seller portfolio will lead to incorrect assumptions about how to successfully enable their differing needs. 

One of the first questions we get asked by buyers when introducing the Modern Seller and Classic Seller framework is whether this framework strictly applies to certain verticals (e.g. office supplies) or industries (e.g. retail). The Modern and Classic Seller segmentation applies horizontally across every vertical and industry in B2B trade. Whether you are a B2C marketplace of wellness products or a B2B distributor of industrial supply chain goods, your business will attempt to enable Modern and Classic Sellers. It’s imperative to have seller enablement in place to prevent seller churn and negative customer experiences. 

A Classic Seller is a brand or manufacturer that uses a custom or enterprise ERP (on-premises or cloud version) to manage purchase orders, inventory, and invoicing for buyers. Other B2B trade elements like product information may be unbundled from the ERP. Their preferred trading partner integration methods include EDI and/or CSV via SFTP (SSH File Transfer Protocol). Classic Sellers typically have an EDI Manager who manages incoming B2B transactions. They often work with large marketplaces due to the investment required in onboarding or maintaining each of their B2B relationships.

A Modern Seller is a brand or manufacturer that uses modern cloud-based systems to run their business with the purpose of selling directly to consumers. Examples of common systems include Shopify Plus and commercetools. They may or may not use an ERP system like NetSuite, but it tends to be connected to a customer-facing system, usually a modern e-commerce platform. Modern Sellers prefer API-based integrations and connectors and typically lack experience in EDI.

Successful marketplaces need to support enabling any kind of seller, irrespective of their preferred business systems and preferred integration methods.

Own Your Customer

There is no crystal ball that can tell you what customers want. If you want to implement a B2B or B2C marketplace, you are implementing the next best thing— a drop ship marketplace dictated by what they’re telling you they want.

The first step is to explore what a marketplace should look like for your customers and business. The second step is to determine what kind of experience you want your sellers to have when they onboard with you. There are lots of considerations and nuances in setting out to implement a marketplace, that is why Myplanet and Convictional have partnered to easily guide brands through the evaluation process.