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Marketplace and Customer Experience Challenges

What to expect when launching your own marketplace

A strong brand generates a lot of traffic that can create revenue without the hassle of product content management and order delivery. Individual vendors are happy. They can outsource the commerce technology, SEO and get a strong digital channel with less effort. This article discusses the customer experience challenges you can expect when launching a Marketplace of your own.


Table of Contents


Marketplace in General

Marketplaces facilitate sales for third-party vendors by allowing them to sell products in one online marketplace. The entire marketplace runs on the same software infrastructure, enabling all vendors to distribute their distinct goods under the umbrella of one website. This business model enables a merchant running the marketplace to sell a huge number of products, without having the burden of managing the inventory.

Vendors don’t need to invest in building their own websites, internal expertise, and online footprint, but rather rely on the marketplace merchants and their large online traffic to build online sales. 


Customer Experience Challenges

Customers create their opinions about the marketplace according to the overall experience they have during their customer journey. The journey includes many steps that are not in direct control of the marketplace merchant, such as product management, pricing or fulfillment. To ensure high customer satisfaction, marketplace merchants need to apply certain strategies to control the quality of the process while balancing between costs associated with higher control and the benefits it brings. Let’s look into more details at some areas that need to be taken into consideration when running a marketplace business.


Branding and Customer Expectations Management

The overall brand perception from the customer depends not just on the marketplace merchant, but also on the performance of the vendors selling their products. In standard retail shops, the customer will often churn and turn to competition when having a bad shopping experience. For example, having to wait a long time for a product or receiving a low-quality product. For marketplaces, this bad experience can be entirely dependent on the performance of an individual vendor. Therefore, it is a good practice to separate and clarify for the customer, through the individual step of the customer journey, the responsibility of the vendor and the marketplace merchant. The goal of this approach is not to lose the customer from the marketplace in case he has a bad shopping experience, but rather associate the bad experience to the vendor himself.


Vendor Onboarding 

During the vendor onboarding, merchants can set up a security gate to verify the credibility of the vendor and the competence to satisfy the requested service level the marketplace merchants want to offer to their customers. This requires the merchant purchasing staff to put effort into the analysis of vendors but with the benefit of providing better customer experience and general brand perception. Alternatively, merchants can allow any vendor to onboard using self-service portals and start to sell through the platform as some marketplaces do. For example, eBay and Airbnb.

A good practice is to have customers rate vendors and expose this information on the front-end. This way, the customers are aware of the quality of service they can expect. A customer may choose to buy a product for a cheaper price from a vendor that has a lower grade and therefore accept the risks of lower quality service.

It is important that the onboarding process is smooth and that there are adequate tools for the vendors to perform onboarding steps. Often, the merchant provides a portal designed for vendors through which they can easily set up their products and other relevant data to start selling. When running a marketplace business model, besides placing the effort on optimizing the user experience for the customer-facing website, it is equally important to optimize the vendor portal to ensure smooth vendor onboarding.


Product Content

Product content quality is crucial for the overall site conversion rate. It gives the customer information about the products, inspires him and influences the overall site search and navigation performance.

In the marketplace business model, it is the vendor's responsibility to create product content. A marketplace merchant can rely on vendors product content and simply expose it on the storefront without any checks prior to setting the vendor product online. This approach requires no effort on the merchant side for the content management and speeds up the product onboarding process. However, it can lead to differences in content structure throughout the marketplace, wrong information, and poor quality. It can also have a negative impact on SEO performance as content provided by vendors will not be unique. Instead, the same content can exist on other sites which lead to content duplication penalization.

Merchants can decide for a different approach and decide to audit vendors content and possibly enrich it before publishing online. This process should be controlled using a workflow. Obviously, this would require effort on the merchant side but with benefits on user experience and SEO rating. In any case, marketplace merchants can decide to use a golden record and always show the same content for the product: the one that is rated as best.


Fulfillment

In any e-commerce process, fulfillment is important as it implies delivering the promises made to the customer. In the marketplace business model, the fulfillment process is entirely under the control of vendors. Once a customer order is received, it is split into suborders and sent to vendors. It is then up to the vendor to fulfill the items from the order and deliver them to the customer. The fulfillment process can become complex as one customer order can end up being sent in multiple packages, from multiple locations, and fulfilled by multiple vendors.

To ensure the quality of the fulfillment process, marketplace merchants need to track and measure the performance of their vendors. To achieve that, the entire process needs to be tracked inside the system with key milestones being: time vendor order created, time vendor order accepted, time vendor order shipped, and time vendor order delivered. Marketplace merchants can then use this data to impose service level agreements (SLA’s) to vendors, to manage customer expectations and more.

Some companies, such as Amazon, have gone one step further and are offering third-party logistic (3PL) services or as Amazon calls it, Fulfillment by Amazon (FBA). This service offers vendors the possibility to outsource their warehouse operations for commerce business and rely on marketplace merchant to fulfill orders. Often the case is that vendors logistic processes are aligned to handle bulk orders and not individual customer orders, so this service is useful for them. This also enables marketplace merchants to control and increase the service quality offered to customers and make promises on delivery speed.


Customer Care

Customer care is often the reflection of your company personality towards the customer and can be a breaking point for losing a customer. With marketplace business model, it is especially challenging to provide great service as the product catalogs tend to be very big (millions of products) and the processes are not in direct control of the marketplace merchant.

Companies such as eBay and Alibaba have successfully managed to direct the communication between the customers and vendors, while they only resolve disputes. This way they have optimized the communication flow and time to resolutions, while at the same time bringing down costs of their customer service.

Providing a Questions and Answers service on the product details page is effective as it creates a community where a customer can get answers from vendors but also other customers, experts, and the marketplace customer support. Chatbots can be used to answer recurring and low-value questions. Also, some marketplaces are successfully using direct chats between customers and vendors that can be triggered in different stages of pre and post sales phase.

Regardless of the channels and methods provided, marketplace merchants should always track the performance as the final responsibility will always fall on them, and thus influence the customer perception of the marketplace brand. 


Conclusion

This article introduced you to the fundamental challenges with customer experience when running a marketplace business model. Marketplace enables the merchant to build a strong brand presence and become a one-stop shop with a wide product offering while at the same time not having to deal with the inventory and logistics operations. However, customer experience and overall satisfaction can suffer if it is not addressed properly taking in consideration all the specific challenges the marketplace as a business model brings. It is important to have an advanced technology that will enable you to deal with the challenges and provide exceptional customer experience.