Marketplace Strategy Podcast by Jetti - Ep.2 Building Marketplace Supply
Episode 2 - Building Marketplace Supply
Amanda: Hi again, I’m Amanda, Customer Success lead at Jetti, and today we are continuing our new podcast format series on Marketplaces. As you may already know from the first episode, Jetti is a multi vendor automation software that works great alongside a Shopify, Magento or even a custom frontend due to its strong enterprise API offering. However, marketplace technology and automation is only a part of the business, so today, Francisco, our Head of Operations will be talking through the strategies to acquire quality Vendors that will be willing to add their products to your marketplace, and how to setup that commercial relationship.
So Francisco, how do you see the importance of creating Supply for a Marketplace? And how do you strike a balance between focusing on acquiring new customers or acquiring new vendors?
Francisco: Hi Amanda, and everyone listening to the podcast, really hope that we can shed some light on a few of the most crucial aspects of running a marketplace business. Regarding the question, it would be easy to conflate Vendor vs Customer acquisition as a chicken and the egg problem, but it really isn’t. If you have nothing to sell, you’ll have no one to buy from you.
It definitely depends on the stage the business is in, but as a start-up Marketplace, the best thing you can do is develop your Supply, and you’ll have to do it even before you launch the business, because again, you can’t open an ecommerce Marketplace without anything for sale.
At the end of the day, your Supply is your business, that is the added value you are bringing to the table. You are allowing a target audience to discover products that, assuming you’ve nailed your positioning, will resonate with them, and they’ll buy and keep coming back because you are providing them with this catalogue selection that they enjoy and that they would find very hard or effortful to discover on their own.
Amanda: And what do you think is the best strategy and approach to creating that Supply even before the Marketplace is launched. It seems like it could be a pretty big stretch for Vendors to accept working with you when you have nothing to showcase.
Francisco: Absolutely, that is definitely one of the trickiest points of ramping up a Marketplace. I would touch on a few topics to address that.
Firstly, who are you and who are you dealing with? It will be very difficult to venture into a space where businesses are big and well established, unless you are also big and well established, and an active and recognized figure in that space. I like to go back to luxury fashion for examples. You’ll have no chance at knocking on Gucci’s door and ask them to supply their products for your marketplace, unless you are a recognized figure, but maybe you’ve owned a boutique that was already buying a lot of merchandise from Gucci and there’s a relationship between the 2 companies and they acknowledge that you are a great person to do business with and would be a great partner. Farfetch didn’t start by knocking on the doors of these big brands, they started by supplying their products through boutique partnerships which were small, sometimes independently owned businesses that were looking for another way to sell their products, but Farfetch has since established direct relationships with the brands after becoming a multi-million dollar business. On the other hand, Amazon, who is now venturing into luxury fashion as well, surely has the opportunity to go straight to the brands.
In sum, it is best if you are going into a space where you have influence, either because you already have relationships in the space, or because you’ll be talking directly with independent business owners that are looking for ways to expand.
Secondly, showcase value So you’ve pre-selected the vendors you want to reach out to, because you believe their brand and their products would be a great fit for your marketplace. Now you need to convince them right? Write a great introduction email, succinctly explain the project, why you are the right person for it, and why you feel their brand would be a good match. Request a meeting, whether video call or in person, have a deck to support it, talk about the goals and ambition of the project, explain how you will be adding value to the end customer, and how you will be adding value to the partner, and of course you will need to touch on the financial agreement which I think warrants a discussion of its own, so maybe we can delve deeper on that in a future episode.
Amanda: Those are all really great tips Francisco, I guess overall you need to strike the right balance between how much influence you have in a given market vs how settled or open to new ideas it is, and also showcase the value that you are bringing to the table with the Marketplace. What about the trade-off between the presupposed value and the effort that goes into supplying for the marketplace?
Francisco: Great point Amanda! That would definitely be third on the list, make it as effortless as possible Put yourself in the shoes of the partner, of course they’d love to get their brand out there and have a new revenue stream, but at what effort to return ratio. Will you be asking them to send you all of their product imagery, ask for a huge document to be filled in for product creation, to manually inform you of stock level updates, only to get a couple of orders a month? It’s probably too much to ask, and one of the reasons I’m in love with the product we are building at Jetti, is that most of it is focused on automation and easing the onboarding of vendors. You are so much more likely to convert them if you say that you will connect to their ecommerce store, pull in all the product information they have including photos, keep stock levels in sync and even be able to push orders directly to their backend, it’s as easy as it gets, and these are only some of the use cases. So if it’s business as usual for the Vendor, with a potential uplift in sales, they’ll want to be a part of it. As the marketplace grows and the volume becomes more and more relevant for your partners, you’ll have more leverage to ask for additional effort, such as meeting service levels on how fast they ship an order, ask them to provide as detailed product information as possible, and even have them send the sample products physically for you to take photos that will showcase consistency across your marketplace.
Amanda: That makes so much sense, and it really strikes a chord with everything we’ve been hearing from our customers, they really want to make it seamless for their partners. Not only does it make it less work intensive for the Marketplace, it also leads to more Vendors and longer-lasting relationships with them.
As a final question, do you have any tips on how you can find the partners that are relevant for your Marketplace?
Francisco: Interesting question, first thing that comes to mind is that eventually you’d need to turn this into a framework for long term sustained growth, but here are a few ideas that I believe would work.
Search as a customer - those brands or partners are probably already making an effort to get in front of customer’s eyes, so how would a customer find them? Search engines would be a great starting point, look for the terms that are related to the space you are in and go through all the relevant search results, they could be brand websites, blog articles that list a number of brands in the category, etc. The other way is social media, set up an Instagram profile, it could be your Marketplace social account, or just a separate account for sourcing vendors. Start following all of the relevant brands or people in the space, and the Instagram algorithm will eventually start pushing profiles related to the ones you are following, and even advertising will be targeted allowing you to discover new pertinent brands.
Look at other marketplaces or multi-brand retail stores - so whether there is already a marketplace competing in that space or one that encompasses it like Amazon, or a more traditional multi-brand store that is wholesale buying the items, you’ll be able to source a large number of potential vendors from these platforms, and also when looking at Marketplaces the vendors have already taken the step into that business model, so they are more likely to convert. Lastly, visit trade fairs and trade shows that you believe will feature relevant partners in the space, that also brings you the advantage of being able to make a physical introduction which is way more effective than any email.
And just to touch on the framework, treat this component of the business as seriously as any other, think about it as a Sales Pipeline for a Business to Business company, you want to have a CRM-like approach to it, the difference is that instead of closing a Sale, you are closing a Partnership.
Amanda: Thank you, these are great tips, and I would definitely agree on the importance of closing good partnerships. I hope today’s episode has helped shed light on some of the strategies needed to acquire quality Vendors and how to setup these commercial relationships. As always, thank you Francisco for sharing your insight on this topic, and to our listeners - if you have any questions or specific topics you’d like us to cover in future episodes, leave a comment down below. Thanks!