6 Strategies for Onboarding Merchants to a New Marketplace
Technology can only take a hyperlocal marketplace so far. At the end of the day, the success or failure of a marketplace depends on how effective its creators are at getting established merchants to sign up and list their services.
Being unable to attract qualified sellers is one of the biggest obstacles a local marketplace will face. And, as Harvard Business School associate professor Andrei Hagiu described to Street Fight in an interview last summer, it’s an obstacle that many marketplace founders are unprepared to overcome. “If you don’t have buyers, then you’re not going to have sellers, and visa versa. That prevents a lot of marketplaces from getting off the ground,” Hagiu said.
Of course, vendors working in a number of hyperlocal verticals have found ways to overcome these challenges to create thriving local marketplaces. Here are their strategies for successfully onboarding new merchants to a hyperlocal marketplace.
1. Target existing marketplaces. “[Vendors should] target existing marketplaces that already have critical mass, and do this with a better product built to solve the specific challenges they’re having in their current marketplaces. One of our strategies is to target these users with a marketplace platform that was built specifically for marketplace transactions, but also provides the tools they found helpful in the other product.” (Cody Hunter, ShareTown)
2. Align costs with your value proposition. “If you plan to charge suppliers a listing fee, you should have a very high degree of confidence that you’ll be able to drive business to them. If you’re less certain whether a supplier will get business by listing on your site, consider a commission-based approach where they pay only if you drive them business. Also, try to limit the time required for a supplier to signup. If it’s free and easy to signup, suppliers will be more patient.” (Andrew Geant, WyzAnt)
3. Deliver more than transactions. “Marketplaces should offer tools that allow merchants to manage their interactions with customers beyond the initial ‘match.’ At TakeLessons, we deliver a portfolio of tools that our instructors leverage for schedule management, communications, billing and payment processing. Our value proposition is a balance between customer acquisition and relationship management tools that allow our merchants—instructors—to maximize their opportunity with every student.” (Chris Waldron, TakeLessons)
4. Promote DIY tools. “Ads on HelpAroundTown.com are really easy to set up. They are also easy to edit and can be changed at any time. Merchants are always surprised to have their ad at their disposal, available at any time, and changeable as often as they want. It’s a totally novel concept for them. They’re not used to that power and control, but you see their interest catch and the idea gets planted when you talk with them.” (Reem Yared, HelpAroundTown)
5. Leverage early adopters. “Create evangelists from early adopters who have seen success on your platform and leverage those testimonials to their fullest. The best way to get new merchants excited about a marketplace is for them to witness the excitement of their peers. Methodically extract proof points and socialize the impact you’re making in the lives of merchants who joined early.” (Chris Waldron, TakeLessons)
6. Demand begets supply. “In many marketplaces, it’s more difficult to generate demand than supply. If you can aggregate demand, you can then promote it to potential merchants and they will sign up in droves.” (Andrew Geant, WyzAnt)
Interviews have been edited for length and clarity.
Stephanie Miles is a senior editor at Street Fight.