Guide to Offering Quality Seller Experience on Marketplaces

Blog: MattsenKumar Blog

From a jumbled repository of information to a well-organized exhibit, the Internet has come a long way. Internet was a geek’s playground until social media and e-commerce happened. From making the first transaction 2 decades ago to exponentially growing into an industry worth $3.53 Trillion, e-commerce has arrived in style.

With 2.5 million sellers, Amazon is the world’s biggest marketplace. Countries like India and China are now fuelling e-commerce growth. If we cover the other e-commerce unicorns like Firstcry and Noon.com, over a million sellers are offering a wide array of products.

Agree or not, it is these sellers that have made what the e-commerce industry today is. Amazon started as a book store and today it has over 300 million products on its platform. Sellers have used the available tools and platforms to the advantage of everyone, which includes marketplaces and customers too. The growing dependency on e-commerce has fuelled the growth of varied logistics and fintech organizations.

Why is Seller Experience Important?

An excerpt from Praxisga insight suggests “A 1% churn in sellers leads to a cumulative value loss of anything between 2-3% over 2 years. That means, if your platform is doing $100M of annual sales, a 1% churn is causing you a value loss of $2-3M. Imagine the loss with 20% and above churn levels. But the bigger problem is that churn is also silently killing your business and eroding your value proposition to customers, which has an even bigger value impact.”

Amazon alone has 8 million sellers selling over 3 billion products worldwide. The e-commerce growth story has just begun and it is expected to take over retail transactions completely by 2040. In the process, millions of sellers and billions of buyers will join the e-commerce landscape. Marketplaces will have to function as a guarding angel for sellers and ensure they are compensated well because they form the backbone of a successful e-commerce system.

Seller experience is now becoming a topic of primitive importance because marketplace’s earn their money from these sellers. While players like Amazon & Flipkart are privileged enough to sell their “Prime Services” and charge “40INR” extra for purchases below 500INR. Nascent marketplaces are not so privileged, they are entirely dependent upon “commission from sellers” to pay salaries and promote their products.

Here’s what happens when seller experience is compromised:

Sellers Pivot: After mastering the art of offering exceptional customer experience, e-commerce giants are focussing on enriching sellers. Grievance management, quality credit facility, training programs, and incubation support are helping big players retain sellers. Some of them have signed an exclusive right contract. All this progress is making it tough for a nascent platform with exceptional products and technology.

When sellers fail to access a similar experience in all stores, they pivot. Sellers either start selling on big platforms or take the drop-shipping route leaving marketplaces in dearth of quality products.

Some statistics that showcase why sellers are important:

Third-party sellers on Amazon covers 56% of the entire revenue
50% of Amazon’s sellers are also selling on other platforms
34% of sellers are constantly adding looking for new products to add
Over 25% of sellers are earning millions of dollars in revenue from marketplaces annually
80% of Amazon’s sellers are running their private label brands too
73% of US sellers on Amazon use Fulfilled by Amazon facility to automate their business
42% of online sellers are using social media for running ads
75% of sellers are continuously investing in customer experience through quality packaging and post-sale service

How to Assess Seller Experience on E-commerce Marketplaces?

Businesses have relied on well-articulated literature for a long now. The right way to understand the challenge and solve them is by getting down into the dirt. With stakeholders interacting directly with sellers, they can decipher hidden challenges and also identify an underlying pattern, if any.

For small-scale marketplaces, one-to-one communication makes sense but for VC-backed marketplaces that are set to sky-rocket with a J-curve, this is not futile. Marketplaces need to have a paradigm similar to how they measure customer experience. NPS is perhaps one of the most sought metrics. Since, marketplaces earn their revenue from sellers and not customers—directly, they can consider these shrewd businessmen as their customers and get their NPS or CSAT score recorded.

Some of the prevalent industry practices include:

Conducting Quarterly Surveys: Reputed funded marketplaces have got into the act of conducting quarterly webinars and forum meetings, where they listen to sellers and award the best performers. The same event is also being leveraged as a platform to understand sellers and the challenges they face better.

Collective reporting allows stakeholders to draw charts and look at the primitive dilemma in detail. Such surveys can lead to the start of a paradigm shift that identifies challenges and gets rid of them forever.

Creating a Feedback Loop: Multiple marketplaces have successfully established grievance management platforms, through which sellers can redeem their lost capital. Often sellers come to these forums seeking refunds against malpractices committed by end-users.

Must Read: Seller Management: Best Practices for Online Marketplaces

Some of the top complaints sellers comeback with includes:

Customers sent a fake product in return
Customers returned a used product
Products were damaged during return transit
Incurring the additional cost of re-packaging

Since marketplaces are already aware of challenges faced by sellers, they can easily create a feedback loop, where they listen from sellers or provide them with an opportunity to assist customers with the return. One such system that involves sellers and focuses on solving a problem for customers instead of creating more for sellers, marketplaces can quadruple their growth within a year.

Top Factors Affecting Seller Experience?

VC-funded marketplaces are now focusing on creating an experience that generates repetitive sales instead of focusing on customer acquisition. The paradigm shift has pushed marketplaces to take measures that impact both customers as well as sellers. While customers are having a great time enjoying a personalized experience, sellers continue to struggle to make the most of every opportunity.

While seller education and seller awareness programs are helping sellers get in line with the new policies and build a rewarding experience for customers. Some sellers continue to look at marketplaces as a “get rich quick scheme” and it is affecting the entire ecosystem. Apart from mistakes made by other sellers, genuine sellers are also impacted by factors like:

Customer-Centric Policies: Well, we all prefer shopping from a website that puts customers first. We have all peeped at the return window before ordering a product online. The increment in pushing e-commerce stores as customer-centric platforms has the sellers cornered. These businessmen have suffered enough and it’s about organizations try to create a balance.

While being customer-centric and using it as a tag to acquire more customers is a good marketing bet but it doesn’t work for customers who are looking for long-term association. It surely helps in acquiring more customers but a sustainable business is only where quality products are available at all times and the seller is willing to offer post-sale support. To achieve quality support from sellers and increment in assortment requires organizations to focus on the health of sellers’ accounts.

No-question Asked Return: One of the biggest side-effects of offering no-question asked to return is that customers end up indulging in Bracketing, a practice where users order multiple sizes or variants of the same product only to keep the one that suits them best. This leads to returns. Bracketing is a matter of abuse of privilege and it affects sellers a lot. They need to spend on re-packaging, pay for two-way transit and also pay extra handling charges.

No Grievance Management: Customer-centricity is affecting the overall health of the e-commerce industry. Even the key stakeholders know that “no question asked to return” is not a sustainable practice and it will need to go, today or tomorrow. On top of it, marketplaces are shying away from building a grievance management team. Allow sellers to speak their minds, let them come to you, and understand the mistakes they made. It should be a learning experience for everyone involved. Allow sellers to help customers use the product efficiently instead of just returning it.

Unclear Payment Options: First affiliate marketers and now sellers, all have complained of marketplaces paying them through e-vouchers. These vouchers can only be redeemed on their platform. Instead of paying cash, marketplaces are trying to convert affiliate marketers and sellers into their customers, which is against the laws of business.

The global economy has discarded grumpy-ole practices like barter long ago and no marketplace should indulge in it unless they want to invite scrutiny or hefty fines.

Also Read: 7 Pain Points Sellers Face on E-commerce Marketplaces & Solutions

Five Tactics to Transform Seller Experience

One of the easiest ways of offering a quality seller experience is to pick all these aforementioned dilemmas one by one and solving them. With all these obscure practices going away, sellers will be way happier. Since marketplaces use norms like “customer-centric” and “no question asked to return” as a hedge against the retail market, they cannot let it go instantly. The process is going to be long and gradual, meanwhile here are some steps that can transform seller experience pragmatically:

1. Pre-& Post Onboarding Support

Webinars, self-help literature, how-to videos, marketing podcasts, and printed hand-outs, marketplaces should be offering all these to make onboarding easier and fun. Help sellers enjoy your platform and they will put their everything at risk to defend your brand reputation.

Jeff Bezos once said “he makes his investment thinking, if it’s going to change people’s lives”, well live by that one quote and no seller will leave your platform. Offering quality support to every seller during onboarding will ensure they are aware of all the guidelines and ready to sell in a business-friendly environment.

2. Business Incubation Support

Some of the top global marketplaces have started investing in local products that are hard to find in other parts of the country. For countries like India, art found in the South can never be found in eastern states but these states house millions of people from southern states.

Global marketplaces have identified this challenge as an opportunity and now they are getting in touch with local sellers, providing them with requisite monetary, technical, logistics, and legal support to help them sell online. While the sellers have found access to an opportunity that can transform their lives, marketplaces have tapped into a segment that can help them attain the j-curve growth.

3. Account Management

What started with small shopkeepers selling their abundant stock online has now turned into a full-fledged business. Bigger retail organizations are setting up companies to sell online. These organizations have registered a new brand name, have started procuring products in a substantial amount, and are selling them online at an attractive price.

Prior understanding of business, gross margin, and taxation is working in their favor and affecting the smaller and nascent sellers. Marketplaces can start offering account management support to first-time sellers to help them sustain their business. With such support, sellers will be able to focus on the supply chain instead of making customer request and handling tax implications.

Offering such support for the first few quarters will allow sellers to understand the mechanism better. Once they are well-versed with the platform, they can run their business on their own.

4. Fair Buy Button Competition

At times marketplaces limit the chances of independent sellers winning the Buy Now button for a lot of listing because a seller, who is directly affiliated or connected to them is selling it too. Such unfair practices have created dissatisfaction among sellers. Also, when independent sellers are not allowed to compete for the Buy Now button, a monopoly gets created, which leads to a price hike and customer experience takes a dip.

Just by letting, independent sellers compete fairly for the Buy Button, marketplaces not only inspire more and more sellers to join but also allow customers to enjoy quality service from multiple sellers. The increased competition coaxes, every seller to offer their best pricing, faster shipping, and provide quality after-sale service.

5. Dedicated Grievance Management Channels

Yes! Just how marketplaces cater to customers on the priority they need to cater to sellers similarly. With marketplaces shifting a bit of focus on sellers, the whole ecosystem will benefit. Sellers will be able to make the most of every opportunity and also reduce the chances of getting duped by customers.

When seller grievances are heard on priority, it gets tough for customers to cheat sellers that will benefit both sellers as well as marketplaces. When sellers are cheated and products are returned, marketplaces also do not receive their commission.

Similarly, for sellers who are capital surplus, one Facebook ad can give them access to information about products that can-do wonder. Such practices are likely to lead to a saturation point, where a few sellers with heavy pockets will rule the marketplaces. E-commerce platforms must take up the responsibility and ensure that all sellers irrespective of their size or inventory can access competitive assessment reports and take necessary steps to reduce challenges faced and double growth opportunities.

Must Read: 10 Tips to Improve Seller Performance on Your Online Marketplace

Quick Fixes to Improve Seller Experience

The discussed methods and paradigms are complex and require structural changes. E-commerce outsourcing services can play a crucial role in shaping the business structure that values sellers. Meanwhile, we bring to you some quick fixes that can stop sellers from churning, while you fix the broken method in the background.

1. Educate Delivery Executives

The goal here is to double delivery executives as the first verification point. Every time a product is returned, they must look for some specific pointers that reduce the chances of fake or imitated products being returned. Training executives to look for barcode, certification, labels, or price tag is not a wholesome task and can be achieved with a month.

2. Reduce the Return Window

30 days is too long a period. The long stint allows people to find lucrative deals on other platforms. Often customers start believing that the product is not a great fit and request to return it. A return window of 7-10 days is enough to help customers understand whether the product is the best fit or not. Once this period is over, marketplaces should not log any return requests.

3. Resolute Management of Return Products

Marketplaces and logistics partners need to handle return products as carefully as they handle freshly shipped products. Poor handling of returned products is leading to unprecedented losses and is pushing sellers out of business.

4. Pay for Damaged Products

Marketplaces have insurance, which applies to all freshly shipped products. Similarly, marketplaces need to have a paradigm that supports sellers in case the product gets damaged or misplaced when being returned to the warehouse. Amazon has started labeling logistic partners responsible for the proper handling of returned products. Their payments are only released when the returned product either reaches the warehouse or the seller.

Final Thoughts on Seller Experience

Offering quality seller experience will help marketplaces attract genuine sellers who are likely to get in long-term partnership with them. Offering exceptional seller experience is about understanding their concerns and having a system to address them. Buyer-seller management services help marketplaces automate these processes, while the key stakeholders continue to focus on other important aspects of the e-commerce business.

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