At this point, you understand the vision and have committed to the transformation that a marketplace can bring to your enterprise. For months, you've been carefully preparing for it. You can see the launch on the horizon. Now it's a matter of finding the right moment.

If there is one thing that our experience has shown us about this point in the marketplace journey, it's this: you can't wait until your marketplace feels “perfect” to schedule the launch. The marketplace is not and will never be a finished product. And that's OK. You'll continue to adjust to valuable streams of customer feedback.

Dan Finley, CEO of Debenhams, the iconic British retailer, puts it this way: “If you aim for perfection, I'm not so sure that day ever comes. You can get stuck on a roadmap. You can be drowned in politics and bureaucracy, and the opportunity ends up sifting through your hands like sand.” It's vital, he says, to “get money in the till. More sales, more customers. That builds momentum.”

Until you launch, you're flying in the fog of ignorance. At this point, you don't know what you don't know. It will be infinitely easier to see things, and to make adjustments once the marketplace springs to life and customer data starts pouring in. Customers will tell you with great clarity what they want and expect from you, and how much they're willing to pay for it. Those amount to your marching orders. And as you respond to them, you're likely to see all kinds of benefits, from increased basket sizes and higher conversion of your first‐party offerings to more customers finding their way to you from search engines.

Even so, the marketplace is always a work in progress. In a very real sense, you're building a learning laboratory. In the period ahead, as you commence operations, the key is to figure out where to focus. What do you want to pay attention to? What do you want to count? Successful marketplaces establish the most meaningful metrics at the start. They harvest these learnings and plow them into continual optimization. The platform will continue to get smarter, quicker, and, of course, bigger and richer. That is the road you are on.

We focus here on five important areas for a marketplace as it bursts out of the gates and opens its virtual doors to customers.

1. Assortment strategy. How do you determine what's working and amplify? You want, of course, to provide the customers with what they want, but how do you amass a large selection that meets your criteria, your values, your brand? How do you maintain curation as you scale?
2. Seller strategy. For some, it takes getting used to, but sellers are a type of customer. They pay you to sell on your site. You put a group of them in place for your Minimal Viable Ecosystem (MVE) at launch. But that's just the beginning. How do you continue to find and add them with ease? How do you help them succeed, since their success is yours? What quality standards do you hold them to? And what data can you furnish them to help them sell more? You're going to be managing a treasure trove of customer data, with insights about their preferences, attitudes, economic willingness, sometimes anger or unhappiness. How much of this can you share with sellers to maximize their potential on the marketplace?
3. Customer strategy. That is, the other customers, the ones who buy things on your marketplace. These people and companies are emitting streams of valuable signals – preferences, attitudes, economic willingness, sometimes anger or unhappiness. How do you process these learnings to improve the customer's experience, satisfaction, and, yes, spend? For many marketplaces, smart use of brick‐and‐mortar assets is an important piece of the strategy. And protecting customer privacy is vital for all.
4. Marketplace technology. From on‐boarding sellers to integrating massive amounts of product data and ensuring smooth day‐to‐day operations, marketplace technology can make the difference between a marketplace that scales and one that struggles to get off the ground. What are the critical capabilities that you need to ensure your software provides? And how does your marketplace tech impact the customer and seller experience?
5. Internal stakeholders. We look at the organizational challenges – how to manage and train and inspire everyone in the company, from 20‐year veteran salespeople on the floor to the vice president for procurement. The goal, for many, is to create a seamless omnichannel organization, one in which physical stores and the marketplace work as one, each benefitting from the other.

Assortment Strategy

Once it's live, everything is possible with a marketplace. But everything can be too much, often way too much. Shopping on a site that offers everything, and on which everyone can be a seller, can raise red flags for a buyer. Is the item legit? Will it fit? Is the seller reliable? When will I receive it? Being a customer on such a site requires more work. It's a bit like a garage sale because it is totally uncurated. No manager or algorithm makes choices about what customers may want or need, leaving shoppers to sift through page after page of product listings.

The successful marketplaces we've launched and admired are different because they benefit from great curation and at great scale. People, assisted by automation and rivers of customer data, are continually dedicated to figuring out which offerings will appeal to customers, even delight them, while also fueling profits and establishing the marketplace's brand, feel, and trust.

After all, your marketplace, whether you're an iconic retailer or a digital entrepreneur, stands for something. You sell certain products or services, at the prices, quality, and selection that customers expect when they come to you. Some items enhance your brand, others not so much. This judgment – curation – must be baked into your choices, both of products and sellers.

Figuring out a marketplace's assortment is essential work, and it never ends. In preparation for the launch, you've already assembled your MVE (see page 77) of sellers and products – hopefully enough to establish momentum so that the marketplace can sustain itself. But that's just the beginning. The next question is where to grow.

One early step for many marketplaces following the launch is to deepen. This means tripling, quadrupling, or more in their core. For The Kroger Co., North America's biggest chain of grocery stores, the marketplace promise would be an endless aisle, with offerings of all of the foods and related goods their customers could possibly want. This is especially important when supply chains are disrupted. Covering the core, and offering the richest selection within it, is key.

But there's also the chance to spread elsewhere. Many marketplace teams start out with expansion after the launch – usually categories not far from their core. 1‐800‐FLOWERS.COM, Inc., for example, expanded from flowers to other gifts that customers might send on special occasions. Chocolates, fruit baskets, and cheese plates fit customers' expectations for its brand, while also widening it.

It is important during this stage not to give into the heady possibilities of a marketplace. Customers should not be overwhelmed by choices. Nor should they lose sight of your brand, and its quality and promise. That said, many of our customers find that they can sell a much wider range than they imagined. You won't know until you try out new offerings on the marketplace.

Some of these expansions are as simple as monitoring what shoppers are looking for on a weekly or monthly basis. What are the 5 or 10 most common fruitless searches on your eCommerce site? That's a good place to start. When Madewell saw that many more customers than expected were hunting for scarves, the retailer ramped up the offering, both first‐ and third‐party. “That was low‐hanging fruit,” says Madewell CMO Derek Yarbrough. A more surprising turn came early in the pandemic, when homebound shoppers were looking for house plants. Once Derek and his team realized that third‐party sellers helped them clear the logistical hurdles, it didn't take them long to start selling live plants on the site.

Sometimes customer patterns seem to contradict the brand. One example comes from the consumer electronics space. We work with a retailer whose buyers had long picked out a selection with prices and quality to satisfy the company's mass‐market base. Quality, selection, and affordability were key. Luxury shoppers generally looked elsewhere.

So the marketplace team was surprised, not long ago, to see strong demand for a luxury Panasonic microwave selling at $1,700. It turns out that this Panasonic machine offered additional features, such as steaming, baking, and broiling, and quite a few customers wanted it.

Encouraging trusted sellers to add unexpected items to their offerings can result in gains like that. After all, we don't know what we don't know. The rule for much of the history of retail was to rely on the gut. Certain people had a “feel” for customers and seemed able to guess what they might like. And it is true. Some people have that knack. But that doesn't mean we cannot all benefit from a detailed read of customer behavior. A larger assortment extends the marketplace laboratory and generates more data to act on.

Take those luxury microwaves. The retailer presumably would have not risked the financial outlay to stock such an item. So the commissions from the sales are a welcome surprise. But how much more profitable would those ovens be if the retailer itself acquired, stocked, and sold them as a first party? The numbers in this case cannot be exact since they hinge on future purchases. But they provide sufficient data – at a much lower risk – for a retailer to make an informed bet.

In this way, marketplace data feeds into long‐term assortment strategy. And naturally, these same calculations work both ways. Many traditional retailers count on a handful of items that produce healthy margins, while lots of others are barely profitable, if at all. Stores have long had to stock certain low‐margin goods because customers expect them. Typically, items like underwear, household chemicals and baby food carry razor‐thin margins. In the extreme case of so‐called “loss leaders,” convenience stores offer gallons of milk or cartons of eggs at give‐away prices. The hope is that while customers are in the store, they'll pick up a few other things with healthy markups, and enough of them to generate a profit. And they'll keep coming back because they know they'll find what they need.

A marketplace team can build the same customer‐friendly dynamic, but without sacrificing profits. It can look to sellers to expand offers of the lower‐margins goods that customers want and need, while the marketplace operator invests in first‐party offerings with higher margins.

But it's also important to drive opportunities to sellers. Sometimes these decisions come quickly – and the intelligence driving comes from the marketplace itself. Let's say a certain item takes off. It might be a wool sweater from Peru, a titanium putter, or an accessory for electric cars.

With marketplace tools, managers can respond quickly, pouncing on opportunities. Marius Lückemeyer, the marketplace managing director for MediaMarkt calls them “truffles.” Like the pricy fungi rooted out by pigs in France and Italy, specific products or often whole categories that take off in a marketplace can sometimes rocket into a sensation. “When you see a best‐selling category working, go deep with the sellers,” Marius says. “Really dig in. These things can explode.”

In a sense, managing an online marketplace is growing akin to managing a financial portfolio. In the traditional world, where retailers and wholesalers alike invested in inventory, many markets advanced at a leisurely rate, often tied to the four seasons. Today, both events and responses can occur within hours, even minutes. The marketplace, after all, is a digital tool.

Once a marketplace can optimize around a high margin offering, legacy assumptions from the physical world come into question. Why bother, for example, buying and stocking low‐margin goods? Sellers can fill in many of those gaps. Take TVs, for instance. We've worked with retailers that get the lion's share of profits from just a few models and rely on sellers to offer dozens or even hundreds more of the less profitable SKUs on the marketplace.

On B2B marketplaces as well, it's vital to widen the selection beyond the MVE, starting shortly after launch. Customers expect it, which is to say they demand it. Corporate customers are eager for one‐stop shops, where they can find everything they need. Chief procurement officers, as a rule, like to limit the number of suppliers because each one creates more paperwork and related expenses. The more the company can find on one marketplace, the better. Here, adding deep catalogs, with thousands of new SKUs, can pay rich dividends. The Conrad Sourcing Platform has expanded in five years from 800,000 to nearly 7 million SKUs on conrad.de. Sometimes, says Rado Svec, the company's vice president for digital platform, a seller mentions that in addition to what they're already selling on the marketplace, they have another 15,000 in another category. “We say bring it on,” says Rado.

This is not to say that all of those items, or even most of them, will sell on the marketplace. In some marketplaces, thousands of items never receive a single click. But it doesn't cost anything to offer them, assuming they can be incorporated without creating clutter and confusion on the site. A few of them can be winners – and every customer ultimately can find what they want. The key is to know the customers, and coordinate first‐ and third‐party offerings to make it as easy as possible for them to find what they want, and to make returns.

If you can pull this off, developing a robust and well‐curated assortment, even unpopular items can generate profits. Vincent Cotte, strategy director for eCommerce at Carrefour Group, the global retail giant, notes that certain marketplace items might only sell once a year. That might sound insignificant. But the magic of a long tail is that it can be extremely long, with an assortment of millions. These once‐a‐year items, Vincent says, “can make up 20% or 30% of your sales.”

For industrial marketplaces, the assortment is usually associated more tightly with catalogs than with the capricious currents of popular tastes and preferences. The objective, after all, is to provide everything a customer needs. This can be quantified. And from the perspective of an auto parts distributor, the numbers are daunting. Consider the millions of parts that have gone into Fords over the past century, or Volkswagens. Every automaker has its own universe, year by year, of the vehicles it builds. No one company's warehouses could store such immense troves. And the financial outlay for them would be formidable.

Vincent Belhandouz, chief executive of Aniel, a French auto parts distributor, saw this as a make‐or‐break problem to solve. His largest competitor was six times the size of Aniel. While no single supplier could come up with everything, the big competitor could come a lot closer to this ideal than Aniel.

The only way to compete with the Goliath, and build the deep and broad assortment that customers wanted, was to team up with loads of suppliers – and competitors. When the marketplace model arrived, Vincent recalls saying to himself, ‘This is the weapon I can use to answer this pain point of my customer and get to my competitors' size faster.’”

In other cases, companies deploy marketplaces to different ends. Many enterprise companies, for example, are their own suppliers. They manage the supply chains that feed their business. For Accor, the global hotel franchise, a marketplace promised to provide a powerful optimization tool for internal operations. Managers of its 5,300 hotels in 110 countries needed stocks of soaps and towels and bedding. They needed chicken and yogurt and vats of batter for their waffle machines. Hotels were massive buyers. Managers and purchasers at every Accor hotel could order whatever they needed on a marketplace – and the items would always be at the level Accor demanded. The marketplace gave the company greater control over quality while also streamlining sourcing. Instead of haggling, ordering, and invoicing from hundreds of suppliers, Accor could manage all of its vast sourcing needs on the marketplace.

That was the initial idea. But in no time, it led to something bigger. If Accor could provide for its physical ecosystem from its marketplace, couldn't the rest of the hospitality industry shop there, too? All kinds of businesses needed the same things, whether napkins, food, or floor wax. Restaurants, retirement homes, theme parks, and, above all, competing hotels. They could all become customers. With a marketplace, the definition of a customer expands, as do the assortments of what they might buy.

Seller Strategy

An immense diversity of sellers exists within the marketplace ecosystem. Some are brick‐and‐mortar businesses that have pivoted to eCommerce, while others are brands strengthening their direct‐to‐consumer strategy. A good number are pure‐play marketplace natives who have built their businesses for the marketplace economy. All of these sellers bring with them different levels of experience and ability that need to be adapted in order to grow strong and lasting partnerships together.

Before your marketplace launches, it's all too easy to associate sellers with risks. They can take away my sales! If their performance falls short, they could drag down my brand! Bad customer service will scare away customers for good! While we certainly understand these concerns, it won't take long for your marketplace to prove that they're not supported by data. (This is not to say that there aren't risks, and we discuss mitigations tools and strategy later in this chapter.)

For now, let's start with the positive. Your sellers' success is your success. Much of the effort must be focused on getting more of the right quality sellers onto the marketplace and helping them reach peak performance.

For the launch, you assembled your initial seller base. There's a good chance you signed on a number of vetted sellers through a marketplace networking service. And your team no doubt reached out to others, including long‐term suppliers. If you recruited and on‐boarded enough sellers to launch, you're off to a good start.

But when it comes to growing your seller base, you've only just begun. Successful marketplaces continuously add new sellers as they seek to enhance and grow their product assortment. Amazon, to cite an extreme example, was recently adding some 3,000 new sellers per day.

While building your seller sourcing processes, it's a good time to focus on seller recruitment. Who is doing that job? The temptation for many companies is to lean on buyers on the procurement or merchandising team. After all, they have contacts and know the markets.

However, to keep adding sellers to the marketplace, you'll need a more specialized approach. Those reaching out to prospective sellers should be sales people well versed in your marketplace's value proposition. After all, they're making a pitch: This new marketplace is a ticket to the future of commerce, a fabulous opportunity, a new sales channel with hordes of potential customers. The procurement and merchandising teams might have greater industry knowledge, but sales people, specifically trained to target and recruit marketplaces sellers, should be managing the recruitment process. Their specialty is making a case and closing a deal.

Their job requires a combination of persuasion and education. As is discussed in detail in Chapter 4, when Israel's Super‐Pharm recruited sellers, its seller recruitment team literally knocked on doors to explain to small Israeli businesses what a marketplace was and why they should join. But Super‐Pharm was an early pioneer, one of the first marketplaces in Israel. To recruit, the company had to educate. That still may be the case when wooing small businesses, like a two‐women jewelry studio in Brooklyn or a caviste in Bordeaux who produces small caches of excellent wine. Such companies often need the educational pitch to understand the opportunity in front of them.

However, thousands of experienced sellers are already fully educated about marketplaces, and thriving on them. And the places where they already sell are good places to find them. Check product listings, reviews, and customer ratings to determine their suitability for your marketplace. But most marketplaces broaden the hunt, searching out potential sellers, whether at industry conferences or on LinkedIn and other social networks.

Once you've qualified the sellers you wish to recruit, convincing them to sign up is usually straightforward. They know the requirements, understand the process, and, for the most part, go along with the defaults on commissions, return policies, and terms of service.

It is important to build a robust seller recruitment process because the evolution of your product assortment needs to flex in line with the changing needs of customers. Trends emerge; conditions change. People one day start clamoring for face masks. A heat wave drives up demand for air conditioners. A viral TikTok video bumps up the demand for farmer overalls. New sellers can service these markets.

To address these challenges, most marketplaces feature two different teams focused on sellers. The first, as we've seen, is engaged in recruiting. The second group – increasingly important as the marketplace goes live – is account managers. They maintain the relationships with the sellers. Account managers help sellers with their problems, ensure that they continue to meet performance standards, and provide whatever they need, in data and guidance, to maximize their sales on the marketplace.

Not all of the sellers work out. You may also decide to part ways with some of them as your marketplace grows. Some may fail to meet performance criteria. Others may fail to gain traction. They depart. This is part and parcel of a marketplace's evolution, as is the continual recruitment of new sellers. With a streamlined seller recruitment process in place, this can all happen quickly at scale, and without bogging down your team.

Most of our customers find it's important to match traditional recruiting – one to one – with “one to many.” This involves using networking services that can line up marketplaces with vetted sellers organized by product categories, geography, and product descriptions as well as other considerations, such as sustainability credentials. A company's team operating the marketplace should keep on top of these offerings, scouting the new additions to fuel the seller pipeline.

Different sellers, of course, have vastly different needs, and require support from the account managers. Some sellers need a hand in managing integration, some need help meeting product data requirements. Others need guidance on pricing or assortment, while some – especially small operations – are simply eager for exposure.

The goal is to make all of them as successful as possible. The key challenge is quality management. You want your customers to be happy with the experience: a quick, secure transaction, rapid shipping, a high‐quality product when the buyer opens the box, and a painless return process if they don't like what they find inside it. When the customer feels well served, the marketplace is positioned to thrive.

How to get to this objective? The first step involves keeping an eye on the shop. Which sellers are missing delivery times? Is another one getting miserable comments on the quality of its cutlery? How responsive are they when buyers reach out with a question or issue?

We have templates of Service Level Agreements (SLAs) for the marketplace industry. But each marketplace can create its own. This allows it to follow each seller's performance, minute by minute, on a host of metrics, from satisfaction ranking to order acceptance rate. Each marketplace customizes its SLAs and alerts. In some industries, such as perishable food, prompt delivery is essential. In others, like rare collectibles, a marketplace might choose to give sellers more flexibility.

Many marketplaces give new sellers more lenient SLAs as they on‐board and ramp up. This gives them time to adapt to a new sales channel and get a good number of orders under their belt before strict SLAs are introduced.

Perhaps the most valuable insights on a seller's performance come from the shoppers themselves. Advanced marketplace technologies can scan their comments automatically and analyze their sentiments. The software can generate sentiment scorecards, note trends, and highlight areas that require attention. This is useful for both the marketplace operator and the sellers as the success of both hinges on delivering a superior experience for customers.

Customer Strategy

In the post–World War II economy, which defined the developed world through the second half of the 20th century, the goal for retail was to develop supply chains and distribution networks that could service much of the human race. These vast networks were similar, in many ways, to others that fed and equipped massive armies. In this scheme, the focus was on reaching large groups of people. Their individual quirks and preferences didn't make much difference because mass production and distribution systems were incapable of customizing. They didn't know much about their customers, and they didn't need to. It was enough simply to divide them into a handful of large sectors: urban/rural, young/old, male/female, and so on.

The internet, with its rich flows of digital data, enabled the individual customer to come into focus. The modern marketplace platforms provide state‐of‐the‐art tools to learn about them, predict their needs, and provide what they're looking for. And you might find that your customer base is wider than you expected.

The depth of marketplaces, and the extraordinary variety within their areas of specialty, create rich and diverse opportunities to connect with customers. Growing numbers of customers, for example, are eager to shop their values. Some want to support minority‐owned businesses. Some are ecologically minded: They might want refurbished furniture or packaging that decomposes.

Madewell's marketplace, for example, promotes sellers called “Hometown Heroes.” These are niche businesses, such as Approvl, a Brooklyn‐based maker of rope bowls, and Goldeluxe, a craft jeweler in Detroit. “It provides exposure to them,” says Derek Yarbrough, Madewell's chief marketing officer. It helps differentiate Madewell's curated site from larger general‐interest marketplaces. And it aligns Madewell with its values.

Values create markets. The 96‐year‐old Lyreco Group is the European leader and the third largest distributor of workplace products and services in the world, with 12,000 employees in 25 countries. Its marketplace goal: provide Lyreco customers with an extended choice of responsible solutions for the working environment.

Lyreco has long had a sustainability mission, says Marc Chochoy, the marketplace director. So, naturally, he and his team recruited only sustainable sellers for the marketplace. This reinforces Lyreco's brand and attracts retailers focused on the same values.

One fast‐growing market, Marc says, is for refurbished products. They're better for the environment, reducing both manufacturing and landfill, and they're less expensive. “Refurbished is already massive in B2C [business to consumer],” he says. “And it's moving into B2B [business to business].”

Cloud‐based information platforms, and the information they amass, are ideal for such markets. And with the national or global breadth of the customer network, they can build markets – mass, long tail, and everything in between – from a dispersed base. A marketplace, naturally, should benefit every one of its components, bringing in new customers and products, as well as learnings from its data laboratory. It's the digital hub of the enterprise.

In addition to seeing which items are selling best, a marketplace tech team can and should carry out continual research on the site. Customer reviews, of course, are fundamental. But additional digging can highlight which placements, photos, fonts, and headlines gain the most attention. Those learnings can go back into the store, with the physical space adapting to what appears to work best with customers online.

Marketplace Technology

As we've stressed to this point, a successful marketplace hinges on a host of factors, from a strong vision and a committed team to a cultural transformation. But underlying everything is the technology platform. It is essential, of course, for uncovering trends and responding quickly to them, and for managing the millions of marketplace transactions. But it is also essential for other crucial jobs as your marketplace scales.

Once your marketplace is operational, you will rely on your technology to:

• Quickly recruit and seamlessly on‐board sellers, at scale.
• Integrate and effortlessly harmonize massive amounts of product data from sellers.
• Maintain smooth marketplace operations, from managing orders to third‐party seller pay‐outs.
• Automatically monitor and proactively address issues with product and seller quality.
• Deliver an optimized seller experience to fuel their continued success and growth.
• Provide updates to ensure compliance with regulations, including everything from privacy to taxes. They all vary by region and jurisdiction.

The current advances to marketplace technology naturally target pain points, whether measured in time or money. One of the big ones, mentioned earlier, is recruiting sellers.

Marketplace momentum is attracting more and more sellers. While this makes the pool of candidates greater, it also muddies the waters. As growing numbers of sellers participate in the marketplace economy, identifying the “right” ones remains paramount. Some aggregators offer automated systems to sort these sellers by specialty, rank them by catalog alignment, and suggest those with a high proportion of product matches as candidates for a marketplace. While human beings should vet these selections, the ranking system enables the process to scale and accelerates time to market. This seller matching based on operator criteria and specifications is occurring today within Mirakl Connect.

With the expanse of automation, more of the recruitment and acceptance will be played out among machines. Say the system lines up 30 potential sellers, already pre‐vetted and matched to a marketplace operator's preferences. A marketplace manager might click OK. The system sends out the invitations for the sellers to join its marketplace and as the sellers accept, it starts the on‐boarding process by creating its store in the marketplace back office.

A key area of focus for marketplaces is the automated uploading and harmonization of disparate product catalogs. As a prerequisite, software can automatically ingest the data, transform it, and validate it, if necessary. While this automation supports catalog growth at scale, it still leaves marketplaces managing duplicate (or triplicate) product records. Taking it a step further, some marketplaces leverage business rules and artificial intelligence to rationalize, de‐duplicate, and categorize product descriptions based on a business' existing catalog taxonomy.

The system then organizes this data into a master data sheet, and from there operators have the ability to modify the master data content before the offer is published online. The result is a single product listing with the highest quality product content, ensuring the customer experience remains consistent – no matter how many sellers and products are added – so that customers always have the product information they need to make a purchase. The enriched data can then be used to optimize search, both for the marketplace and for Google.

There's a common misconception that marketplaces are just for “big companies with big teams” to support the day to day operations. But this is a myth, if you have the right technology in place. Scalable operations are achieved when actions can be managed autonomously, either by applying business logic or leveraging artificial intelligence, or in bulk. Automation should therefore extend into order management and approvals, invoicing, and accounts payable. This will have the marketplace operating more efficiently, not less – even as it grows.

Another crucial aspect of the technology is its ability to monitor the marketplace for quality control. This includes managing seller performance at scale, factoring in key metrics like delivery time and product quality, then highlighting top performers and suspending underperformers. It also includes customer care.

As marketplaces scale and the volume of customer messages inevitably increase, operators may struggle to manually triage customer messages to identify which require an immediate response and which can wait. Integrating automation and emotional artificial intelligence (AI) technology to distinguish between positive or neutral (e.g., question) and negative (e.g., complaint) sentiments can help identify which messages need a response right away and which don't, optimizing customer satisfaction and doing it efficiently.

Finally, while getting great sellers on board and managing them at scale is crucial, it's also important to ensure that their experience is optimal – that your marketplace is easy to manage with the right set of tools to drive success. These seller tools should include clear reports and dashboards, guidance on best practices, and promotional capabilities. Effective marketplaces deploy these tools at scale, ensuring sellers can focus their time on supporting your marketplace and selling more.

Internal Stakeholders

Yes, automation is on the rise. But it all does its work in an enterprise run by people. Unless they understand the marketplace, its potential and – most importantly – the role they will play, their concerns can weigh it down.

One fundamental step is to set and manage expectations, both in the process of building your marketplace and in the early days of operating it. To get the company to embrace and fund the marketplace, you no doubt had to stress its transformative power and potential. But early in the process, it's important to prepare people for struggles: delays, glitches, channel conflicts, and a ton of learning.

A marketplace is nothing less than a new business, a startup. And no matter how well you've prepared, the unexpected is bound to happen. Despite even the most fastidious preparation, says Tom Kraus, vice president for eCommerce at grocery wholesaler UNFI, “you're going to have to solve problems that you didn't imagine. Good chance it's going to take longer than expected.”

Jodi Fountain, eCommerce leader for L'Oreal's SalonCentric, a beauty and hair products marketplace, had to tamp down soaring expectations. Her team had described, pre‐launch, how increased customer traffic would bring in not only third‐party sales, but also boost SalonCentric's core offerings. This is known as the “halo effect.”

Shortly after launch, she was receiving emails asking about the halo effect. Was it happening yet? When would they see it? She recalls saying, “Calm down, we're just on day five.” (Even so, it didn't take long to see 70% of the orders on the marketplace include both first‐ and third‐party items.)

On the other side of the ledger, people are sure to see signs that their fears are coming true. Complaints will come in about late shipments and quality issues. Signs of channel conflict will emerge as the merchant team spots items undercutting their own. All of this can be very scary. And this is where you rely heavily on strong support from the C‐suite. Executives are sure to be hearing complaints and lamentations. They – along with everyone else – have to be reconciled to the discomforts and disruptions of launching this new business.

They also have to be ready to invest more money. The marketplace, after all, is not a one‐time expense. What you have in place at this point is the Minimum Viable Product. To grow, it's going to require continued investment, more people to recruit and on‐board sellers, more customer service, and marketing campaigns. In these weeks and months when the halo effect is yet to be seen, it can be hard to ask for more investment. That's why the executives must be prepared for it in advance.

At the same time, it's important to reach out to all of the executives on a regular basis, providing them with progress reports and context. Pay close attention to the executives who don't have their hands on the business. When the inevitable bumps and bruises occur, they'll be hearing and retransmitting the news. It's up to the marketplace team to control the narrative.

International Expansion

For both B2B and B2C platforms, crossing borders can offer a clear path to gaining both customers and sellers. And while not every organization turns to international expansion for growth, the increased flexibility and adaptability of marketplace platforms means that businesses that choose to do so have a head start.

An international presence can be particularly appealing for B2B marketplaces. Chief procurement officers around the world are interested in lowering the total cost of acquiring certain parts or other items. Adding multiple suppliers adds to these costs. For this reason, many CPOs focus less on the individual cost of an item and instead consider its total cost, including all of the related invoicing, audits, checks, and compliance. They're often interested in offloading this work to a marketplace. But they want it to be everywhere they might need it. This adds to the international push for marketplaces.

The first challenge for a new marketplace in a new locale is technical: to adapt the platform to the laws and regulations of each country, and to its language. These are tasks that required significant work while creating the first generations of marketplaces. The platform technology, increasingly, gives operators the flexibility to configure settings, languages, and alerts from one market to another.

Many international operations adopt the standards of the most demanding markets. This is a prudent course, and especially important for privacy, where the European standards are more stringent than those of the United States. A marketplace that settles on European settings is less likely to encounter troubles when, for example, a European customer does business on an American site, or with an American seller.

The farther you stray from your home market, the greater the challenges of quality control and customer service. An international operation requires teams to monitor each marketplace and each seller, surveying the customer comments or complaints in every language, along with automatic systems to flag warnings and anomalies. This is critical for any marketplace, but becomes even more challenging at scale.

Advances in AI make this work easier. Advanced systems like Mirakl's can carry out sentiment analysis on complaints, dividing them into three piles: positive, negative, and neutral. Such readings can prove invaluable, especially in monitoring feedback in foreign languages. Needless to say, a spike in negative feedback requires prompt human attention. In coming years, these systems will grow more sophisticated, highlighting specific trends and issues.

A primary challenge, especially acute as marketplaces cross borders, is to ensure top‐notch customer experience. You cannot afford, for example, to have sellers who don't support customers in their language. It takes careful work to manage international operations at scale while supporting a personalized and seamless customer experience.

But international operations also provide rich opportunities for learning. For France's Adeo Group, this was especially useful. Adeo, which includes home‐improvement brands such as Leroy Merlin and Bricoman, used its first marketplace, in Brazil, as a laboratory for both speed and selection. With the launch of its Leroy Merlin marketplace in 2017, Adeo was able to offer its Brazilian customers entirely new lines of furniture and to expand into home electronics, such as TVs. These new possibilities grew as the company added marketplaces in Italy, France, and South Africa, with assortment adapted to local markets. The goal, according to company leadership, was to have deeper offerings, and also to test additional categories of products.

One key to going international is to standardize as much of the technology as possible so that each marketplace will be able to build the customized shopping experience on the same commercial engine. The more of the process that can be replicated, it goes without saying, the faster the roll‐outs. At Adeo, the international operations work from a common tech platform, while adapting the language and selection and customer service to local markets.

With the expansion, though, comes more complexity. Financial flows become more challenging. Companies face greater risk from regulators they're just getting to know. Many are eager to offload this work onto consultants, or to platform operators like ours. It's a service. Like others, it focuses on removing pain points. That's where opportunities lie, and how the ecosystem grows.

Chapter Summary

In this chapter, we look at the strategies behind successfully operating a marketplace post‐launch. You now have a chance to see the customers in action, and to adjust the offerings to what customers are signaling they want and need. This customer data should inform the pathway of the marketplace, from the sellers you add to the service and quality levels you guarantee.

One key is to stitch together the customer's journey between the digital and physical stores with an omnichannel strategy, ensuring you meet customers where they are.

The marketplace itself is a vehicle for growth – for reaching new customers and selling an expanded offering. The key to expanding the assortment is by adding sellers, and curating at scale. But there is also the opportunity to grow by reaching beyond traditional boundaries. We discuss the challenges of international expansion. It's possible that you don't plan such an expansion. But if your competitors are active in international markets, for both sourcing and sellings, it might not be something to take a pass on.