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Steps to setting up your Seller Acquisition

Welcome to the first stage of creating your marketplace! We’re gonna guide you through setting up your new marketplace, starting with Seller Acquisition. This is the second post in our 4 part series on Seller Success, make sure you read our first post before carrying on:

Still here? Great, let’s get into it.

When you’re setting up a new marketplace, you need to consider many factors: You need a platform that is easy to use for both sellers and for customers; you want to make connections with third-party logistics providers and business tools; but the most critical element in creating a successful marketplace is your sellers. Your range of products, pricing, and attractive unique items are all dependent on your sellers.

Why should I create a marketplace seller success funnel?

A marketplace seller success funnel is similar to marketing and sales funnels. It’s a set of steps for attracting, onboarding, and retaining the best sellers for your marketplace. The point of a marketplace seller success funnel is that it’s designed to bring in not just the best sellers, but the best sellers for your marketplace. For example, Amazon currently has more than 5 million sellers on it’s platforms, but only 50,000 sellers surpassed $500,000 in annual sales and 200,000 more surpassed $100,000 annually. That’s 5% of the sellers generating 31.8% of marketplace revenue! These are the type of sellers that your marketplace should be looking for.

Data from Amazon

Onboarding high potential sellers should be your primary focus when building your marketplace. Ideally, you’ll acquire some promising top sellers before launching your marketplace, so that your very first visitors don’t see a series of empty virtual storefronts. Bringing in the best vendors isn’t something you can leave to chance. You need a plan for seller acquisition!

5 steps to setting up your Seller Acquisition

Step 1: Prepare your seller acquisition goals

The first step to any effective business funnel is to define your goals. In this case, your KPIs should focus around the number and type of sellers you want to recruit. Start by thinking about your marketplace’s core categories. This is your guide – you want to make sure to attract enough sellers to cover all your core categories and the ideal product assortment.

Now, calculate how many sellers you need per category. You want to provide plenty of choice for customers, but without diluting the focus of your platform or spreading your buyers to thin across multiple sellers who overlap their product listings. For a new marketplace, be on the lookout for experienced vendors who have large, varied product catalogs so that you can benefit from their experience while quickly filling your marketplace with a range of items.

For example, imagine that Mark is the marketplace director in a new marketplace that launches in two months. He’s setting up his seller success funnel right now in order to onboard some successful sellers before it opens, so he can continue to attract and retain the best sellers as time goes on. Here’s what we know about Mark’s marketplace:

  • Mark’s core categories are apparel and shoes.
  • He decides he wants to bring in five sellers each for men’s and women’s shoes, as well as for women’s clothing, women’s accessories, and men’s clothing.
  • Mark chooses not to focus on attracting sellers for children’s clothes or shoes right now, planning to expand into that area once his marketplace is established.

Step 2: Define your target sellers

The next step is to prepare profiles for the sellers who you want to recruit. There are two main ways to approach this step:

Top-down profiling

With top-down profiling, you begin by creating an ideal seller profile (ISP), a theoretical profile of the type of seller you want to recruit.

To continue our example, Mark creates an ISP for his new marketplace:

  • Experienced seller
  • Already has a presence in his geographic region
  • Offers a range of sizes and colors for the products he sells, number of offers
  • Has a high seller rating of positive reviews at 95% or more and/or 4 stars or more
  • Has shown consistent sales growth of 50% or more over the last 12 months

Bottom-up profiling

Bottom-up profiling is for existing sellers whom you’ve spotted on other marketplaces, and who you want to attract to join your marketplace too. In this vein, Mark creates a list of the sellers who’ve caught his eye on Amazon, eBay, and marketplaces that specialize in selling shoes and apparel, and gets ready to reach out to them with his proposition.

Step 3: Find the sellers that match your needs

With a clear understanding of the categories you need to fill and the types of sellers you need, it’s time for serious research. Use public sources of information to locate and qualify sellers who match the ISP you drew up in the previous step.

Searching competing marketplaces and using a tool like our own also assist you in locating the sellers you need.  Our very own software (allow us this bit of self promotion!) can also help you to discover new sellers through an AI-powered algorithm, taking you to marketplaces, countries, brands, and individuals that you may have otherwise overlooked. Let’s bring back Mark and his criteria:

  • Experienced seller
  • Already has a presence in his geographic region
  • Offers a range of sizes and colors for the products he sells, number of offers
  • Has a high seller rating of positive reviews at 95% or more and/or 4 stars or more
  • Has shown consistent sales growth of 50% or more over the last 12 months

In our example, Mark turns to Silverback to discover the best sellers in other marketplaces. He checks their sales growth rate, seller ratings, product range, and other KPIs to evaluate if they are a good fit for his ISP.

  1. Entering his criteria

    Mark decides to look for sellers within the Amazon marketplace. He filters the sellers based on region, category, number of listings and sales growth.

  2. The results!

    All the sellers on Amazon that match his criteria are displayed. He can now choose to take a look at their seller page or contact them by phone or email. 

Step 4: Reach out and bring them in

Now that you’ve found your ideal sellers, it’s time to reel them in. Prepare an engaging proposition to attract them to join your new marketplace, including in it: a clear fee structure, effective logistics support, and all the business tools they need to maximize their efficiency. You need to make it clear why they should step over to your marketplace when they are already familiar with and clearly succeeding in their current environment.

To make your marketplace attractive, partner with omnichannel solution providers and aggregators like Magento and ChannelAdvisor. This makes it easy for your new vendors to sign up, onboard their stock, and get started on your marketplace.

Finally, using seller-friendly terms and conditions will smooth the way and set the stage for a comfortable and mutually productive working relationship.

To draw in new sellers, our friend Mark follows these steps carefully:

  • He prepares a detailed set of seller onboarding materials that highlight the benefits of signing up to his new marketplace. This includes his business tools, third-party solution providers, and early-bird signup offers.
  • Mark goes over their T&Cs, making sure that there’s no confusing jargon or lack of clarity.
  • By the time Mark reaches out to the sellers he previously identified, he is poised for success. To his great delight, half the sellers he approaches accept his offer and onboard to the new platform. Now he has the sellers he needs to present a vibrant and successful marketplace.

Step 5: Track your key success metrics

The final step in the acquisition campaign for your seller success funnel is always to track your success metrics. These are the qualitative and quantitative targets that you set in the first two steps. It’s important to take the time to evaluate the process so that you can refine your seller acquisition campaign for the future.

To complete our example, Mark asks himself these questions about his first marketplace acquisition campaign:

  • Have you reached your target number of sellers per core category?
  • Did you succeed in attracting the specific sellers on your list from other marketplaces?
  • Did you find sellers who meet your ISP?

Funnels are key to your marketplace success

When you set out to attract excellent sellers into your marketplace, the key to success is to consider it as a funnel. Preparing your goals, defining and finding your ideal sellers, reaching out to them, and then evaluating your achievement takes time and careful thought, but that will all pay off in the future. With the right strategy, you can prepare a marketplace seller success funnel that keeps your marketplace healthy, competitive and growing. In our next post, we’ll be detailing the next stage of the funnel – Activation! You can find the other parts of this series in the Related Posts tab below.