Vendors are at the core of the procurement process of every organization. Many companies, however, continue to ignore the value of maintaining a good relationship with their vendors. Such acts of incompetence may have made little difference as procurement played an administrative role in an organization’s purchasing of goods/services.
Management of suppliers is also a key competency of effective organizations. In a global marketplace that is ultra-competitive, companies need to look for innovative ways to gain more value from suppliers while at the same time reducing risk and retaining efficiency. Management of vendors enables you to establish a partnership with your suppliers and service providers which will improve both companies.
With efficient vendor management processes in place, you can better-set targets for performance, efficiency, expense, and satisfaction, and identify and manage third-party vendors that will help you achieve those business objectives.
What is Vendor Management?
Vendor management is the internal framework of an organization to negotiate with outside vendors and suppliers. It enables third-party vendors to continue to evolve through regular cooperation and continuous monitoring. The partnership between the company and vendors is one of the main factors and creating an efficient framework for dealing with them would lead to revenue-boosting.
Vendor management system is also a form of risk management- a key vendor’s activities are capable of either a financial decline or a profit boost. Daily vendor audits and checks will avoid the entry into financially unsound vendor relationships. It includes working as a team with your vendors to draw up mutually beneficial contracts which will eventually benefit both companies. It prioritizes developing a long-term partnership with the vendor over short-term profits.
Overall, the management of the Vendor partnership deepens buyer-supplier relationships in order to achieve a mutually beneficial objective and create trust.
How to manage vendors effectively?
Communicate
Bad communication is the root of the majority of company failures. The failure of your suppliers to communicate or obtain essential information will end up shaking the very foundations of your vendor management operation.
This is especially important in terms of timelines. Corporate buyers need to meet regularly with their vendors in order to efficiently relay their requirements and get a better understanding of the capabilities of their suppliers
In any partnership, the best way to create an ill will is a lack of contact. Take the time to connect with your vendors, and in return request the same form of outreach.
Build Relationships with Vendors
Getting out of a transactional partnership and into a strategic supplier-buyer relationship model is the secret to productive vendor management. The first step of the cycle is to consider the suppliers as worthy partners.
You need to take a systematic approach to develop and sustain relationships with your best vendors to get the most value out of your vendor management process. Good suppliers are difficult to get through, so it’s important to maintain your relationship with the suppliers that you don’t want to lose.
Instead of merely sharing the predefined KPIs with your suppliers, include them in crucial strategic decisions such as setting specific goals for the partnership. Vendor management makes long-term partnerships a priority over short-term benefits and marginal cost savings. Changing vendors constantly to save a penny here or there will, in the long run, cost more money and will affect consistency.
Focus on win-win agreements
Negotiations should be based on good faith and honesty and not on strong-arm tactics. You’re not going to be able to establish ties with methods of strong-arm negotiation. Instead, you’re going to generate frustration that can lead to more down the road issues.
Focus on reaching agreements in good faith which will help all parties to walk away feeling good about the agreement. Partnership goals should be organized in such a way as to provide fair incentives for growth and support both businesses.
Risk Management
Third-party risk assessment is an important element in dealing with vendors, especially as a result of recent federal rules and guidelines on a company’s liability when hiring a third-party vendor. Due to rising public concern about cybersecurity and data breaches, this form of risk management is particularly relevant these days.
Whenever you enter into a contract with an outside vendor, you need to minimize risk. Require your vendors to explain what data they are going to need to access and how exactly they are going to secure the data from disclosure, and make sure they live up to a fair standard of protection before you contract.
It is mandatory to regularly scrutinize the inner workings of vendors, especially those with strong-level access to confidential information. Audits and assessments shall be performed to assess their long-term suitability for a relationship.
Measure Vendor Performance
As your marketplace operator, you don’t just source vendors, and let them be on your website selling digital goods on their own. Monitoring how the vendors are doing is really important, too. Therefore, from time to time you can run various reports to benchmark and compare the vendors and find out what works, what doesn’t, and what are the best practices that might make all the vendors sell more.
If you consider vendors who are underperforming, first review vendor profiles if all the required information is present so that they have a well-established reputation that can be seen and noticed by your clients. The next move is to search the listings of its products. Are the explanations of the goods correct and the items well presented? Does the question lie with the seller or the systems in the event of problems? Is Brand Listing Easy? Are there enough fields of knowledge to present the goods to the full? You could also boost and refine the navigation and interface of your website which will certainly enable your vendors to get a sale.
Promote your Vendors
Advertising and supporting your vendors along with their goods can be a good way to get tourists and help your vendors sell their products in various social media networks, such as Facebook and Twitter. Note, if your vendors earn, then you earn, so helping them sell their goods is in your best interest.
Writing blog posts about vendor products will help you generate additional content for your web page as part of your digital marketplace marketing campaign, and give your vendors another forum to promote their goods. Make sure, however, that the articles to be published following the appropriate quality standards that you need to maintain for your blog.
Provide Vendor Resources
It will become an ongoing activity to work with vendors and to help them market their goods. You will need a mechanism to help your vendors as well. Initially, vendors will have a lot of questions because they will have to understand how to work with your digital product marketplace and what to do to earn money.
It is, therefore, best to follow a constructive strategy, in order to foresee their questions. One way to do so is to send out a series of informative emails upon the sign-up of new vendors. The goal is to help suppliers complete their product listings and then inspire them to list more quality items on your digital product marketplace in a second phase.
Benefits of Vendor Management System
The benefits of establishing successful and sustainable partnerships with vendors are untold. Vendors or suppliers of the products and services of your business are some of your essential business partners and as such, a concerted effort must be made to build an effective vendor management system, capable of optimizing the current company and vendor relationship.
Boost the level of services you have
Boost operating and/or financial performance
Reduce expenses
Expand your product usability
Concentrate on the main market functions
Vendor management is essential to the company’s economic well-being. In order to streamline operations, an efficient vendor management system must be developed at the company.
Conclusion: Good Vendor Management is vital for your success
In today’s world economy, where regional and economic boundaries are increasingly decreasing, companies will collaborate with different types of vendors from around the world. Even if you deal with a single vendor, successful vendor management is important, because their success ultimately affects the success of your company.
It is important to understand vendor management’s advantages and challenges, so you can develop an efficient process that will drive your interaction with your vendors. Do not forget to add vendor management best practices to your method to ensure that your vendors provide optimum value to your organization.
Only make sure to always invest in a robust and comprehensive vendor management system and you will be ready to create efficient, strategic relationships with your suppliers while streamlining your workflows and keeping costs down. With automation, total accountability, increased collaboration, and integrated cloud-based data management, the team will be able to break free from low-value activities, gain more strategic sourcing through better insights, and ensure the company is agile and fleet-friendly enough to succeed in today’s dynamic economy.
Digital Product Marketplace’s store owner and operators have
a very long list of tasks to do in order to manage his/her digital product
marketplace well. This encompasses tons of administrative and
non-administrative works just to get their webstore all up and running. Digital product marketplace owners have vendors to manage, customers to handle,
marketing strategies and tactics to implement, developers/programmers to relate
with and many other stuffs that would definitely consume there day.
This is now why it is essential to free some of your time and therefore concentrate on many important tasks for your online marketplace. But how? We need to learn and adopt an automated process that will lessen the burden of manually doing administrative works for your digital product marketplace.
Common Problems of Manually Paying Vendor Commissions
Here are some of the problems that a Digital Product Marketplace webstore owner most likely to experience when doing the manual payment to vendors.
Spend a lot of time paying vendors manually – Having only a few vendors and sales per week or month could still go through manual payments. But, if you are now getting more vendors and earning more sales, you may notice that you’ve been starting to spend a lot of time paying them manually than before, and it is not healthy especially if you also have other administrative tasks to pay attention to.
Vendors do not want to wait long to get paid – It is important as a marketplace owner to always keep your vendors happy. One way is not to delay or give payments for too long. This may happen if you have tons of vendors and sales needed to split and give payments manually, and maybe a few of them are already overdue. We shouldn’t let this happen or your vendors will feel unsatisfied with your service.
Adopt automated payments to easily scale up – As we have said earlier, business owners/staff should be doing something important for the betterment and growth of the marketplace instead of spending an awful amount of time in paying vendor commissions. This could actually prevent business upscale and growth.
Possible problems with ManualPayments – Making tons of vendor payments each day or week can cause you a lot of confusion and headache. From different calculations, percentages, splitting of payments, tracking amounts and others can quickly get above our heads. Thus, the manual process are very vulnerable to different mistakes and errors. This is one main reason as to why we should adopt an automated payment service.
PayPal is still the best and commonly used payment service – PayPal is still today the benchmark for most developers, vendors, freelancers, and customers on the web. Almost everyone has their PayPal accounts and you won’t get any trouble explaining things to you with regard to it. In conclusion, PayPal is the best practice for online payment solutions.
Benefits of Automating your Payment Processes
Business process automation is the use of technology to execute recurring tasks or processes in a business where manual effort can be replaced. It is done to achieve cost minimization, greater efficiency, and streamlined processes. Any business that wants to gain an edge over their competition should consider automation, which can simplify a company’s operations, not to mention speed them up by a great deal.
Automating your Payment Processes is essential when you are
operating a Digital Product Marketplace. Enumerated below are some benefits of
automating your business processes.
Quality and Consistency
Automation ensures that every action is performed identically – resulting in high quality, reliable results. Also, they will experience the same level of service from your business, thus providing a high-quality, consistent work output.
Time Savings
Automation reduces the number of tasks you and your employees would
otherwise need to do manually. This frees up your time to work on items that
add genuine value to the business, allowing you to be more innovative and
increasing your employees’ levels of motivation.
Improved Operational Efficiency and
Productivity
Process automation reduces the time it takes to achieve a task, the effort required to undertake it and the cost of completing it successfully. Automation not only ensures systems run smoothly and efficiently but that errors are eliminated and that your best practices are constantly leveraged.
Simplify Repetitive Tasks
Many employees spend most of their working day performing repetitive tasks, which can be both boring and when all of the alternatives are considered, unproductive. Automation software can, therefore, automate many of these repetitive processes, so your members of staff can focus on other areas of the business. This will allow you to use your staff more effectively, and it could even speed up the processes involved.
Greater Opportunities
Automation can open doors to countless opportunities for your business. Instead of wasting your time doing repetitive administrative works, business owners might be doing something that would greatly scale and increase business growth. This is how important automating your business processes is.
Automate Payment Commissions on your Digital Product Marketplaces
Your Digital Product Marketplace might have several vendors who needed to get paid off their commissions. Whenever a digital product has been purchased on your marketplace, your vendors needed to get paid manually, and this consumes and wastes a lot of your time. This could cause your marketplace growth a huge setback just by doing this repetitive administrative work manually, especially when you needed to pay many people of their commissions, every single day.
This is now why automating your vendor payment commission is very important if you are operating a Digital Product Marketplace. The Admin user may find it very difficult to track each and every sales and afterward payout vendors manually. So here comes a solution – the PayPal Adaptive Payments Plugin.
Introducing PayPal Adaptive Payments
This plugin works by automating your vendor commissions by
instantly and automatically splitting third-party commission up to 6 receivers.
This way, it will save you a lot of time in manually paying vendor commissions.
If you want to scale up your marketplace and want to work
with more and more vendors, we strongly recommend implementing an automated
solution brought by this PayPal Adaptive Payments Plugin.
Key Features and Benefits
Here are the Key Features and Benefits you can enjoy by
using this plugin:
The payment of third-party revenue can be done
instantly and it saves significant time instead of manually paying your vendor
commissions every time a sale has been made.
With the PayPal Adaptive Payments gateway
integration, you can easily split payments with up to 6 different receivers at
the same time. This plugin handles payments between the sender of a payment and
one or more receivers of the payment. It’s possible to split the order total
with secondary receivers, so you can pay commissions or partners immediately
afterward.
You can set each receiver up with a specific
percentage of the payment within the settings for this gateway. Not only that
but it provides configurations that can help you set this up as you prefer.
Lastly, you can determine whether you would like to use a Chained or Parallel payment type. Chained Payments: Your Store accepts the entire payment and secretly pays commissions to Vendors after the sale. Parallel Payments: The customer knows everyone who will receive payment upon checkout – as the payments are split visually at checkout.
Conclusion: Automate payments on your Digital Product Marketplace
Sticking with a Manual Business Workflow simply creates opportunities for delays and errors. Adopting business process automation, especially on paying vendor commissions, can improve organizational efficiency by automating redundant administrative and repetitive tasks. Remove those processes that are putting a strain on employee time and free them up with workflow automation, with this approach you will be able to accomplish more by using fewer resources and in a more efficient way.
In conclusion, vendor payment automation, if implemented
correctly, can help you in increasing the efficiency and accuracy of your payment
processes. This can make your vendors very happy and will surely affect the
growth and scale of your business.
WordPress today powers 30% of the world’s websites and leading eCommerce software such as WooCommerce are actually WordPress plugins which have proven that WordPress is much more than just a blogging solution.
When you are considering setting up a multi-vendor digital product marketplace you might want to consider using Easy Digital Downloads (EDD). EDD is the leading WordPress solution which is specialized in selling digital products and offers a marketplace extension as well. Unlike WooCommerce, Easy Digital Downloads does not come with any in-built legacy made for shipping physical products, instead, it is truly optimized in selling digital products. In this article, we will outline how to set up a multi-vendor marketplace platform in WordPress with Easy Digital Downloads.
If you are interested in more information, please download our Free eBook on How to Build a digital product marketplace on WordPress which contains even more comprehensive and detailed information on how to set up a multi-vendor marketplace for digital products.
Why create a Digital Product Multi-Vendor Marketplace Platform?
Sales for online marketplaces are expected to greatly double from $18.7 billion in 2017 to $40.1 billion in 2022 (MCFADYEN based on eMarketers). During the May 2018 survey made by Statista, 50 percent of global shoppers stated that they preferred to make first-time purchases at a retailer, whereas 47 percent of repeat buyers preferred online marketplaces. As per Statista, two of the top three reasons for purchasing at a marketplace instead of a retailer were more competitive prices and a broader selection of products available. Also 38% of all online shoppers in 2017 ordered from abroad.
Number of
Digital Buyers Worldwide, Source: Smartinsights 2017 based on eMarketer
First of all, why should your first choice be is to sell a digital product and not a physical product in your marketplace? The three main reasons are:
(1) No inventory required
(2) No shipping and handling problems
(3) Easier to sell worldwide
When selling digital products, a creator will
have the choice to either sell his digital products on his own website or using
a digital product marketplace. Below are the arguments why it can be a good
idea to start a multi-vendor
marketplace platform
rather than a single vendor store:
Selling a digital product is easier than selling a physical product
Buyers prefer choice and larger product inventories
Same launch costs as single-vendor websites
Low fixed costs enhancing chances of achieving break-even early on
Scalable business models with benefits in obtaining traffic (e.g. SEO and Social Media)
Types of digital eCommerce, Source: Pluginsandsnippets.com
Best is to start a digital product marketplace
only in a niche you are very familiar with as this will save you time and it
allows you to find solutions to problems quicker than when you know nothing
about an industry. Some people also say you need a large amount of passion. We
think it cannot hurt and will only help you if you actually care about the
products you will sell in your digital product marketplace.
Before starting a WordPress Marketplace – Market Research
Conducting market research is the very first
step we must work on and do before even building and starting our Digital
Product WordPress
marketplace. It is important to first conduct thorough market research
and study the essential factors which can affect and contribute to the success
of the business plan when starting a digital product marketplace.
Illustrative example competitor analysis, Source: www.pluginsandsnippets.com
An effective way
to conduct a market study is by starting with the closest competitors of your digital product
marketplace idea. Try to especially focus on the top 5 or 10 competitors
and thoroughly research their profiles to understand what and how they are
doing and where the market gap for a new digital product WordPress
marketplace might be. When analyzing competitors, try to analyze the
following:
What do they sell?
Number of Vendors / Products
Price ranges of their products
Alexa Rankings
Followers on social media
Sources of traffic
Strengths and weaknesses
Reviewing the strengths and weaknesses of
competitors should not only be in terms of how good their website appears but
more in terms of how good their business model is. Is this a marketplace
platform you believe can attract the interest of customers and vendors? If yes,
why? What do they do well? Which points they seem to neglect or where do they
show weaknesses? There might be an untapped opportunity where the market is not
served?
Doing this analysis properly will give you
more information about the marketing strategies and tactics of each of the
competitors and you will quickly figure out where there might be an untapped
opportunity in the market that deserves to be serviced by your new digital
product WordPress
marketplace.
SEO can offer a cost-effective long-term
marketing strategy for marketplaces since there is a lot of content placed
there. Therefore you will need to do keyword research which is the process of
finding and analyzing actual keywords entered in search engines. The objective
of the keyword research will be to figure out which keywords would be easy to
rank within our market niche, have decent traffic search volumes and show only
a low level of competition.
Another topic to research and check are
commission rates charged to vendors by similar digital product marketplaces. Standard commission fees for digital product marketplaces are somewhere between 10% and 30%. So
before deciding what it will be, please check first how many potential
competitors are charging to their vendors and see that your fees are in line
with the market terms for your market segment.
Setting up a Digital Product Marketplace
Just like in starting a simple Digital
Downloads eCommerce WordPress Website, the very first thing to do is to choose
your Domain Name URL and a Web Hosting Provider.
The Domain Name URL is the internet address
where Internet users can access your website. Registering domains will cost
from $10 per year upward, depending on the registrar and top-level domain
(TLD).
The next task will then be to select a
suitable web hosting provider that will host your website. You can choose
between a shared and a private server. If you have plans to make your website
large, you might be better off starting with a private server as otherwise, you
will have to move your website away from a shared account as soon as you get
more traffic.
As mentioned initially, you will need to install Easy Digital Downloads which is the leading solution in WordPress and fully specialized to sell digital products online.
Installing a Multi-Vendor Marketplace WordPress Theme
The next step will be to install a WordPress Theme for your new marketplace platform. There are numerous free and paid themes available which are covered in a previous article and summarized here:
What you need to watch out for is to install a theme that supports the Frontend Submissions (FES) plugin in EDD. In case your chosen theme would not support FES, you can still install the theme but then you will have to manually develop designs for frontend vendor pages which is costly and time-consuming to do. Therefore, better use a standard theme which already supports FES, to begin with.
Please note, the theme just needs to serve the
purpose to get you off the ground. You will have to rework your website many
times during the operations of your digital product WordPress marketplace.
We just need a theme to start with, makes your marketplace presentable and
helps us to attract first customers and vendors.
Frontend Submissions provides a full-featured front-end package to turn your Easy Digital Downloads powered website into a complete multi-vendor marketplace. It allows you to accept download submissions from third-party authors or vendors and allows them to list their products in your Easy Digital Downloads marketplace website.
By using the FES plugin on top of your EDD
plugin, you can build a store where vendors and creators can sign up, list
their products for sale, and manage their own accounts, all from within your WordPress marketplace platform.
For a multi-vendor digital product store, FES is the key marketplace
plugin for WordPress to use.
Commissions– An Essential Marketplace Plugin for WordPress
Commissions Plugin
The Commissions extension is what you need to administer the revenue split between your platform and third-party vendors automatically. The way it works is that you need to define the percentage of sales (the commission) your third-party vendors get on every product sale. For digital product marketplaces, commission rates should lie between 10% – 30% which will form your fee income.
The Commissions add-on is often paired with Frontend
Submissions, but it can also work perfectly on its own. Commissions can be paid
to any WordPress user at either a flat rate or a percentage of sales. It’s a
key component for any Marketplace plugin in WordPress and Easy
Digital Downloads.
Our PayPal Adaptive Payments, same as FES, the main marketplace plugin for WordPress, is a key WordPress plugin to use, as it automatically splits payments received between you and third-party vendors. This way, it avoids a lot of administrative work as the payment of third-party revenue can be done instantly and it saves significant time. This marketplace plugin for WordPress is a tested and true time-saver for all multi-vendor Easy Digital Downloads stores.
The plugin connects Easy Digital Downloads to the versatile Adaptive Payments gateway. With this gateway integration, you can easily split payments with up to 6 different receivers at the same time. You can set each receiver up with a specific percentage of the payment within the settings for this gateway. Also, you can determine whether you would like to use chained or parallel payments.
We do really like to recommend you to use this plugin and benefit from its very helpful and straightforward features. We have customers who spent a lot of time executing payments to vendors manually every month and is simply a lot of work which you do not need to do if you have an automated solution. PayPal Adaptive Payment Gateway is not actively promoted anymore by PayPal and you will need approval from PayPal before you can implement it. Nevertheless, we recommend using it as it saves a lot of time and as far as we are aware PayPal still accepts new users into its program.
The Reviews plugin from Easy Digital Downloads makes it quick and easy for your visitors and customers to review the products offered on your website and for leaving a rating. Reviews are a sign of engagement and trust, therefore installing such a marketplace plugin WordPress extension is a must.
After you have successfully set up your digital product
marketplace and installed the specific EDD WordPress plugins, the next
essential step to take is to be able to fill up your catalog with products, but
how? The answer is, we first need vendors to get on board with us. It wouldn’t
be a marketplace if there were no vendors. This means we will have to source our
first vendors who will contribute the digital products for sale on our
marketplace.
From where can you obtain first vendors
willing to sell their products with you? Based on our experience, vendors are
normally sourced from the following sources when starting a new digital product marketplace:
Creating your own products
Partner with vendors you know personally
Reaching out to potential new interested vendors.
Read our eBook for more insights on each source
of vendors.
Marketing Strategies for Digital Product Marketplaces
Once your WordPress marketplace has been
launched, promoting your digital product marketplace is important for
gaining the attention of future customers and prospective vendors. The process
of selling and promoting digital products is quite similar compared to how you
would sell and promote physical products on any eCommerce website.
Now, if you are looking for ways to effectively
market your digital
product marketplace, here are the strategies that should be tested.
Social Media Marketing
Social media refers to websites and
applications that allow users to create and share content as well as
participate in social networking with other users. Different Social Media
Platforms such as Facebook, Twitter, Instagram, Youtube and many other remains
a very great way to establish your brand and build an audience.
Keep in mind, depending on your target market,
there will be different social networks of relevance. E.g. management
professionals you most likely find on LinkedIn, developers there are many on
Twitter and Youtube, etc. Try to figure out which social media networks your
target audience is most active and these should be the social media channels to
focus on.
Social media marketing is an art by itself and
there are many techniques and tricks to be mastered. Most important we find is
to post regularly. For this, you can use a service such as Buffer which allows
you to put your posts in a queue so that you won’t forget to post at least once
per day.
Normally, the tasks are to review your posts,
compared to your competitors, research and learn what can be improved and
implement it. The key performance indicators (KPIs) normally are engagement
received, number of followers, retweets/reposts, shares, clicks which drive traffic
to your website. This all needs to be monitored on a regular basis. So be
prepared for a steep learning curve and lots of trial and error until you know
how to master social media marketing for your digital product WordPress
marketplace.
Search Engine Optimization (SEO)
Search engine optimization (SEO) refers to the
process of optimizing your website to be found by search engines. The objective
is to rank on the first page such as Google, Bing or Yahoo when somebody enters
a keyword in the search bar. The result will be that you will be getting free
traffic from organic search results via the search engines as you will improve
your website position in the Search Engine Results Page (SERP).
There are two sides to any successful SEO
approach SEO has two techniques to improve website position, On-Page SEO and
Off-Page SEO.
On-Page SEO
This refers to all the optimization tasks that
we do on our websites such as optimization of text titles, meta descriptions,
page titles, contents, image optimization by adding alt tags and descriptions,
checking keyword density in text, internal linking, creating sitemaps, ease
navigation, reducing page load times and many more tasks.
Overall, the on-page technique aims to
structure and present your website in a search engine friendly manner. This is
a very important task and to be done before even thinking about working on
Off-page SEO link building.
Off-Page SEO (Backlink Building)
This refers to all the activity that happens away from your website to raise your site’s rankings by building quality back-links. Building quality backlinks is at the heart of off-page SEO. Search engines use backlinks as an indication of the linked-to content quality, so a site with many high-value backlinks will usually rank better than an otherwise equal site with fewer backlinks. Below find some strategies you can use to obtain backlinks for your digital product WordPress marketplace:
Participating in Forum Discussions
Blogger Outreach
Guest Blogging
Press Releases
These are just some of the techniques which
can be used to build backlinks. Feel free to talk with an SEO agency, they
normally can provide you with additional options where to place backlinks and
can also help you work on that.
Email Marketing
An email marketing list can become a very
effective tool for communicating with your audience on a regular basis.
The first step in setting up your email marketing program is to install an onboarding process. Mostly this can be done by adding a subscription form at the checkout page to stay updated on news and product updates (e.g. install the Mailchimp extension). Another way is to add a widget or a popup window with subscription suggestions on your website.
Email newsletters should be sent on a regular
basis (e.g. monthly) but also not overdoing it as otherwise unsubscribe rates
will become high. For digital product marketplaces here, some ideas what
to put in your newsletters:
Present new products
Summarize new blog posts or research articles you have written
Present select vendor achievements or story
Present customer showcases and how your marketplace could help them
Introduce new features of your marketplace
Ask for user opinions on topics of interest
Only by tracking and comparing your newsletter
results you can figure out how to make your email marketing campaign more
effective and which changes lead to best results among your audience.
Now that we have successfully set up our multi-vendor marketplace platform and, have started
with marketing and vendor onboarding, we need to focus now our attention on the
operations of our digital product marketplace.
There are actually a lot of different elements
that we need to keep on our radar, constantly observe and work on in order to
enhance and improve our WordPress marketplace.
Sales Optimization
Normally the main goal of your digital
product’s marketplace will be to maximize sales and profits over the long-run.
In eCommerce we have 4 factors which determine your revenues as shown in the
following graphic:
This means you can maximize revenues of your digital product
marketplace when you seek to maximize each of the 4 revenue drivers:
Number of Visitors – See previously mentioned marketing strategies which will be needed to attract and grow the number of visitors
Conversion Rates – You will need to work on your website to best convert visitors into paying customers
Number of Orders per Customers – The more times your customers return and purchase from you, the higher your sales will be
Average Order Value(AOV) – Mostly depends on the price point of your products, how your products are packaged and how easy/difficult it is to sell them.
As for any eCommerce website you will need to
work on improving each of these four factors in order to max out your full sales
potential.
Vendor Management
Running a successful digital product multi-vendor marketplace platform means
keeping an eye on multiple vendors. Vendors come to your store with their own
ideas, expectations, and ways of doing things. You have to gather these
different vendors under one umbrella.
Your job as a store manager is to help vendors
sell as much as possible as easily as possible, while still retaining the
ability to make important decisions about your store. This means making vendors
happy while making yourself happy as the store manager.
Most digital product marketplaces will opt for curating all products they
receive from vendors for the following reasons:
Avoiding harm: Digital products are subject to
harmful code additions that might not be detectable by normal users. The worst
that could happen is that any form of digital code or program harms customer’s
computers. Therefore, it is important to review each product and know the
vendors you work with as otherwise, the risk may get too high.
Avoiding chargebacks: In the case of product
descriptions that would not be accurate, they will have a good chance of
requesting chargebacks as payment gateway providers will have the last say in
such cases. It is therefore in the best interest of the marketplace operator to
ensure product descriptions are accurate to avoid problems later on. Especially
products listed from new vendors will require a careful review.
Establishing a personal relationship with your Vendors: A product curation process will also establish a more personal relationship with your vendors. As the operator of a multi-vendor marketplace platform, your vendors are not simply your sellers but rather they are your business partners. It is very important to establish a good personal relationship with them. Why not use product curation as one way to do this? Especially smaller niche marketplaces have an advantage here as they can afford to deal with their vendors on a 1:1 basis.
It is very rare to see a digital product
marketplace that would not use a curation process to ensure a
high-quality of products are listed in its marketplace. However, we are still
checking for best practices on how to do this. Let us know if you know any good
example which should be listed here.
Monitoring How Vendors are Doing
As the operator of your marketplace, you don’t
simply source vendors and let them be on their own selling digital products on
your website. It is very important to also monitor how your vendors are doing.
You should, therefore, run different reports from time to time to benchmark and
compare your vendors to find out what works, what doesn’t and what are the best
practices that might help all the vendors to sell more.
If you find vendors who are
underperforming, first, check vendor profiles if all necessary information is
present in so that they will have a well-established identity that your
customers may see and observe.
The next step is to check their
product listings. Are the product descriptions accurate and are the products
well presented? In case of problems, does the problem lie with the seller or
with your processes? Is it easy to list products? Are there enough information
fields to completely present the products?
You might as well enhance and
optimize your website’s navigation and experience which would definitely help
your vendors get a sale.
Promote your Vendors on Social Media and your Blog
Advertising and promoting your vendors, along
with their products, in different Social Media Channels such as Facebook and
Twitter can be a good way to get visitors and help your vendors with marketing
their products. Remember, if your vendors earn, you earn, so it’s in your best
interest to help them market their products.
As part of your digital marketplace marketing
campaign, writing blog posts about vendor products can help you to create
additional content for your web page and offer your vendors another platform to
market their products. However, make sure the articles to be published comply
with the required quality standards you need to maintain for your blog.
Providing Vendor Resources
Working with vendors and helping them to
market their products will become an ongoing task. As such you will need a
process to help your vendors. In the beginning, vendors will have a lot of
questions as they will need to understand how to work with your digital product
WordPress
market place and what they will have to do to earn money.
Therefore, in order to anticipate their
questions, it is advisable to follow a pro-active approach. One way to do this
is to send out a series of education emails to new vendors upon sign-up. The
objective is to help vendors to complete their product listings and then in a
second step motivate them to list more quality products on your digital product
marketplace.
Building a Team
We all know that running a digital product WordPress
Marketplace is tough. When you’re starting out with your business, you
will have to do all the tasks required. From running and managing your
marketplace like updating and creating products, managing vendors, paying
commissions, sourcing more vendors, managing promotions, customer support,
handling social media accounts, SEO Management – the list of To-Dos is endless.
However, as a business owner, it’s better to spend your time doing what you do best – running and growing your company. But that’s not to say the routine tasks and administrative duties aren’t important because they absolutely are. Depending on your budget, you will have to consider hiring people. Normally you want to hire employees in a lean manner. So apart from hiring employees, you have the following alternatives to hire:
When your marketplace is very new you don’t
want to incur big costs at the beginning and first test out if there are demand
and interest in the products. Therefore, you should consider outsourcing tasks
first to freelancers then to virtual assistants until your marketplace produces
stable revenues and profits so that you can afford to hire employees.
Tasks you can Outsource
It is important to know what tasks you should
outsource before you start building your team – including freelancers and
virtual assistants who you can work with on a more permanent basis. When
considering to outsource tasks, look for manual, time-consuming work or tasks
that are repetitive, can be thought to others and where you are better off
using help rather than when having to spend the time yourself.
Here are some daily tasks you should consider
delegating:
Customer service: Answering emails
and phone calls from customers.
Social Media Management: Creating
content, responding to comments, and other community management tasks.
Store management: Reviewing product
descriptions, managing vendors, tracking KPIs
SEO: Off-page link-building
Technical operations: Website
maintenance, SEO management, and other administrative tasks.
Data-entry: Bookkeeping or
inputting data from different sources into a spreadsheet.
Etc.
Tracking Key Performance Indicators (KPIs)
If you want to know how your digital product
marketplace is doing, you need to keep track of your Key Performance
Indicators (KPIs). This is an important step to take to ensure that you are not
going off track.
Example dashboard of tracking KPIs
A key performance indicator – also known as
“KPI” is a performance measurement that impacts the result of your online
store. KPIs need to improve and achieving your objectives will provide
important milestones on your road to online success. Monitoring important KPIs
for your online store tells you whether your business is moving towards meeting
your objectives or not.
Essential KPIs you should track
KPIs for digital product marketplaces are numerous to track but important is to
focus on those where any change will impact the financial result of your
business. Tracking should be done at least on a monthly basis or even on a
weekly basis. The advantage of doing a weekly tracking is that you will find
out sooner in case of any problems and have more time to take action. If you
wait until the month-end, you might find out that too late that were problems
and it leaves money on the table.
We present a selection of KPIs which will be
useful to consider tracking on a regular basis for a digital product marketplace.
They are:
Website
Traffic (Number of Visitors)
Website Traffic
Average Time on Site
Domain and Page Authority
Alexa Ranking
Social Media Followers
Conversion
Rates
Conversion from Visitor to User
Conversion from User to Paying Customer (Free to Paid product)
Cart Abandonment Rate
New Customer Signups
Email list subscribers
Number of orders
Average
Order Values
Number of products
Average Order Value
Measuring KPIs on a regular basis is an
important step towards professionally managing your digital products marketplace
and finding the areas where you can still improve in order to achieve your
business goals. To really grow your multi-vendor marketplace, you need to monitor
your webstore’s performance on an ongoing basis and take actions every time
KPIs, move in the wrong direction. Once you’ve decided which KPIs you want to
track, make it a part of your weekly and/or monthly routine to follow them
closely.
Automating and Improving Processes
At the beginning of your website, tasks are
fine to deal with as they come up. But as you grow, these tasks get more and
more frequent, and the demand on your time and your team’s time becomes even
greater. After a while, these small tasks can significantly eat into
productivity; reducing output, creativity, and even profit margins.
You will be confronted with seeking new ways
to automate and improve your processes as your digital product marketplaces scale up and become larger. The objective
is to save time, money, and sell more. Ultimately, it provides gets your
business ready to scale-up exponentially. Automations include mostly:
Automating tasks and improving processes is an
ongoing task and there will be many more ways to save time and benefit from
automated solutions and improved processing. Obtaining a sufficient level of
automation is key to fully scale-up your digital product marketplace to
reach its full potential.
Website Security
Another important element that most eCommerce
companies need to consider from the very beginning is the eCommerce website
security. If you run an eCommerce website, you’ll know that they are a major
target for hackers, fraudsters and yes, even for your own competitors. Just
think about the thousands of user IDs, personal information, product catalog
and prices, financial information including credit card details a typical
eCommerce webstore has. That’s what makes eCommerce sites, big and small, so
attractive to cybercriminals to exploit and competitors to leverage on.
As your multi-vendor
marketplace platform becomes larger you will also find that you
will have to spend more time in making your infrastructure more solid and
enhance the security of your marketplace. Here are some basic measures you will
have to implement to keep your digital product marketplace save (among many
others):
HTTPS / SSL – today Google views it as an
outdated practice to use HTTP and punishes websites still using the old HTTP
protocol. Therefore, implementing a Secure Sockets Layer (SSL) certificate from
the start is a must. You can purchase one from your hosting company or a
reputable SSL vendor at affordable costs.
Complex Passwords – Insist that every user
have to use passwords that comply with a minimum standard.
Payment Gateway Security – While it may make
processing payments more convenient, having credit card numbers stored on your
database is a liability. In order to save your business from this terrible
fate, you should never store credit card information on your servers and ensure
your payment gateways security is not at risk. Today you can easily use
third-party payment processing providers such as PayPal or Stripe who will
manage all sensitive Credit Card information in a professional manner.
Firewalls – using firewall plugins and also
configuring your server firewall is a must to protect again malicious attacks.
Backup your data – Data loss due to hardware malfunction or cyber-attacks are not uncommon. And if you don’t back up your data regularly, you are at the risk of losing it for good. Employ automatic daily backup service so that even if you forget to do it manually, all your data will be backed up automatically minimum once a day.
These are just a few elements to mention and
to work on. As your digital product
marketplace becomes bigger, paying close attention to security becomes
even more important.
Conclusion: Building a Digital Product Multi-Vendor Marketplace Platform is a
Journey, not a Destination
Building a digital marketplace is a good idea
as today the trend goes towards creating specialized niche marketplaces that
can offer better know-how and a much more focused approach than a generalist
marketplace. Many buyers prefer to buy from a marketplace rather than a single
vendor store.
Easy Digital Downloads offers an open-source solution to run a digital product marketplace on WordPress by installing select marketplace plugins for WordPress. These are either freely available or are very reasonably priced. Also, many useful plugins are available on the WordPress plugin directory.
The marketing tactics require a bit a
different focus for a multi-vendor
marketplace platform
compared to a single vendor store. SEO and Social Media Marketing are two
important strategies to focus on, especially as traffic there is cheap in the
long-run compared to other sources of traffic.
Vendor management and tracking your Key
Performance Indicators are a must in establishing a successful digital product marketplace.
Activities and tracking of KPIs should focus on factors which will influence
users and revenues later on.
Ongoing work will be required and normally
only by keep testing and optimizing your WordPress marketplace you can exactly understand
how your marketplace business works and how to make it a success. Creating a digital product marketplace is not a
destination but one of the most interesting journeys in eCommerce. Feel free to
take it.
This article provides an overview of how to build, set up and operate your digital product marketplace in WordPress. If you are interested in more details, please download our Free eBook on How to Build a Digital Product Marketplace on WordPress which contains even more comprehensive and detailed information on how to set up a multi-vendor marketplace platform for digital products.
For any feedback or comments feel free to reach out to us as we are also interested in your input digital product marketplaces can be made even better.
