How to Launch a Successful Curated Multi-Vendor Marketplace

Are you considering launching your own curated marketplace? Whether you are after insights on how curated marketplaces work, the role of AI, or how vendors and customers benefit from these platforms, we have you covered.

We’ve gathered all the essential questions about curated marketplaces and got answers from industry expert Francisco Campos, COO of Onport.

From how marketplaces prevent over-competition to the ways composable technology is transforming product integration and customer experience, this Q&A covers everything you need to know about the future of online marketplaces.

Q: What are the main business challenges when starting a curated multi-vendor marketplace?

Francisco: The first challenge is defining why you want to launch a marketplace. It could be because you believe in the marketplace model and its value for customers, or maybe you see it as complementary to your existing business.

For example, one of our clients, Hole19, is a golf app that helps users find the best golf courses. They added a retail marketplace for golf gear, allowing them to offer more value to their audience by recommending and selling equipment in a curated manner.

Beyond the "why," a key challenge is defining your audience. Who are you targeting? For retailers, you may already have an audience and are simply expanding your offerings. For startups, it's crucial to find a niche.

A client of ours, Immaculate Vegan, created a marketplace for vegan fashion, understanding that the vegan clothing market was fragmented. This gave them an edge by offering a one-stop shop for vegan-conscious consumers.

Q: What is the importance of curating vendors, and how do you convince them to join your marketplace?

Francisco: Curation is vital. You need to select vendors that align with your marketplace's philosophy and niche. The vendors want access to sales channels that expose them to a larger, yet targeted audience. If you already have a strong customer base, it's easier to convince brands to join, as they'll benefit from your established audience.

For example, Mango, a well-known, established fashion retailer, for a long time only focused on clothing, and didn’t have its own shoe line. Before launching their own, they partnered with Adidas, New Balance, and other shoe brands to offer their customers footwear that matched the style of their clothing line.

For newer marketplaces, you need to sell vendors on your vision. Brands need confidence that your marketplace will succeed, so you must demonstrate how you will drive sales and marketing efforts to bring consumers to their products.

Q: Why is understanding your audience so critical when launching a marketplace?

Francisco: Understanding your audience determines the selection of products you’ll offer and how you’ll market them. If you already have an audience, like in Mango’s case, the challenge is knowing what adjacent products they’re likely to buy - in Mango’s case, footwear.

If you’re starting from scratch, defining your niche is even more critical. Going broad is difficult for startups; it’s better to start niche and focused. Immaculate Vegan, for instance, recognised that vegan consumers were searching across multiple websites to find specific products, so they consolidated all those offerings in one place.

This is where the real value of a marketplace comes in—solving fragmentation and providing a curated, seamless experience for your audience.

Q: What should new marketplace founders consider when trying to onboard vendors?

Francisco: For established retailers, it’s about showing vendors the existing audience they can access. You’re giving brands a platform to reach more potential buyers. If you’re just starting, you’ll need to focus on selling the vision. Explain why your marketplace will succeed and how it will grow.

Vendors need to believe in your strategy and that their products will actually sell on your platform. You also need to communicate clearly what value your marketplace brings to their brand, whether that’s new customers, better visibility, or an alignment with their target market.

Q: What role does the marketplace play in preventing over-competition between similar vendors?

Francisco: Marketplaces can actually become great advisors for brands and sellers, leveraging the data they gather on customer preferences and buying behaviour. Without revealing sensitive information, a marketplace can guide brands on what types of products are performing better with customers.

For example, a marketplace could tell a seller that specific colours, sizes, or styles are more popular, helping them plan future collections or product launches. This creates a more informed environment where brands can make better business decisions based on insights they otherwise wouldn’t have access to.

Q: How can AI play a role in ensuring seamless vendor integration?

Francisco: AI can play an incredibly important role in vendor integration by automating processes that were previously manual and time-consuming. For instance, tasks like category mapping, and syncing stock levels can be automated through AI, reducing the operational burden on both the marketplace and the sellers.

In the past, these tasks required significant human input, but I can eliminate much of this, driving down costs. AI can also assist with transforming product images to create a coherent and appealing look across the marketplace, enhancing the customer experience.

Q: What are the benefits of centralised automation in marketplace operations?

Francisco: The centralised automation of marketplace operations extends its benefits beyond integration to areas like customer service. For example, platforms like Onport can manage queries about stock levels, order tracking, and availability, which would otherwise require human agents.

This automation can significantly reduce operational costs and improve efficiency for the marketplace, leading to better margins for both the platform and the sellers. Moreover, the scale at which marketplaces operate makes it easier for them to leverage various technological tools compared to individual sellers.

A marketplace can implement state-of-the-art solutions across thousands of vendors, gaining a competitive advantage in efficiency and customer satisfaction.

Q: What future developments in AI should marketplaces expect?

Francisco: One major development marketplaces should prepare for is the growing integration of AI to streamline and enhance content management.

Marketplaces often face challenges with inconsistent product content from multiple vendors, including variations in language, format, or style. AI can address these issues by automating the transformation process and ensuring that content is tailored to specific needs.

It can customise product descriptions using parameters such as tone of voice, target audience, brand story, and insert SEO-focused keywords. This not only saves time but also ensures consistency and brand alignment across all product listings. Operators simply set their preferences, and the AI handles the rest, even allowing for manual overrides when necessary.

Of course, security remains a priority. In alignment with OWASP best practices, the focus must be on designing safeguards that minimise risks, such as using markdown for basic formatting, which is safely converted to HTML. This ensures that content remains secure and free from unauthorised modifications. As AI continues to evolve, marketplaces can expect even more powerful tools to help manage and optimise their platforms efficiently.

Key Takeaways:

• Start with the "Why": Are you launching a marketplace to enhance your existing business or because you see an opportunity to create something entirely new?

• Define Your Audience: Whether you're building on an existing customer base or starting from scratch, knowing your audience’s needs and behaviour is critical to success.

• Curation is Key: Selecting vendors and products that align with your marketplace’s ethos adds value, both for consumers and for the brands you onboard.

• Onboarding Vendors: Established businesses can attract vendors with their existing audience, but new marketplaces must pitch a compelling vision and a plan for success.

• Vendor Integration: Seamless integration through advanced technology reduces vendor workload and makes it easier for them to stay on the marketplace.

• AI’s Impact: AI is crucial in streamlining operations, improving image transformations, enhancing customer service, and reducing operational costs for marketplaces.

• Managing Vendor Competition: Marketplaces can act as advisors to vendors, using aggregated customer data to help brands better tailor their offerings, thus balancing competition.