Today, how e-commerce brands handle marketplace payments is a key business differentiator. With online sales on the rise, today’s sellers have big opportunities in store—and their choice of where to peddle their products.
In 2020, 50 top marketplaces based in the U.S. grew sales by 40%. (The fastest-growing new marketplace, alcohol delivery service Drizly, saw 300% growth.) While top marketplaces like Amazon continue to dominate the scene, brands and e-commerce businesses looking to diversify are turning to a growing number of options—meaning that to scale up, burgeoning marketplaces must attract not just consumers, but sellers. It’s clear that to differentiate, marketplaces can’t overlook any aspect of the seller experience. That includes marketplace payments—specifically, how sellers get paid.
According to research from McKinsey & Company, offering value-added services for sellers will be key to standing out in this competitive landscape. Sellers must compete, themselves, to position their products effectively and meet customer demands for efficient order fulfillment. So, they are naturally eager to work with marketplaces that make that job easier—whether by offering training and tutorials, sharing access to data and trend analytics, or continuously improving their platforms to give sellers more capabilities and benefits.
For instance, eBay recently expanded its product authentication services for items such as watches and sneakers. Products are shipped to a team of experts who inspect each item for authenticity, offering added protection for sellers—and confidence for their customers—at no extra cost. And consider how Etsy, which started in a Brooklyn apartment, has grown its seller base to over 2.5 million people. This hotspot for handmade and vintage goods offers an array of digital toolsfor marketing and advertising, including the ability to create a custom website powered by the seller’s Etsy shop. Sellers can even access tools that help them create targeted social posts and free ads to promote their products. These kinds of value-added services are a win-win for brands and marketplaces, and they are gaining prevalence as more platforms realize the power of supporting their sellers.
But one area where most platforms can still do a better job is by building a better seller payout experience. It’s common for marketplaces to offer ACH transfers, which can take three or more business days to clear, or access to funds via a third party that charges fees to the seller. Frustrations during payment can turn off and demotivate sellers. Fortunately, other, better options are available for issuing marketplace payments to sellers—such as reloadable virtual cards that make it possible to pay sellers quickly or even in real time. Cards charge no fees to the seller and can even eliminate payment administrative costs for marketplaces. These digitally native payments provide flexibility, choice, and convenience for payees, enabling them to spend their funds anywhere—online, on mobile, or in person via a mobile wallet—in addition to options like transferring funds or cashing out.
That said, the real power of digital payments resides in the level of engagement possible for marketplaces wishing to support and retain sellers. When a marketplace makes an ACH transfer, it has little control over the payee’s experience and no opportunities to build loyalty. With a branded, customizable card, marketplaces not only stay top of mind for sellers, but they can easily build in rewards programs—say, when sellers spend their earnings at select gas stations—and even sweepstakes to engage cardholders with monthly prizes. The marketplace payment experience becomes one more way to add value for sellers and engage them at multiple touchpoints.
As marketplaces continue to proliferate, winning seller loyalty will become both more challenging and more important than ever. The good news is that many e-commerce platforms are already harnessing the benefits of digital tools to enhance seller success and satisfaction. Moving forward, companies that extend this approach to every aspect of the seller experience, including marketplace payments, will stand out as exceptional platforms amid a growing number of choices.