Oct 12, 2024

Trust and shipping: The keys for transactional marketplace strategy Success in transactions requires building trust Creativity in shipping options also needed Experiment with different models, like instant offers At the peak of the Covid-19 pandemic, horizontal marketplaces rushed forward transaction capabilities to capitalize on the sudden demand for seamless online buying. As the dust settled on the boom, it revealed a grab-bag of markets. In some, c-to-c recommerce has flourished. In others, the wave of online transactions receded — or never took off at all. Where transactions have thrived, these elements are critical to their success: Liquidity: The availability of the right products, merchandise or “stuff.” If there’s not enough, there’s no marketplace. Ease of use: If it’s too complicated to buy / ship / receive, or it’s too difficult to post and list products, no one will buy. Willingness to transact online: In some markets, people are comfortable buying online with just a few clicks. It’s second nature. In some countries, like India, there’s great reluctance to transact online. Payment systems, dispute resolution services, authentication: These are essential to building trust and making users want to transact. Convenience is the bottom line “The key to success [in recommerce] is providing consumers with convenience, which comes through constant innovation,” said Antoine Jouteau, CEO of multinational marketplace operator Adevinta. “We need to make it as easy and convenient as possible to buy secondhand.” The two most important elements in any successful transaction strategy are trust and fast, affordable shipping. “Trust connects immediately to the transactional model,” Robin Schuil, the founder and CEO of Greece-based Vendora, told the AIM Group. “Then, for [an online] transaction to happen, there needs to be a couple of enablers in place. The most important there is shipping, because if nobody trusts the postal agency — they think that they break everything and lose packages — it won’t work,” he said. Several steps required to build trust Creating trust in a marketplace requires varying steps, depending on the market’s needs. “It isn’t just a list of features that can be copied,” Schuil wrote in a LinkedIn post on the subject. “Trust is a like a plant,” he added. “It needs the right environment, constant care and a lot of patience to grow.” Vishal Salunkhe, VP and head of commercial teams at Carousell Group, echoes that view. “Trust has multiple dimensions,” he told us. “In my mind, it’s a spectrum. That means, in terms of solving problems,” marketplaces must create unique buying and selling experience that removes friction and imbues trust in the process. Improving listing quality, user experience The first step to increasing trust in a marketplace is improving the quality of listings and inventory. “This is the most fundamental requirement for all marketplaces,” Mayank Yadav, a former product lead at Facebook Shops, once told us. “Initially, platforms curate their inventory, sellers or content, but as they grow, they need to add product solutions, which creates trust proactively — adding checks to ensure high-quality products get on the platform — or reactively [by] removing products based on user reports … to create a quality buyer experience.” AI and ML can play a role Much of the grunt work weeding out scams and fraudulent posts can be carried out by artificial intelligence and machine learning. But the most successful marketplaces — like LeBonCoin in France, and Mercari in Japan and the U.S. — look and feel like e-commerce sites, thanks to the way they use AI and ML to curate the listings based on how well products have been photographed, the popularity of the items and the ratings and reviews the seller has received. LeBonCoin up-ranks listings from sellers who have high ratings, displaying their average rating and the number of reviews they’ve received prominently on listings, including how quickly they respond to buyer inquiries. Mercari also scores sellers based on responsiveness to buyers. Carousell, based in Singapore and operating in seven Southeast Asian countries, returns search results based on what its algorithms determine is the “best match” for the user’s query, rather than those most recently posted. The algorithms personalize results based on the user’s previous search history, and prioritize high-quality listings. “Right off, that makes my experience with secondhand really good,” Salunkhe said. ‘Seller diversity’ helps buyers When inventory volume at Carousell increased and the company saw more professional and “power sellers” participating, it wanted to maintain its utility for casual sellers, so it developed another algorithm — “seller diversity.” This ensures buyers don’t see more than two listings from the same seller on each page of results. Buyer protection, or a dispute resolution tool, is also important. Vinted, the multinational fashion and luxury site based in Lithuania, has automated dispute resolution using AI — though that can sometimes lead to the buyer or seller ending up with both product and money. Other companies take a more hands-on approach. Vendora employs a customer support team to handle disputes. “If we have a dispute, we usually get on the phone with the customers, which makes a great … difference,” Schuil said. The company also found that a good way to nip potential issues in the bud is to proactively monitor transactions on its site. “What we’re also doing is the first time a seller receives a payment, we immediately give them a call to let them know, ‘Hey, we found you a customer and is there anything else we can help you through this transaction?’” Schuil said. “We let them know that we’re monitoring this, so we have your back if something goes wrong — we are here. This really gives a lot of peace of mind to, again, put trust in us and into the system.” Building creative shipping options Marketplaces operating in high-trust societies often find it relatively easy to introduce transaction tools because users tend to trust the process. Perhaps they’ve previously had a good experience meeting for in-person trades, or the site or app is the place they found their last job, home or car. However, paradoxically, this may also deter consumers from completing transactions online, if they can easily and safely meet in-person. That makes fast and affordable shipping critical to encourage more online transactions. For marketplaces, the challenge is not so much finding a shipping company with which to work, it’s overcoming the last-mile problem. “That’s where you need to be creative,” Schuil said. “It needs to be affordable, and it needs to have great coverage.” Convenience stores: Convenient Creating a network of drop-off and collection points is one strategy to address the issue. In Japan, Mercari uses convenience stores as drop-off points. It has about 80,000 drop-off locations throughout Japan. Carousell works with convenience stores in Taiwan, one of its earliest and biggest markets for transactions. Sellers can take their items to a local 7-Eleven and show a QR code to print a label that’s attached to the item, and it is shipped. “This already existed,” Salunkhe of Carousell told us. “It was this unique 7-Eleven setup that all the e-commerce and recommerce players were already using. That made it easier for us to partner with 7-Eleven, but there are other discussions we are trying to have with 7-Eleven and other partners in Taiwan to see what we can do beyond what’s already on offer.” The experience in Taiwan helped Carousell launch similar partnerships in Malaysia, but with post offices instead. In Singapore, it’s long offered door-to-door shipping, but it recently struck a relationship with Ninja Van to offer more than 800 drop-off and collection points. “The way we assess partners is to probably find a partner that can give us preferential rates, because it has to be cheaper to sell with us vs. doing it directly. Otherwise, there’s no value-add,” Salunkhe said. “It has to be a process that we co-create, hopefully to make a compelling value proposition to the seller, which is unique to Carousell.” Using parcel lockers In France, LeBonCoin works with several carriers, including Mondial Relay and Shop2Shop by Chronopost, which provide parcel lockers to ship items between points. Vendora lets users drop off and collect items from lockers it set up with local shops, convenience stores, even barbershops. “The key,” Schuil said, “is to have a locker that’s very close to everyone.” Carousell found another friction point in the process was the packaging of items. “We haven’t done this [everywhere] yet,” Salunkhe said, “but we are trying. … Can we give free poly-mailers at the access point of drop-off, so the person just takes the item, and they don’t have to do anything?” It launched one such initiative in Hong Kong, working with carrier SF Express to provide free packaging materials at drop-off points. “You just take your item, they will inspect it to make sure it’s not something illegal, and then they will package it, print the label and then it gets shipped,” Salunkhe said. (In the early 2000s, during the height of the EBay c-to-c craze, literally thousands of privately owned stores popped up around the United States with the simple proposition, “We’ll sell it for you on EBay.” They took in the item, photographed it, posted it, managed the auction or “buy it now” deal, and shipped the item. For that, they took 50% to 60% of the sale price. The stores were everywhere: in big cities, small towns, even rural areas. As the EBay selling craze subsided, and the company moved more into b-to-c transactions, the stores faded away as quickly as they popped up .) Helping passive visitors buy, sell There is another challenge that’s trickier to overcome, but still intersects with trust and shipping. Many marketplaces understand only a small proportion of the people visiting their sites and apps end up buying or selling. They wanted to know why. One hypothesis is that there are people who would like to sell their items, but don’t have the time — nor, perhaps, the inclination — to photograph, post and then ultimately pack and ship their items once sold. To encourage those people to begin selling, some marketplaces have partnered with third-party specialists, like electronics resellers or even other marketplaces to provide easier options to sell their items. “We found, after some research, that there are some time-starved buyers who probably need more convenience, more safety, more trust. … They want instant cash,” Salunkhe said. In Singapore, the company last year rolled out “sell to Carousell” for secondhand clothes, luxury fashion, bicycles and electronics. Users answer a few questions about the items they wish to sell and, providing the condition is stated accurately, Carousell will buy the item from the user for cash. (For bicycles, Carousell affiliate Decathlon makes the purchase.) Quick cash in hand “If someone is trying to sell a mobile, [they] will go to [electronics marketplace] Lacu6, which is our entity,” Salunkhe said. “Someone will go to their doorstep, do a quick security scan to ensure everything is in order, and in three to five minutes hand over the cash. It’s a very seamless process.” With luxury fashion, Carousell is a little more selective. It buys only items that it knows are in high demand and will sell quickly. For items that might take longer, Carousell offers an option of selling on consignment to offset the risk of holding onto inventory. Through another relationship, with e-commerce marketplace Lazada (owned by Alibaba), Carousell offers a smartphone trade-in option for Lazada users buying a new phone from a Lazada merchant. At checkout in the Lazada app, users are asked if they’d like a trade-in quote; if it is accepted, the value is used to reduce the price of the new phone. Cross-border sales Mercari has introduced cross-border transactions for certain items — high-value Japanese cultural items, such as rare anime comics — to improve the utility of its marketplace for Japanese sellers. Mercari lets users at its U.S. marketplace buy items from the Japan site, and it’s established relationships to share its inventory with marketplaces in other countries. Any time a seller in Japan lists an item in certain categories, that listing is automatically syndicated to Mercari U.S. or to the affiliated marketplaces. Buyers are responsible for customs and shipping costs. “From the seller’s perspective, they don’t know if they’ve sold it to overseas consumers or domestic consumers,” Takahiro Masaki, Mercari’sregional expansion lead for cross border and global expansion, told the AIM Group. Mercari’s foray into cross-border transactions, which grew gross merchandise value by 3.5 times in FY2024, is a key priority for the business moving forward. ‘Creating a global marketplace’ “Our marketplace mission is create value in a global marketplace where anyone can buy and sell,” Masaki said. Consolidating inventory and becoming a cross-border, or multi-country, marketplace with a single brand is perhaps the way forward for recommerce marketplaces. Even though marketplaces in the European Union wouldn’t have to deal with customs, there’s still the challenge of sorting out shipping across borders. “It means you can’t have a single solution to roll out across Europe,” Schuil said. “You need to figure the individual route. It’s a big, big puzzle. How do you make this happen affordably? And then we still have different languages across Europe and different currencies. Cross-border does still pose some challenges. “I think the true opportunity that we are going to see unlocked by cross-border transactions is still a couple of years out, because we need to see the postal market improve — but new regulations coming out of [EU headquarters in] Brussels are doing just that. Give it a couple of years and I think you’re going to see that further ramp up,” he added. Search for: