Marketplace eCommerce

Best Platform Governance Strategy with Examples

Updated September 23, 2022  |  7 min read

Platform Governance Is Fundamental

Maintaining high-quality service for buyer and seller interactions is a challenging, yet essential, part of operating a marketplace platform at scale.

This boils down to platform governance—the rules of the marketplace and how you enforce those rules, and how you guide the sellers and buyers in their interactions within the marketplace.

Given the right metrics and framework, buyers and sellers are motivated to act in a way that makes the marketplace successful.

At the end of the day, if the sellers don’t provide a great service to the buyers, and the buyers don’t provide a reasonable purchasing experience for the sellers, the marketplace will collapse.

The marketplace’s value is dependent upon several factors, such as the products and inventory, logistics, as well as the governance. The buyers and sellers have to comply with that and work together, or the whole system will break down.

This shows how critical platform governance is for an marketplace eCommerce platform. Governance is about how you allow buyers to share feedback, how you promote positive performers on the sellers’ side, and how you demote, ban, or suspend those who don’t follow your marketplace rules.

Governance Strategy for Seller Experience Levels

Whenever there are issues, you’ll find that there are always two sides to every story. But you can also look at trends with sellers and how they usually deliver for customers, and trends for buyers to see how many issues they’ve had in the past.

Some sellers have a lot of experience with customer service and understand it’s critical to have high customer satisfaction. Then there are sellers who haven’t learned that yet, and they are possibly being overly ambitious or opportunistic, and overpromising and underdelivering.

In the latter scenario, these types of sellers can be weeded out upfront. Specifically, we can put a process in place with your marketplace to preemptively require that sellers have a certain track record or certain level of performance to go into certain criteria within the marketplace. Then, the buyers will know going in that this seller is a well-established business, and that they’ve been in business for over five or ten years. Or they see that this seller has this many references from customers who have a verified purchase through the platform.

Setting up different levels of sellers, such as bronze, silver, and gold, can be a helpful search functionality.  There can also be reporting for a seller’s average fulfillment time, customer support ratings, and issue resolution. These are all things that should be apparent to the buyer in advance of their purchase. If the seller doesn’t have any history (ratings, reviews, etc.) then the seller information should show that, as we want the buyer to be aware of that going in.

Strategic, Preplanned Platform Governance Process

In some cases, issues will occur despite these preventative measures. The best way to handle issues that do occur is to have preplanned workflows or governance process. Then, if there is a return request, the seller and buyer will need to go through certain processes that they’ve agreed to in advance.

Many of our marketplace eCommerce clients will provide an onboarding process for sellers, that they must complete before becoming a seller on the platform. This onboarding process would cover topics like how they are expected to provide returns and refunds, and what the standards are within the marketplace community.

A common situation that might happen is that a seller doesn’t get a product delivered on time as promised. For example, let’s say there’s a buyer who needed a part for a machine that’s down, and they got the impression from the seller that they’d have the part two days ago, but it didn’t arrive. So the buyer purchased the part from another seller, and now they need to return the item because it didn’t get there when promised.

For a situation like this, and similar scenarios, there needs to be a policy in place so there’s a standard procedure to operate under. When the seller, for whatever reason, didn’t get the item to the buyer on time as promised, there needs to be a full refund there.

However, it may not make sense for your marketplace to guarantee delivery times. If that is the case for your marketplace, then we need to clearly show the buyer that this is not a guaranteed delivery date when they are making their purchase.

These things make a difference if a seller continues to have issues where they get a lot of return requests or negative reviews. It’s important for you to be able to look at all of the transactions and interactions, and for the marketplace administration team to be able to have the data to analyze what’s going on with the seller.

If a seller doesn’t abide by the rules or isn’t customer-service oriented, there needs to be a path to be able to escalate within your marketplace platform, both for the buyers as well as the marketplace administrators. We recommend having a flagging system, where upon certain events occurring, sellers get moved into different tiers of caution. There could be a first or minor warning, and a strong warning, and then a high priority escalation where something needs to be done beyond administering the warning.

Depending on how much volume a seller has and what’s occurring, different actions will need to be taken. Did someone provide a lower than average review, or a very low review? Request a return and refund?

If these occur within a certain time period, like a month, then this might be when you want to put them into a caution state, and provide a workflow with emails or notifications to remind them that, “hey, you got some reviews below your average, here are some effective ways to deliver high quality services.” You can also recommend that they try getting in touch with those reviewers and making it right. Maybe they can turn four start reviews into five star reviews by providing great customer service.

If a seller continues to have major issues and isn’t reconciling them, then it does make sense to have an automated escalation path, where internal team members receive a notification so they can potentially take action. They may need to temporarily pause receiving or processing orders for that seller. It usually makes sense to remind the seller of the platform governance, and giving them a message along the lines of, “If you’re found to not support these terms and policies you agreed to, then we can at any time pause or terminate your membership as a seller in the marketplace.”

Typically, it works well to provide them with a notification, and an automated notification is usually helpful, that might say, “Hey, we received this report that claims you are violating the terms of this part of the agreement. Here are the details of the terms. Please let us know what your responses are to this and what your plans are to reconcile the issue.”

Many times it will make sense to have direct interaction with them, especially if they are a large seller. There may be confusion or misunderstanding in many cases that’s driving the issue.

Website Governance Framework to Scale Your Marketplace

The main takeaway here is that you want to utilize a marketplace eCommerce platform that can handle this concept of providing reviews, and providing reviews for different aspects of the particular interaction, reviews on particular line items within an order and different vendors who are fulfilling an order, different sellers, as well as overall reviews of how the interaction went.

A successful marketplace eCommerce platform has the capabilities necessary to take action on an order or line items, and reconcile issues with a seamless workflow that’s built into the marketplace platform. These capabilities are fundamental for any marketplace platform to be able to scale. Without the ability to deal with these issues and have a governance process workflow in place, the platform will be a bottleneck and a limiting factor to the marketplace’s progress.

These automated workflows need to be seamlessly incorporated into the platform, the ERP, CRM, other customer support systems, etc. This is critical for the system to be able to scale.

Provide Resources to Succeed in Your Platform Governance Process

So you want to think about these things in advance. Not just what the ideal outcome is, though that is a critical starting place; but also, what scenarios might occur, how the seller and buyer might behave, and how you want to handle these situations. Then you want to ask yourself: “Are our platform governance terms and policies reflective of these things?”

This would include clearly messaging throughout the process, in an encouraging but firm way, that “this is how we operate in this marketplace. This data shows this behavior gets these types of results. We expect sellers to give great service, handle complaints timely and resolve them with success, and consistently deliver what’s promised when it’s promised. If sellers don’t follow these terms, we can pause or terminate your account.”

These types of things can be really helpful to have in the workflow of the seller process. It can be surprising, but a lot of the time, when sellers are not in compliance, it’s because they don’t understand the value of them being compliant, or they don’t know how to complete a particular task. For example, resolving a customer concern—they may not have a good way to handle that, so they get overwhelmed and shut down, which is horrible for their business.

You can help sellers within your marketplace by giving them suggestions and best practices on various scenarios, such as in the event they get a customer complaint—let’s include some videos and training on how to handle it, and even how to think about it in a positive way.

Sometimes peaple are busy and overwhelmed, especially the sellers in a marketplace. They don’t necessarily see it as an opportunity when someone provides feedback in the form of a complaint. It’s not the most fun, but it’s probably valid to some extent. So, complaints can be a great opportunity for the seller to fix some problems, possibly major problems holding their business back. It’s also an opportunity for them to show what integrity they operate with, because if they do resolve the issue and provide a satisfactory response, that is key to future customers, that they know the seller is going to resolve the issue maturely and professionally.

If you’re looking for an eCommerce marketplace platform, it’s best to get one that can handle at least some of these processes in an automated way. It’s also key to have a team that supports your workflows and tailors the implementation of your eMarketplace platform for your business and your customers.

If you’re looking for this kind of service, look no further than the Clarity team. If you would like to receive complimentary review or discussion, we welcome the opportunity to share what we've learned over these 16 years of operating our marketplace eCommerce platform successfully. And regardless of whether we work together, we're happy to help and hopefully point you in the right direction.

Implement Your Platform Governance Seamlessly

Our team can provide you with the tools you need to succeed. Get a complimentary review with one of our experts.

Related Posts

Author
 
Autumn Spriggle is a Content Writer at Clarity Ventures who stays up to date on the latest trends in eCommerce, software development, and related topics to provide readers with the latest and greatest. She strives to help people like you realize the full potential for their business.