After launching a marketplace business, there are bound to be challenges that your business will face. These challenges usually crop up as small or minor issues and later evolve into gigantic problems that can threaten the progress of the business. If you don't want your business to suffer extreme setbacks, you need to rise to the occasion and put a stop to them.
More often than not, these challenges can come from different sources, from software, customers, products, services, and your approach toward sales. For a fact, your business can only be opened to two individuals: the buyers and the sellers. These two sets of clients depend on each other to make the business thrive.
Though the problems and challenges that marketplace businesses face can be different due to the products offered for sale and services rendered, there are many challenges common to all businesses.
Luckily, there are solutions to these challenges. Once you have a solid plan in place and adhere to the tips and recommendations analyzed in the subsequent paragraphs of this article, your business should witness a significant turnaround in due time.
So, what are some of the big challenges that can confront your marketplace business, and how do you successfully tackle them? Let's get to the tips together.
1. Unexpected Price Hikes
This economic challenge is inevitable. Day after day, all marketplace businesses face unexpected changes in the price of products and services. The standard cost of things like last-mile deliveries and warehouse rentals climb up because demand is constantly on the increase compared to supply. Simultaneously, the price of raw materials and goods increases due to tariffs.
The cost of advertising has been on the high side, too, with no significant effort to reduce it. With a 12 percent increase in advertisement charge, which accounts for more than five times the rate of inflation, prices of products and services have risen in a short time. If your advert targets a particular audience, it is pertinent that you spend more on advertising.
The activities of influencers are another factor that has caused price hikes since their work has more to do with boosting posts using algorithms, statistics, and data. It can amount to as high as a 25 percent increase in advertisement charges. To make things worse, you can't refuse to patronize them as a marketplace business.
To solve this mystery, you can mount extensive research on customer behaviors. Channel some efforts into it, evaluate the reason behind the high demand for a particular product. Another strategy you can adopt is a reduction in the number of under-performers and the use of loss-frontiers to achieve more conversions with top gainers. Take a step-by-step approach to review the customer journey, considering outdated contents and details with attempts to replace them with new ones.
2. Low User Experience
This is another big challenge that any marketplace business can face. Poor user experience can result in an increased rate of cart abandonment. When the right scopes aren't in place, the sellers and buyers are likely to lose interest in your marketplace.
If you want to solve this problem without exposing your business to further risks, more stakeholders should be motivated to use the business platform by registering. The checkout process should be simple with a single-click checkout process. It would help if you endeavored to provide multiple methods of payments to propagate the user experience. The marketplace structure and design must be in the right shape to accommodate more customers on the platform.
3. Economic Fluctuation
One fundamental reason for financial crises is the lack of a stable and balanced economic environment. Economic fluctuations can come in different forms, including market volatility, recession, and inflation. This challenge threatens both new and old marketplace businesses.
The solutions to this problem are pretty technical. First off, you need to make customer retention a top priority. An increase in the rate of customer retention can lead to a significant increase in sales as well.
Hence, ensure you make your customers happy by implementing policies that give forth quality service. You can initiate programs to put your team on the frontline and cut down turnover to provide a performance boost. No doubt, it will hinder customer service and sales from declining.
4. Poor Promotion
Marketplace businesses can be quite challenging to promote. Once the business platform lacks intensive promotion and branding, the recognition of the marketplace will also fall because both sellers and buyers won't lose focus on the goods and services such businesses provide.
Businesses should give maximum attention to B2B and B2C areas of the marketplace business initiative to achieve better promotion. Marketing will witness a tremendous turnaround when the marketplace's objective aligns with other activities such as SEO. With the right content and optimized for the ideal keywords, you improve the success rate of your marketplace business.
5. Customer Loyalty
The list of challenges that marketplace businesses face cannot be complete without making mention of customer loyalty. Customer acquisition and maintenance can be challenging.
Customer loyalty research has shown that most companies lose 45% to 50% of their customers every five years, and winning new customers can be up to 20 times more expensive than retaining existing customers. Usually, customers abandon business platforms where incorrect orders and delays in product delivery are predominant for a more efficient platform.
What you have to do as a business to win back the trust of your customers if you have lost it is to build personal channels that enable easy access to products. You can also use these channels to render customer services to your agents too. If a customer buys from your platform, you can add a coupon to his package.
As the marketplace business soars high, another challenges that marketplace businesses face is salary payment that are compliant. By ensuring your workers are paid on time, instantly, without them having to wait hours or days, you motivate them into giving their all to the business. That is why companies like Ksting, Tidyapp, Memmo, and a whole lot of others use GigaPay for instant salary payment. Feel free to book a demo, and we'd be more than excited to guide you on how our system works. :)