As any app (or online service) provider knows – in their quest to hit an all-important network effect – it’s not just downloads and user numbers that indicate success. Revenue generation is ultimately needed to ensure longevity.

Dating apps have established some of the most forward-thinking and innovative monetization methods in technology today. But finding a perfectly matching monetization strategy for your app or dating site means adopting a method that reflects its content, style, and user experience.

Luckily, there are lots of different tried and true monetization strategies out there already. Although they broadly fall into two major categories – in which the user pays or a third party pays – there are many different variations.

Here are some ways dating site owners can monetize their operations or improve their current strategy.

Advertising: Great When There’s Scale

Allowing other brands to advertise on your site has been part of the online world since the first sites went up. A natural extension of the broadcast media commercial model, passing the cost onto third party advertisers allows dating sites and apps to offer services for free: albeit for the price of the user’s attention.

Ad formats themselves come in all shapes and sizes – from simple PPC text ads to full-page interstitials, as well as native ads (more consistent with a site’s overall inventory), in-line carousel ads, in-feed content stream ads; among many others. Revenue is either generated via clicks, views, or transactions.

However, dating apps offer higher click-through rates and eCPMs (effective cost per thousand impressions) than games or other types of apps. Despite this, brands still need to work harder to make an impact as consumers have grown weary/immune/resistant to digital advertising.

Where online dating apps and sites are concerned, third party commercial affiliations range from the sublime to the ridiculous. Some pairings – like Tinder’s Dominos and Bud Light beer partnerships – might appear odd at first but, considering the importance of food and drink in the dating/socializing scene, actually make perfect sense.

From a business perspective, campaigns like these are a testament to a dating app’s ability to engage certain demographics (usually millennials) at scale; demonstrating the pulling power of a specific dating platform.

However, it’s not necessarily a technique that can be relied on to monetize a digital dating service from its very inception. Other methods are much more effective at doing that – often by selling their features and benefits. But this involves the cost being pushed back onto the user.

Subscriptions: Luring Users Behind The Paywall

Subscriptions ain’t what they used to be. Consumers are a lot more reluctant to part with their cash if they can’t see a genuine benefit for the service they’re from the very outset.

For some, better user experience is enough to sway them to part with a little cash each month. However for others, given that so many ‘free’ dating apps exist (admittedly of varying quality), unless they can clearly see what they’ll be getting for their money, they’ll take their chances elsewhere.

To overcome this, dating sites and apps offer varying degrees of ‘membership’ which can seem a little muddled to the uninitiated. So let’s consider the main contenders.

Firstly there’s the ‘free and paid app versions’ model: in which the free version has limited functionality, meaning the user must upgrade to fully benefit. Stalwarts like OkCupid and Plenty of Fish were among the first pioneers here – but many others champion this model too, including EliteSingles, Jaumo, Zoosk, Grindr and HowAboutDating – offering monthly and annual subscriptions.

The ‘Freemium’ model offers a similar experience – providing basic functionality for free – such as finding and communicating with others. However, other perks are available for an additional cost.

Badoo’s ‘Superpowers’ feature is probably the best known: letting users see who ‘liked’ them and added them to their favorites, as well as giving access to invisible mode, having their messages highlighted – plus they don’t see any ads. In fact, the popularity of Tinder’s ‘Rewind’ feature (taking back your swipe) led the company to start charging for it via it’s Tinder Plus and Tinder Gold packages. Bumble Boost, Hinge’s Preferred Membership, and Happn’s Premium are other scope-widening freemium services worth mentioning too.

A slight variation is the ‘free app with in-app purchases’ model. In addition to greater functionality – like a broader search radius and more daily matches – users can buy virtual and actual gifts and services. For example, Plenty Of Fish lets users digitally buy in-app ‘Goldfish’ credits to send virtual gifts to their potential dates – a folly to break the ice basically.

However, those that don’t want to pay, but are keen to test a few additional dating app perks, can often complete in-app tasks for limited-time access to premium accounts. Users are usually presented with an ‘offerwall’ detailing tasks to complete and the rewards to be reaped. MeetMe’s rewarded videos are a great example of this, as are rewarded surveys which seem to become increasingly common – and were trialed by dating app Matcher (now Dangle) a while back.

Activities like these indicate dating sites’ key asset: their audience data. Given that 15% of Americans use dating services and that the average user dedicates around 8 minutes to every session, the opportunity is real for those that achieve a certain scale.

But you can’t just sell data – can you?

Data Monetization: Insights For Sale

The sale of user data is a big no-no when specific information is involved (remember Cambridge Analytica?). But when the user grants consent and the data remains anonymous, well, that’s a different story.

Companies operating in EU countries need to abide by GDPR regulations or risk severe penalties, and other international data security initiatives, such as the EU-US Privacy Shield Framework are held in high esteem. So how can dating sites use their rich data sources as a revenue generation tool?

The only kind of data that can be sold is non-personal data – with a user’s consent. Even then, the type of data source is restricted to basic parameters: device types, mobile operator, country, screen size – among others.

The good news is that there’s significant demand for all of this data – from market researchers across many different sectors for a range of purposes; including optimizing user experiences and understanding buying choices.

On another positive note, according to one research survey, 95% of respondents are content to use apps that collect anonymous usage statistics.

However, unless your dating app has more than 50,000 daily active users, it won’t offer a large enough pool to draw from; and it will prove difficult to find a buyer for it.

Which Monetization Strategy Works Best?

All things considered, as with many types of online businesses, the greater the combination of monetization methods, the more profit there is to be had. Perhaps that can explain Tinder’s phenomenal global success.

But in isolation, each method has its drawbacks. Advertising only reaps a reward when a service offers scale; otherwise, where’s the value for brands? Conversely, charging users for a new service can be tricky to justify – unless the cost unlocks some additional never-seen-before feature. And without scale, charging marketers for data insights is pretty much impossible.

What is crucial, however, from the very outset, is that dating platforms establish a strong, dedicated user base. This means doubling down on trust and user safety, and finding ways to keep users engaged.

Despite the many positive things about dating sites, for some, the negative connotations persist. While sites and apps are a lot more conscious of preventing these, as with any platform that relies on user-generated content, the risk of users being catfished, shown inappropriate content, or de-frauded is always prevalent.

However, there are lots that digital dating platforms can do to build trust in their platforms and boost conversions. Content moderation is just one area – but it’s one that any dating service looking to expand its user base can’t ignore.

Ultimately there’s no substitute for getting the service right, knowing your users’ wants and needs (and there are many different dating services!), and developing a safe, secure and engaging environment for them to interact in. With these established, and when active usage hits a critical mass, monetization becomes a natural next step.

Just like any other business, online marketplaces also continuously tend to look for new and improved revenue streams to boost their growth. We caught up with Marketplace optimization and growth specialist and founder of the marketplaceplaybook.com, Bec Faye, to hear her take on how marketplaces can monetize their platforms efficiently.

In the interview, we speak about the importance of considering your users’ behavior and experiences when deciding on your monetization strategy, and we explore a successful disruptive monetization strategy that will inspire your inner creativity.

Watch the Interview:

Want to read the interview instead?

Emil: Hi, everyone, I’m here with Bec Faye, Marketplace Optimization & Growth Specialist, who is running the marketplaceplaybook.com. Bec, would you like to introduce yourself?

Bec: Hi. It’s really great to be here. As you explained, I specialize in helping marketplaces to really optimize their growth and to be able to work from the UX kind of angle and looking at conventional organization. But in amongst that, I work with a lot of different marketplaces of all different shapes, sizes and stages. I am really looking forward to have a chat today.

Emil: It’s really exciting to have you on. If you haven’t seen before, me and Bec did a webinar as well together around UX design for online marketplaces, which was really valuable. So I’m super happy to have you on board for this interview, as well, around monetization.

Bec: Really great to be back.

Emil: Awesome. Let’s jump straight into it. If we think about monetization strategies for marketplaces, there are many things that you need to consider. But if we can just start with what is monetization for marketplaces, how would you define it?

Bec: I have a couple of thoughts on monetization. I think part of it is obviously how we actually make money from a marketplace, and how do we actually create this piece of technology that’s going to fulfil its purpose. But in a way that we can actually help sustain it as a business or not for profit or whatever shape it happens to be in. But I also think it’s an interesting area where we tend to really focus in on specific trends and the way that people; we always do market monetization in marketplaces. But I think is actually really quite interesting because we see a lot of trends in people going for funding and raising all capital and everything like that. And the marketplace is very much dependent on that. But one of the things I’m really passionate about, exploring over the next two years, is really trying to figure out how do we make marketplaces profitable without necessarily relying on investment quite so much. So it’s what one of my areas of I’m quite passionate about. Sorry, but I think in a nutshell, monetization is really about how do we actually make money? How do we make sure that we’re making something that’s worthwhile that can be sustainable?

Emil: Yes and if you’re a young marketplace as well, like getting the investors on board, there needs to be some plan on how they can make their money back. If you can’t monetize your platform in a right way, then the investments are not going to happen, even to begin with. So for online marketplaces, if you look at different mindset and strategies to implement, there’s so many different alternative business models out there, like commission based selling fees and advertisement subscription. But what would you say, Bec, is important to consider when deciding on a suitable monetization strategy?

Bec: It is a really good question, I think it always comes back to no matter what stage you are in your marketplace. Really understanding the value of your core user group, the value that you’re offering to that user group, what paying for it is solving for them and what you are providing for them and then trying to really distil the value offering and that way basing our monetization around the value, the offering. So it’s going to make our job a lot easy to justify. And it’s also going to mean that people are willing to pay for that. I always say it depends on what side of the market we end up charging and the different structures that we might end up charging. But for me, it always comes back to really ensuring that where we’re providing that value and income associated, the monetization around that typically. One of the exercises I get a lot of early stage marketplaces to do to really prove that the marketplace monetization really work, is trying to create five transactions successfully without actually using the marketplace as a platform.

So to do it manually offsite, if they can create those five transactions manually. They’re saying really if you can prove that you can create these transactions without technology and means and proof, that people are willing to pay at that point in time, you get a lot of really valuable lessons along that journey that allows you to write on that monetization strategy without having to impede on the marketplace as a whole or worrying about technology and things like that. But it’s obviously for early stage marketplaces. The latest stage marketplaces, I think it’s really a matter of trying to figure out why they’re looking at monetization strategies. Is it that they’re looking to add a new revenue streams that business? And if that’s the case, then again, it’s going back to a core users. What value can we offer them? And is there an additional way that we can add revenue to help business in that way? I think we touched on it in the webinar about monetization around how tricky it can be to actually to transform an established marketplace and change that monetization strategy. But if you find ways to add new revenue streams into the business, that could be a way of kind of exploring that.

Emil: You’re right. In the recent webinar that we did around monetization in marketplaces, we spoke about mature marketplaces and well-established global players on how it can be very difficult to change that business model, instead looking at becoming more of an investor and adding revenue streams that way, as well. Just out of curiosity, like regions and geographies, does that really matter? When you look into integrating a new strategy?

Bec: I think it always does, because different regions are always going to have different intricacies about them, whether it’s the currency, whether it’s the exchange rate, whether it’s the culture in the way that that different, different aspects are conceived in that particular culture, for example. So I think it definitely comes into play. That’s where really getting to know your users easier every day, really understanding what it is that drives them, what they’re comfortable with and where they would see the value in your platform.

Emil: It is a good point. You should always look at user behaviour, but what is the user base that you are? What’s your marketplace? Who is the target audience? Who is using your platform? How are they using it? Looking to those different aspects and then you will find the different opportunities. I think you know that the premium listings like that kind of on monetization strategies really comes from that need of people who want to be able to sponsor the content, etc. and these kind of things.

Bec: Exactly. I am a true believer in that your end users are going to tell you what you need to be doing in business. If you are not listening to them, you are making a whole heap of assumptions. I always say with anybody I work with is always getting back to who your users are and listening to them because they are going to tell you the answers.

Emil: Super. If we look at monetization, it feels like things are trending from year to year, there’s a constant development in the marketplaces industry, moving from classifieds to offering more, the full payment solution and the entire offering. So my question is: what is the kind of trending monetization strategies that works in 2019?

Bec: I think, as you just touched on them, one of the big trends that we’re really seeing is the larger marketplaces, those traditional classified spaces trying to get closer and closer to the transaction in the original days and online classifieds. It was very much on listing and then a lot of that transaction happened off technology, basically, along with the real world. When now, they are again going back to that customer journey, really understanding what is that name that they’re selling for they users, for their customers.

For example, when the price of real estate they’re looking at, the original classifieds might be just selling a house. But actually, if we take a step back from that as a whole, lot of stuff that happens in amongst that, there’s things like the need to get financing. There’s the getting the phone and Internet and all of those kind of things connected. And there’s a whole bunch of other stuff that needs to happen around that part of that journey, the customer’s life. So really looking at what that journey looks like and then starting to figure out where they can add more value in, again, adding new revenue streams into that. And it’s thing that we’re seeing time and time again, every base works. Another good example as well, where a base or a trend happening with the tops of these that we use in the marketplaces that we’re using in minor places are using the platform. They realized that there was a lot of people using it for work, so then they started to explore that. And then a baby was born. And there’s another income stream for them. So to me, it felt really that everybody is coming back on this journey and really saying to depict how it’s coming. Get more. Closes the transaction. But how can we add more value as well in the long journey?

Emil: It’s really key for mainly larger mature players to really have that opportunity to both satisfy their users and users by adding these values sort of services. It could be anything from any insurances or delivery and payment solutions. But you offer that complete solution and that also gives not just increase UX, but also actually more revenue streams for yourself. So it’s a win-win in that sense to move in that direction. Out of curiosity, are there any traditional monetization strategies that doesn’t seem to work anymore or are fading out?

Bec: One of the things that probably less than the fading out, but one of the challenges that I’ve seen marketplaces really struggle with, particularly in the early stage, I work with a lot of early stage marketplaces. A lot of them are falling down the tunnel of, they’re in a low frequency marketplace and there in a low value frequency marketplace which means transactions are only happening very rarely for a user. So, for example, one user might only transact with their platform maybe once a year or every six months. That’s only about very low volume. So if you’re taking a ticket, as a percentage of the transaction, they really need a huge scale in order for that to work. And because they’re so close to the business, sometimes can be a little bit hard to see. The fact that they are charging that percentage but get the lifetime value of that customer on the average order value of that customer is so large. It’s just a really challenging space to be in and at scale is really the only option. So this is where I think that I really need to kind of recognize that that’s the case, and if the current shift that around and focus on solving a need that’s around that might actually bring in a higher frequency from that particular customer or a higher value of that transaction. It’s a matter of kind of looking to see what other income streams that can look at. What are the revenue streams can I look at? I think just being mindful of that is something definitely to be considered.

Emil: You touched on a little bit here that you work with a lot of more younger or early stage marketplaces, So I’m going to jump into another question. But feeding off of that, I assume, since you speak to a lot of young early stage companies, marketplaces that you have encountered, a couple of really disruptive sort of out of the box thinking style monetization strategies. Anything that you that you want to share.

Bec: I guess one of the real great things about working with early stage marketplaces is that we can be really inventive and really creative in how we approach monetization. I was working with a client recently, who was in a space where they were very concerned about the fact that they were kind of in the business of matchmaking almost. So they had users that were coming in from one side and the demand side. But it’s very easy for them to form relationships with a supplier, and therefore that relationship could be technically, taken off the platform. Therefore, charging a commission, for example, wasn’t gonna work for them, swinging to really take a step back and just really understand again what the customer journey was like. But really looking at the big picture of what the user was trying to achieve in their particular industry, and by taking that step backward, to identify that there was actually a big need that needed solving, which meant that we could actually really structure a sort of being narrowed in by what was done previously, were able to create more of a disruptive model that would let out that particular marketplace. To then basically bait 10 times the amount, 10 times their revenue that they were then earning from an average order value from that particular customer that was coming through the platform. Then we’re looking at a new way now to which will work out for them buying basically for a single hour. For example, they will be now purchasing bulk hours and then we’re looking into more of a membership type of opportunity which come down the track as well. So suddenly we’ve gone from being worried about the supply and the demand guy off site and platform where we’re losing the transaction to it now actually really increasing and multiplying that revenue stream. Now that’s the marketplace. So it’s kind of combining quite a few different techniques together. But by really understanding what the needs were of that user group, where I would identify this new opportunity, that would mean that we’re basically solving a problem from all angles. Sorry, that’s been really interesting, that experiment we are still running with, but so far the tests have been really positive.

Emil: It is very cool. I know that it can be a big struggle with having conversions like losing out on the actual conversion from your marketplace that you have your buyers and sellers, especially the sellers, I would assume, who are incentivized to leave the marketplace. But here is also, from a moderation standpoint, where it gets dangerous for the user as well. Because you can’t control the conversation and you can’t protect your users, the buyer in that scenario. So if the seller manages to get the conversation off the site, then the chance for a scam, etc. increases significantly. So it’s also like a way to keep protect your users in that sense as well, to be able to keep them on your platform. It’s very interesting. Another way of preventing that as well is adding, like we spoke about value-added services, as monetization strategy. And if you add enough value like OpenTable, or like an Uber, something like that, where you actually can do reservations and book. And the platform itself is so useful for the seller, that can bring down the incentive to actually leave the platform because it adds services that you need.

Bec: Exactly. That’s a really great technique.

Emil: So I think that brings us to the end of today’s interview. So thank you so much, Bec, for taking your time. It’s been really helpful. I hope and I think all the listeners are really happy to hear your tips, tricks and ideas for monetization strategies. If you want to get in touch with Bec, you can reach her on her email on bec@becfaye.com. If you want to learn more about monetization strategies, check out our webinar that we did on September 17th. And finally, if you want to learn more about content moderation and how we, at Besedo, can help you improve your content quality, and from that side of things, boost your revenue generation. Then don’t hesitate to reach out to me at emil.andersson@besedo.com. Thank you, Bec. Thank you very much. Thank you for having me. Take care, guys. Bye.

Bec: Thank you. Bye.

Choosing and implementing the right monetization strategy for your marketplace is a process that can often feel somewhat complicated and challenging.

You wouldn’t think of starting a marketplace without a strong concept or a target audience in mind. The same goes for your monetization strategy. Having no clear monetization plan in place can easily lead to a disaster even if your marketplace has a great unique selling point.

Finding an adequate and suitable strategy is critical for your marketplace to thrive and be profitable. After all, growing a sustainable platform comes down to generating steady revenue.

Yet, many marketplaces continually struggle to find the optimal monetization strategy for their platform, simply because there is no secret formula that fits all marketplaces perfectly. You just need to find what works and what doesn’t for your business.

One advice that is often shared by experts is to try out different revenue models to find the best option for your platform and value offering. Ultimately, building a lucrative marketplace is a process more than a goal, which involves continuous monitoring and tweaking of the strategy already in place. Yet, with the deluge of information on monetization strategies available, you might wonder where to start.

But the good news is: we have you covered! Check out our latest webinar featuring marketplace experts, Anton Koval, Jeroen Arts and Martin Boss who shared their best tips and tricks, current marketplace monetization trends, and their methods for efficiently integrating your monetization strategy.

How to optimize your marketplace monetization strategy

Alongside our webinar, you’ll also find our handy guide to popular monetization strategies used by renowned marketplaces currently to guide you along your marketplace growth journey.

Curious to know more about the right monetization strategy for your marketplace? Check out our latest webinar and our 7 marketplace monetization strategies guide.

Could you tell us a bit about yourself?

My name is Kevin Ducón from Bogotá, Colombia. I hold an MSc in Computer Science from Universidad Politecnica de Madrid and a BSc in Computer Science from Universidad Ditrital de Bogotá.

I have been working in information and communications technology for more than fifteen years and began working at Besedo five years ago, specializing in IT Service Management and Information Security. I started as a local ICT Administrator in our Colombian center, then as an ICT Supervisor, and currently, I am the Global Head of ICT-IS (information and communications technology – information security).

Over the past five years, I have applied my knowledge and skills to this ever-changing industry by creating policies and processes aligned with the industry’s best practices, supporting our clients, and continuously improving our on-going projects.

What are your responsibilities as Global Head of ICT-IS?

As the Global Head of ICT-IS at Besedo, I’m in charge of all levels of support in information technology and communications.
I oversee the Global ICT work, and together with my ICT team, I make sure that we fulfill our most important metrics – availability, service-level agreement, and customer satisfaction.

On top of that, I manage and provide insights into our security guidelines and develop strategic and operational plans for the ICT department to ensure that all necessary tools and processes are fully functional to achieve the company’s overarching goals and ambitions.

I also have hands-on technical responsibilities in supporting and developing mission-critical systems, which are running 24/7, to make sure our moderation services are successfully delivered to our customers worldwide.

From an ICT point of view, what are the key elements that must go right when running a content moderation operation?

The essential part from an ICT standpoint when running a content moderation operation is to truly understand the priorities and needs specific to the operation. Having an IT strategy to translate business needs into functioning IT operations is vital for a successful moderation setup.

Furthermore, ensuring good practices in network infrastructure and server setup, device management, and IT support is key to achieve a solid moderation operation. Finally, it’s crucial to have a knowledgeable and committed IT staff behind the scenes.

What are the common things that can go wrong?

When running a moderation operation, many potential issues can occur, some of the most common hazards include Internet connection, networks, or servers going down, power outages and failed infrastructure deployments.

For instance, content moderation relies heavily on a stable Internet connection, and you cannot blindly trust that it will just work. Instead, you need to make sure that your Internet service always works to its full capacity.

What safety measures are needed to make sure the moderation operation runs smoothly?

It’s important to have proactive safety measures in place to guarantee that the moderation operation always is carried out correctly. A good first step is to plan the implementation of the moderation services thoroughly before putting disaster mitigations plans in place.

For example, at Besedo, we work with several Internet service providers in case one of those fails to deliver correctly. We also work with fault-tolerant networks, a resilient infrastructure, third-party support, etc., to ensure that our IT operations remain stable when potential risks materialize.

On top of this, we run daily IT checklists and use monitoring systems that allow us to prevent potential challenges during IT ops. Also, we have backup routines to avoid any information loss or damage and use UPS to keep our critical devices turned on.

All in all, for anyone looking to run a successful moderation operation, many countermeasures must be put in place to make sure that IT operations run smoothly.

What’s the best thing about your job?

My job allows me to work in the different areas of the ICT Function and with all the disciplines that contribute to the business. For some people, ICT only assists with end-user tickets because that’s what’s visible to them. However, IT is not just a commodity but a strategic ally for us to deliver the highest level of services to our customers.

I’m proud to apply my skill-set and knowledge to Besedo’s purpose and values, which I genuinely believe in. When I took the role as Global Head of ICT-IS, I sought out to implement our promise ‘grow with trust’ into everything we do in our team. This has shaped the ICT team’s goal to help all functions grow with trust, through efficient processes, guaranteed quality of services, and high customer satisfaction.

At Besedo, we have an excellent ICT team of committed and ambitious individuals who love what they do and work hard to improve the company every day.

Kevin Ducon - Global Head of ICT-IS

Kevin Ducón

Kevin Ducón is Besedo’s Global Head of ICT-IS. He has been working in information and communications technology for more than fifteen years. Over the past five years at Besedo, he has applied his knowledge and skills to the ever-changing content moderation industry.

This is a guest post by Martin Boss, Founder of MultiMerch. MultiMerch helps online marketplace owners build and grow successful businesses.


 

Starting a regular, run-of-the-mill online store is a piece of cake nowadays. Get a Shopify account and upload a few products, sell and dispatch them – and you’re done.

Two-sided marketplace platforms with vendors are different beasts. Not only you need more complex software to run a marketplace, but the operations are also more difficult as well when you’re dealing with two sides at once.

Here are some of the marketplace operations you’ll have to master to start a successful online marketplace business.

 

Setting up and maintaining your marketplace platform

First and foremost, a regular e-commerce platform like Shopify won’t cut it if you want to run a marketplace.

So, you will be looking for multi-vendor software (or two-sided marketplace solutions) to power your new marketplace.

There are three main types of marketplace software:

  • SaaS or cloud-based platforms
  • self-hosted marketplace software
  • multi-vendor e-commerce extensions

Cloud marketplace solutions like Sharetribe, Arcadier, and Marketplacer are the easiest to get started with and require little to no technical knowledge. In most cases, they also offer free trials so you can spend a while playing with the platform to make sure the solution fits your requirements.

Self-hosted marketplace software like MultiMerch or CS-Cart gives you much more customization and modification possibilities since you have complete access to the source code and own it outright. However, you will need at least some technical skill to build a marketplace platform using self-hosted software.

Finally, you can take a regular CMS like WordPress, Magento or OpenCart and slap a multi-vendor extension on top of it. In this case, you absolutely want to have a developer on your team who has experience working both with the underlying system and with two-sided marketplaces. We never recommend this approach to new marketplace owners with no technical team.

Depending on the software type you go with, setting up a new marketplace platform will take you anywhere from a few hours to a few months (I’ve seen years, but I don’t recommend it).

 

Finding, onboarding, and managing vendors

It’s not a multi-vendor marketplace if you don’t have any vendors. So, you will need to find vendors and convince them to join your platform.

We recommend doing market research and lining up at least a few vendors early on – even before you start building the platform. Not only will this allow you to validate your idea and generate a little awareness, but it will create a pool of early adopters who are willing to test your platform and provide feedback.

Here are a few ideas for finding your initial vendors:

  • join a bunch of Facebook groups for store owners
  • reach out to Etsy/Amazon sellers directly or via communities
  • create a few paid Google/Facebook/Instagram ads
  • go door-to-door the old school way if you’re starting a local marketplace

This article by Shopify describes the process of finding manufacturers and wholesale suppliers. You’ll find it most helpful for a B2B marketplace platform, but the process will be similar if you’re building a B2C marketplace.

Now you will need to convince your vendors to join your platform, especially when you’re just starting out. What’s in it for them to join a marketplace that has barely any users? Here, you will need a landing page or a slide deck showcasing your value proposition and why it makes sense for a vendor to join you. Consider offering an incentive or two to your early adopters, such as lower (or waived) selling fees or a free onboarding service.

To reduce friction for new vendors, make sure your sign up flow is as simple and straight-forward as possible. Simplify your vendor registration forms – don’t ask for too many details right off the bat if you can do it later after the vendor signs up. Describe the process of signing up and be available to new vendors for support.

Here’s how Etsy makes the onboarding process for new vendors a breeze:

Marketplace operations in a nutshell - Etsy onboarding features

First, they really go out of their way to answer all possible questions a new vendor may have on its “Sell on Etsy” landing page. This includes a few sections covering the selling features Etsy offers, a clear overview of the fee structure, a FAQ section and even a few highlights of existing sellers.

 

Marketplace operations in a nutshell - Etsy seller stories

To sign up as an Etsy seller, you first need to create an Etsy account (if you don’t have one), then set up your shop. Creating an account is simple enough – you’ll only need your first name, email address and your password:

 

Marketplace operations in a nutshell - Etsy create account

Then, you’ll go through 5 simple steps of setting up your store – from specifying your regional settings and naming your store to upload your first items and filling out the payment details.

 

Marketplace operations in a nutshell - Etsy stop preferences

Note that Etsy will require you to upload at least one item before you can complete your setup process. While you’ll want to avoid this extra step to reduce friction for your new vendors when you’re just starting out, this helps Etsy weed out dummy signups and only accept sellers who are serious about opening their stores.

 

Creating and managing the product catalog

Now, it’s time for your vendors to start listing their products on your marketplace.

There are two common ways your marketplace can tie products to individual vendors:

  • Etsy-style, where every product is unique and belongs to one vendor only
  • Amazon-style, where a single product can be sold by multiple vendors at different prices

Both have their benefits and drawbacks, but you’ll find that most ready-made marketplace solutions out there will offer Etsy-style listings due to a somewhat simpler system architecture.

In any case, you’ll want to keep the process of listing new products simple – your vendors are busy people. This means simplifying your product listing forms, asking for the crucial information only and tailoring them to product categories you plan to carry.

Consider offering your vendors a way to upload products in bulk or import their catalog from a third party marketplace platform. If they already sell on Amazon (or elsewhere), they’ll appreciate a quick way of syncing their existing catalog with your marketplace instead of having to list all products manually. Do it for them as an onboarding service.

Decide whether or not you want to moderate products published by your vendors to keep your product catalog clean (the answer is probably yes, especially for a larger marketplace). If you do, make sure you have a moderation system in place to prevent delays. The last thing you want is for your vendors to wait a week to get their product published because you’re moderating thousands of products by hand.

 

Processing payments and managing orders

As your marketplace starts getting traction, you will be processing payments and helping your vendors deal with customer orders.

There are two common ways your marketplace can process customer order payments:

  • aggregated, where your platform collects buyers’ payments and later redistributes them to vendors via payouts
  • split or parallel, where the payment is instantly split at checkout and distributed between the vendors (and your platform, if you charge a selling fee) by the payment processor

Aggregated payments make single checkout possible and allow you to own the transaction, but place an extra burden of tracking your sellers’ finances and making regular payouts on your platform. And with the payment industry becoming increasingly more regulated, payment aggregation as a marketplace payment flow will only be getting more complex.

Split payment processing eliminates these issues and shifts the liability and the compliance burden from your business to the payment processing company. The biggest remaining problems of parallel payment processing are implementation complexity and the lack of marketplace processor availability.

However, the trend is changing. At MultiMerch, we’ve recently discovered at least 26 different marketplace payment solutions that cater to two-sided platforms.

Now, while you won’t be processing orders yourself, your vendors will need a way to receive, process and dispatch products to their customers. Since the shipping cost and speed directly affect conversion rates, the sooner your vendor gets notified about the new order, the sooner they can dispatch it and keep the customer happy and willing to purchase again.

To keep the customer informed about the status of their order, offer your vendors a way to specify the tracking number after they’ve dispatched the order. Consider connecting your order management system to a third party shipping service like ShipStation or AfterShip to let the buyer track the order without leaving your marketplace and get notified about the status changes automatically.

 

Handling customer and vendor relations

Now, simply attracting new vendors and buyers and hoping it will all work out by itself won’t do in most cases – you will need to actively keep your users happy, loyal and using your platform on a regular basis. As your platform grows, you will be supporting your users, answering their questions and helping them solve various problems on a regular basis. Do have a plan for that in place.

These are just a few of the challenges you’ll be dealing with when running your platform:

  • helping vendors sign up, customize their stores and list products
  • resolving technical issues and software glitches the users’ report
  • mediating order disputes between the vendor and the buyer
  • enforcing the rules and moderating user-generated content 

To reduce your own involvement, you’ll want to allow the buyer to communicate with the vendor directly and ask questions about the products and the orders, both before and after the sale. The more options to reach out you offer, the more likely is the issue to be resolved without your intervention.

Delays, questions, and disputes are inevitable, so you’ll need a plan (and a system) to handle them. As you grow, you may consider starting a user community and creating your own protection programs for buyers and sellers, like eBay’s Money Back Guarantee or Airbnb’s Host Protection Insurance.

 

Growing your marketplace

“If you build it, they will come” sounds great in theory, but will probably not happen in practice. You’ll get some traction due to the nature of two-sided platforms but will still need to actively promote your platform, especially in the early stages.

The unique challenge online marketplace owners face is growing both the supply and the demand side at once – getting vendors while you have zero customers and finding buyers with only a small product catalog.

Earlier, I’ve outlined a few ways of getting those first few vendors to join your platform. When it comes to customer acquisition and growth, paid, social and organic search will be your main channels – as well as other business development initiatives.

Set up a presence on Instagram and Facebook. While organic social media reach is going down, it’s still an important channel for an e-commerce brand. Now, have a paid promotion strategy for your marketplace in place to attract new users and create brand awareness. The more content gets created every day, the more value you’ll get out of paid marketing campaigns. Set aside an initial paid advertising budget and test a few different channels to see what works best. Instagram is a great channel for highly visual ads, for example.

In the long run, search engine optimization will be crucial for your marketplace since over 50% of trackable traffic on average still comes from organic search. To minimize the amount of SEO work you’ll need to do, make sure your marketplace platform is built with search engines in mind. This means search engine friendly, optimized and shareable product listings, seller stores and the rest of your marketplace. Keep in mind that most sellers won’t bother optimizing every listing (if they’ve heard about SEO at all), so make it a no-brainer for them and automate as much as possible.

And SEO isn’t only about products – there’s way more user-generated content on a typical marketplace platform:

  • product and vendor reviews
  • public questions and answers
  • vendor stories, blogs, and other things

This is great for you, the marketplace owner. Encourage your users to create great content on your platform and feature it prominently for better SEO and social proof.

 

And that is how you start and manage an online marketplace platform in a nutshell. If it sounds difficult, it’s because it is. One thing I learned here at MultiMerch is that marketplace businesses are more challenging than regular online stores, but also so much more rewarding. 

For a more in-depth guide on starting a two-sided marketplace, check out my Beginner’s Guide to Starting an Online Marketplace Business.

Martin Boss - MultiMerch

Martin Boss – Founder at MultiMerch Systems

Martin Boss is the founder of MultiMerch Systems and a fan of marketplace e-commerce. At MultiMerch, he helps companies build and grow successful online marketplace businesses. Reach out to him on LinkedIn and Twitter.

No online marketplace founder or entrepreneur set out to fail. The world loves a romantic success story, where a disruptive idea changes how we look at an entire industry. Two examples that immediately come to mind are Airbnb and Uber.

Yet, 90% of startups fail and that is something we don’t talk about enough.

Failure in itself may not be something glorious, but it’s an important ingredient for successFrom failure comes learnings, and hearing the mistakes of other marketplaces can be very useful to followers looking to avoid the same pitfalls.

Learnings from a failed online marketplace

Anton Koval is the founder of Brainjobs.pl – a failed online marketplace. Today he’s moved on and is helping founders and companies build and grow their own online marketplaces, through his agency Braincode.

We caught up with him to hear the story of his failed online marketplace, what went wrong, and the lessons he learned from the experience.

Part 1

In the first part of the interview, Anton shares the business idea, USP, and operational setup.

Part 2

In part two, Anton shares what went wrong, the actions they took to turn it around, and the main lessons learned he took with him from the experience.

Anton Koval - braincode

Anton Koval

Anton Koval is a founder of Braincode an agency that works with founders and companies to help them build their own online marketplaces. Previously Anton bootstrapped his own marketplace in HR- Tech area. Anton is a big advocate of the platform economy and remote work.

Is your site suffering from ‘marketplace leakage’? If so it’s because your customers are sharing their personal details with each other – to avoid paying site fees. But by doing so they also put themselves at risk. Here’s how to make sure your business protects itself from marketplace leakage and those that use it.

Marketplace leakage (also referred to as ‘breakage’) is a real problem for many online businesses. According to Venture Capitalists, Samaipata, the term can be defined as ‘what happens when a buyer and seller agree to circumvent the marketplace and continue transacting outside the platform.’

Broadly speaking, there are several ways in which personal details are shared – via listings, embedded in images, and within one-to-one chats. Information shared typically includes phone numbers, email addresses, WhatsApp details, and money transfer account details.

From a user perspective, it might make sense to try and do so. However, many don’t realize the wider ramifications of marketplace leakage and the negative impact it can have on the platforms they transact on – and on their own businesses.

Let’s look more closely at the impact of sharing personal details online via marketplaces and what can be done to prevent it.

How personal details do damage

As we see it, there are 3 key ways in which sharing personal details can have a negative impact.

1. Conversions

From eBay to Airbnb; Amazon to Fiverr – the vast majority of marketplaces facilitate the trade of goods and services. As a result, a core part of each platform is its payment infrastructure.

But not only do these solutions offer a trusted way for users to transact, they can also be used to collect fees – a percentage paid for using the platform.

In the early days of a platform’s existence, many sites may be available to both buyers and sellers for free – whilst the marketplace is trying to scale and get as many users as possible. However, once it’s reached a certain threshold and networks effects are visible, it’s common for them to begin charging, often through the transaction.

This is often when users – primarily those selling on these sites – will try to circumvent the platform and include their contact details in each post. It might be that they paste their email address in the product description itself, or create an image that has details included within it.

When this occurs, your marketplace loses out on conversions. It’s something that’s easy to overlook and – on the odd occasion – let slide. But in the long-term, activities like this will seriously dent your revenue generation.

2. Retention

One of the major differentiating factors between online marketplaces is whether they’re commoditized or non-commoditized – particularly where service-focused platforms are concerned.

While commoditized service providers are more about getting something specific fixed, delivered, or completed (think Uber or TaskRabbit); non-commoditized providers (eg Airbnb) take into account a number of determining factors – such as location, quality, and available amenities.

Due to the nature of these sorts of services, they are more likely to encourage personal interactions – particularly when repeat transactions with the same vendor are involved. Once trust and reliability are established, there’s little incentive for either party to remain loyal to the platform – meaning conversions are more likely to be forfeited.

Leakage of this nature was partly to blame for the demise of Homejoy – an on-demand home services recruitment platform. The nature of the work involved increased the likelihood of recurring transactions. However, it transpired that the features facilitated by the site – in-person contact, location proximity, and reliable workmanship – were of greater value than the incentives offered by using the site itself in many cases.

As a result, more and more transactions began happening outside of the marketplace; meaning that the site lost out on recurring revenues.

3. User safety

Losing control of the conversation and having users operate outside of your marketplace, increases the risk of them being scammed.

This is particularly prevalent in online dating, where even experienced site users can be duped into providing their personal details to another ‘lonely heart’ in order to take the conversation in a ‘different direction’.

eHarmony offers some great advice on what users should be wary of, but the general rule of thumb is to never disclose personal details of any kind until a significant level of trust between users has been established.

While similar rules apply to online marketplace users too, some telltale signs of a scammer are requests for alternative payment methods – such as bank or money transfers, or even checks.

An urgency to trade outside of the marketplace itself is also a sign to be aware of. So it’s important to advise your users to be cautious of traders that share their personal details. Also, make a point of telling them to be wary of vendors who are ‘unable’ to speak directly to them – those who request funds before any arrangements have been made.

In all cases, marketplaces that don’t monitor and prevent this kind of activity put their customers at risk. And if their transaction is taken away from your site, they forfeit the protection and assurances your online marketplace provides.

But unless your users understand the value and security of your platform, they’ll continue to pursue conversations off your site and expose themselves to potential scammers.

Preventing marketplace leakage

The best way to overcome these issues and prevent marketplace leakage is to do all you can as a marketplace owner to keep buyer-seller conversations on your site and reinforce why it’s in their (and to some extent your) interest not to share personal details and remain on your platform.

There are several ways to do this.

Stronger communication

The stronger the communication channels are within your platform, the less incentive there is for customers to navigate away from your site.

From eBay and Airbnb’s messaging functionality (which look and feel like email servers) to one-to-one chat platforms (similar to Facebook Messenger or WhatsApp), or even on-site reviews and ratings; the more user-friendly and transparent you make conversations between different parties, the greater the likelihood they’ll remain on your site. A point we also highlighted and covered in our webinar about trust building through UX design.

In addition, it’s always worth reinforcing exactly what your marketplace offers users – and reminding them of their place within it. For example, telling them they’re helping build a trust-based peer-to-peer network is a powerful message – one that speaks to each user’s role as part of a like-minded online community.

Provide added value services

If users feel as though there’s no real value to using your site – other than to generate leads or make an occasional purchase – there’s very little chance that you’ll establish any meaningful connection.

The best way to foster user loyalty is to make the experience of using your marketplace a better experience to the alternative. In short, you need to give them a reason to remain on your site.

In addition to safety and security measurements – consider incentives, benefits, and loyalty programs for both vendors and buyers.

Turo, the peer-to-peer car rental site is an example of a company that does this very well – by offering insurance to lenders and travelers: both a perk and a security feature.

In a similar way, eBay’s money-back guarantee and Shieldpay’s ‘escrow’ payment service – which ensures all credible parties get paid; regardless of whether they’re buying or selling – demonstrate marketplaces acting in both customers and their own interests.

Another way in which marketplaces offer better value is through the inclusion of back-end tools, which can help vendors optimize their sales. Consider OpenTable’s booking solution for example. The restaurant reservation platform doesn’t just record bookings and show instant availability; it also helps its customer fill empty seats during quieter services.

Platforms that can see past their initial purpose and focus on their customers’ needs are those that thrive. They offer a holistic, integrated solution that addresses a wider range of pain points. Which is a great way of ensuring they’ll remain loyal to your business; ultimately reducing leakage.

Filter and remove personal details

A relatively straightforward way to prevent marketplace leakages is to monitor and remove any personal details that are posted on your site.

However, this can turn out to become quite the task, especially when the amount of user-generated content increases.

The next logical step here would be to direct efforts towards improving your content moderation. Either improve your manual moderation and expand your team or look at setting up an automated moderation solution.

An automated filter is a great solution to help prevent personal details to be shared, and although the filter creation process can be complex, it’s definitely possible to create highly accurate filters to automatically detect and remove personal details in moderation tools like Implio.

Machine learning AI is another great automated moderation solution that will help with preventing personal details, and much more. Built on your platform-specific data, a tailored AI moderation setup is developed to meet your marketplace’s unique needs. This solution is a great option for online marketplaces that look for a complete customized solution.

Added value and moderation – a mutual benefit

Trust, security, and accountability are the most valuable features that any marketplace or classifieds sites can offer its users. However, they’re not always the most visible components.

But when they’re parts of a broader benefit – such as optimized user experience or a suite of useful features – the need to share personal details and transact way from a site is mitigated.

That said, shared personal details will always contribute to marketplace leakage. And without the right monitoring and moderation processes in place, it’s impossible for marketplace owners to overcome the challenge of marketplace leakage.

At Besedo, we work with online marketplace and classified sites to help them make the right choices when it comes to safeguarding their businesses and users by removing personal details.

To learn more about how you can prevent personal details form your marketplace, specifically through automated filters, check out our on-demand Filter Creation Masterclass.

Wondering whether the technical side or the business side is harder when building marketplaces?

Well, they are equally difficult.

However, if you’re competent with technology or have a good web development team, the technical side will be much easier.

It will also help to be aware of common technical pitfalls and challenges. At Sloboda Studio we’ve identified the top 4 technical challenges in software development of marketplaces that founders may face:

#1: Multiple user roles

There are three common user roles in marketplaces: customers, suppliers and administrators. Customers and suppliers affect the construction of the marketplace in particular, whereas administrators can be found on almost any project. Marketplace development begins with a clear definition of user roles, their permissions and access level, and ways to interact with each other.

Challenge: Different interfaces

The difficulty here is to create three different interfaces that work perfectly on the same platform but can function differently according to the role of its user.

Recommendation:

User roles should have personalized interfaces, and tools for interacting with the platform, registration forms, personal accounts and, most importantly, different permissions. Each query must either be allowed access to only one of the user types or return different results.

#2: Marketplace security

While building an online marketplace, you need to make sure you’ve eliminated all the gaps and security issues, starting with GDPR compliance and ending with data leakage and hacking proofing. This can be accomplished by following the best practices of development.

Data privacy and identity verification are the top priorities for marketplace security. The security issue has especially intensified after the introduction of GDPR.

Challenge: Data Privacy

Data should be collected with the user’s consent; otherwise, you’ll be in violation of data protection regulations. There is no data privacy without data security.

Recommendation:

To protect against hacking, Sloboda Studio uses the latest versions of all user libraries to avoid possible security breaches. You can also use Github or Snyk to prevent any vulnerabilities in your marketplace platform.

Challenge: Identity verification

Verifying a user’s identity is a big part of marketplace security. One common way to verify identity is to ask for a passport, driver’s license or other types of ID.

Recommendation:

In addition to asking for ID, your marketplace can also request phone number verification.

Challenge: Authentication

The authentication process comes after a user’s identity has been validated. Unfortunately, traditional methods of online authentication, such as the use of simple passwords, don’t work now since many frauds have appeared in the last several years.

Recommendation:

There are many options available for secure authentication:

The system may authenticate users with a special token generated on the basis of his/her password during login. The passwords themselves are not stored in the database and are encrypted with special algorithms. The front end sends the user’s token to the back end, and the token is validated.

The authentication process can also be simplified by signing up using a social network login, for instance, by using and connecting a Facebook account.

You may also wish to use two-factor authentication, for instance, a one-time password or code that is sent to the user via email or SMS. This method drastically improves security.

You can also use a variety of solutions like OAuth and OpenID. If your app features an API, you can use JWT tokens. The advantage here is that JSON Web Tokens can store additional useful information about users, resulting in higher performance. In the case of cookies, it is sometimes necessary to make requests for more information. With JWT, this information can be transmitted in the token itself.

#3 Payments

Every marketplace has its own website monetization system. There are a few available online payment solutions that can be implemented. However, you need to think of all possible scenarios in order to avoid payment failures.

Challenge: Payment method

Having the right payment method is key to building to trust and encourage transactions through your platform. It’s important to find a payment method that works smoohtly both for your business and for your users. (sellers and buyers alike)

Recommendation:

Using payment gateways like Stripe or Braintree as a payment solution would be a great choice for service marketplaces. Stripe has a powerful API that is integrated directly into your marketplace. The most important advantage of this payment integration is its transparency and stability.

#4 Multiple time zones

Challenge: Different time zones

It is no secret that when you use a global rather than a local marketplace, there is a good chance that your supplier and customer will have different time zones. Say you want to book an interpreter for your meeting. Which time zone are you going to choose?

Recommendation:

In order to avoid giving your customers a headache, and to make life easier for everyone, you need to have a universal time zone. We save user time zones in IANA format, which is the time zone database (a.k.a. TZ or Olson database). It’s a universal database of information on global time zones used with computer programs and operating systems. For convenience, our team of developers keep time in UTC and then convert it to the user’s time zone.

Challenge: Day-light saving time

Another difficulty can be a recurrent order or service that is repeated at a previously scheduled time. Let’s say a customer sets an appointment for a cleaning service, by the same company, on Thursdays at 9 a.m. During daylight savings time, the customer’s service time changes.

Recommendation:

The solution here is to create a special service that verifies whether the current time is in the same period (i.e. daylight savings time) and whether or not the time has changed for that period, then adjusts it according to the desired time.

To sum it all up, there are a number of technical challenges facing marketplace owners, including security, payments, time zones, price adaptability, user diversity, and the necessity for a user-friendly interface.

Top recommendations for founders:

  • Start by creating three different user roles, with individual registration forms and separate accounts.
  • In order to protect your marketplace, use the latest version of libraries and always double-check authentication.
  • Think of all possible scenarios in order to avoid payment failures and use Stripe or Braintree to give both sides a seamless payment experience.
  • If you have a global marketplace, ensure that your suppliers and customers have the same time zone and don’t forget about time changes, such as daylight savings time.
  • Don’t forget that your customers are people, and as much as you want, the platform can’t eliminate the human factor of the marketplace. So make sure to think through each case when you need to notify others about possible issues or delays. Notifications should be sent not only to service providers but also to customers.

Pavel Obod

Pavel Obod founder of Sloboda Studio

Pavel Obod, Founder of Sloboda Studio, Top Ruby on Rails company in the world according to Clutch. Sloboda Studio has been providing high-end web development services for almost 10 years. Pavel is also a Payoneer’s ambassador in Ukraine.

Trust is a key component of a successful marketplace and there are many small parts that help achieve it. One element that plays a major role in trust-building is of course how you present your platform to your users and the experience they have while using it. But how can you use UX design to build trust in your marketplace?

UX design is often described as the process of enhancing user satisfaction by improving the usability, efficiency, and accessibility of a website.

This definition is true when designing for online marketplace too. A marketplace’s UX design should be viewed and function as the spine of the platform. Its task is to efficiently guide users through the site to the desired end destination (oftentimes transaction completion).

What’s different for online marketplaces, is that most of them rely heavily on user-generated content. This dependency limits the level of control you have over a vast majority of the user experience. Since you are not the one choosing the images and creating the text, it’s harder to ensure that it aligns with your brand, tone of voice and messaging. A marketplace’s role is to help strangers find and transact with each other. Without the important physical clues, we’d normally use to establish trust and the added challenge of limited content control it can be a struggle to achieve high enough trust levels for strangers to engage.

That’s why it’s vital for online marketplaces to include trust-building elements in their UX design. It’s also imperative that this is combined with a highly selective content curation and reviewing strategy since low quality and irrelevant content can quickly destroy any trust gained from trust-inducing UX design.

Keep in mind that trust building isn’t a one-off effort. In order to achieve a truly trustworthy marketplace, your trust-building elements need to become an integral part of your marketplace’s UX design, from pre-acquisition and throughout the entire user journey. On top of that, you need to continuously deliver on the trust promise you make with your UX design. This means following through and actually making your users safe for instance by offering great and timely customer support, curating and reviewing content diligently and providing secure payment channels.

How do I build trust through UX design?

Make sure to design and develop the user journey for trust. Whether it’s keeping your top listings on the home page, ensuring quality suppliers, presenting honest reviews, or offer easy support, UX elements like these will help build trust in both your platform and users.

Want more detailed info on how you can build trust into your UX design? We invited Bec Faye, Marketplace Optimization & Growth Specialist, for a webinar to share her knowledge and expertise. Watch the full webinar recording here.

User content is the lifeblood of marketplaces. It can feel counterproductive to remove listings, posts or profiles, but the reality is that some content just isn’t good for your site or users. Whether it be spam, scam or just low quality that makes it undesirable, you need to curate what users post. However, while you need to manage and remove inappropriate content to protect your users and maintain a high-quality inventory, the goal should always be to limit the volumes you reject.

 

What’s the main purpose of refusal reasons?

Refusal reasons play a huge role in decreasing the number of items you must reject, by giving you better insights into where and why issues arise on your site and what policies users generally clash with when publishing content.

If properly implemented, refusal reasons are also very helpful in providing on-point feedback to your users that help educate them, increasing the chance of them getting their content approved next time they post. An example of feedback could be an email stating “We do not accept the publication of ads referring to counterfeited items or piracy, streaming app, etc.”

The success of marketplaces relies on good quality content and good user experiences. This cannot be achieved without proper feedback via refusal reasons.

 

Is there a template for the best refusal reason implementation?

The ideal refusal reason setup varies from marketplace to marketplace depending on the audience, location, and inventory. This means that each setup will be unique, however, there are some elements that marketplaces universally must consider when it comes to refusal reasons. Having worked with players of all sizes across the globe for more than 15 years, we’ve been able to build a framework of best practices that work as a guideline for solid refusal reason management.

To help you implement best practices for refusal reasons, we spoke to our head of filters Kevin Martinez. He’s worked with most of our clients advising them on how to best manage and implement their refusal reasons. Here are his 4 tips for better refusal reasons.

 

What should you think about when deciding a refusal reason?

A refusal reason must be easy to understand for the user attempting to post his ad, but also by the agents doing manual moderation. If the refusal reason is too convoluted, the user will not understand the feedback they receive, and you run the risk of them repeating the offense and getting their content rejected again. This obviously causes a very negative user experience most likely resulting in increased churn.

If the refusal reason isn’t clear to the agents doing manual moderation it will both impact the quality of feedback your users receive and decrease the value of the insights you’re generating through refusal reason analysis. Furthermore, if your refusal reasons aren’t clear it will likely cause confusion and reduce the efficiency of your agents by preventing them from taking fast decisions.

Another advice for building good refusal reasons is to approach it from a content quality view rather than focus on item categories or services.

Create refusal reasons that can be applied broadly while still representing the same issue and where the educational email sent to users makes sense regardless of what item they were trying to post.

For instance, a modified PS4 that can run illegally downloaded games, fake Nike shoes and a cloned smartphone, could be refused with the same refusal reason: counterfeits and piracy. The feedback email sent to users who get their ad refused, for this reason, will need to be general enough to cover all cases included in the refusal reason category, but also informative enough to educate the user properly. It can take a bit of tweaking before you get it right, but it’s an important exercise if you want to have an efficient refusal reason setup.

 

How many refusal reasons should you have?

The fewer the better.
A high-performing and well-trained agent working in an optimized content moderation tool can handle about 600+ ads per hour. Even the best agent, however, will be significantly slowed down by a bad refusal reason setup. Too many, or vague, refusal reasons will cause confusion and efficiency loss. For example, if you expect Cannabis to be refused as drugs, paracetamol as medicines and that fat-burners should be refused for pharmaceutical products, you create confusion for the agents to use the proper refusal reason per items.
Grouping items, representing the same content issue, decrease the seconds an agent need to spend when deciding the action for each content piece.

On the other hand, it’s also important to do not have too few refusal reasons. Otherwise, the data you get will be too broad giving you no actual meaningful insights. For instance, if all bad items are refused for forbidden items without any distinction (weapons, drugs, profanity, etc.) you cannot take proper action to improve/maintain the quality of your site as you will be unable to pinpoint the main issues to focus on.

 

Any refusal reasons that are universal to all marketplaces?

In general, refusal reasons are unique and tailored to the specific marketplace or community, however, there’s one refusal reason that’s sadly universal to all marketplaces: SCAM. The refusal reason setup for scams can be replicated across marketplaces because it should, practically, always follow the same structure. Anything refused as scam should not result in an educational feedback email to the user, and the content piece should not go live.

Scam should also always be the top priority refusal reason to use in cases where a content piece breaks the rules in multiple ways. For instance, a scammer trying to sell something illegal, should not be refused with the illegal refusal reason, but always with the scam category. Using the wrong category for scam content helps educate the scammers in how they can circumvent your system and get their content published next time.

One other example of universal refusal reasons is duplication, we have yet to see a marketplace where there’s been any reason to have duplicate content, and the educational email is always straight forward and easy to understand.

 

What is an example of a good or bad refusal reason?

A bad refusal reason is too generic, an example could be a refusal reason called forbidden items/services. A refusal reason like that isn’t giving the user detailed feedback on why their content wasn’t approved and as such doesn’t allow them to improve.
Users must understand the terms of use for the website, and specifically the terms they’ve broken when having their first content piece refused. Otherwise, they may replicate the action next time they try to publish content. Or they may flood customer support with angry emails asking why their ads are not online. In the worst-case scenario, they will simply stop using the site. Unfortunately, because the competition is so fierce for online marketplaces, users usually have many alternatives to your site. This, in turn, make the worst-case scenario of silent platform leakage the most likely.

Good refusal reasons, on the other hand, target specific bad content and group them by family. For instance (drugs with medicines or weapons with fireworks). The title of each refusal reason should also be very explicit and consequently logical to use for the agents and easy to understand from an end-user perspective.

This is the approach we use in the Besedo Layers. Apart from helping agents to be more efficient, and improve the user experience for those adding content to your site, it also makes it easy to narrow down your site’s biggest content threats when analyzing the refusal reason data.

 

Getting more out of your refusal reasons

Whether you are looking to improve your refusal reasons, or need to build the framework from scratch, your first step should be listing your overall needs. Look at what you want to get out of the data, what information your users need, and then balance that with what your agents realistically can handle while maintaining high efficiency.

Once you’ve pinpointed these needs, you can start building the framework. List all the refusal reasons you believe you’ll need, then start trimming it by grouping similar ones.

Finally, test the new structure with all involved stakeholders, agents, end-users and those who are going to use the data gathered from the refusal reasons. As with most things in content moderation, refusal reasons need to be tweaked from time to time, but it’s important that they don’t change too often. Otherwise, you risk reducing agent efficiency, confusing end-users and collecting data that can’t be compared with previous samples, making long-term data comparison and content moderation strategy near impossible.

If you need help or advice with your refusal reason setup or content moderation strategy in general feel free to reach out for an informal chat about how Besedo can help solve your needs.