Lots of people want to build marketplaces or some kind of virtual inventory setup like dropshipping.

Few people know the pitfalls in setting up these programs. If you're a startup, recruitment is by far your biggest worry. Most sites have no idea why they exist, and cannot consistently explain it to vendors. Someone more established with consistent traffic has the opposite problem - onboarding and management of vendors.

• Can you clearly explain to the vendor what is expected of them?

• How quickly can you lead them through the process?

• What are the standards?

A big problem I see often is training and retraining vendors. At launch, they are complying, but things quickly fall out of compliance. How will you know?

Software is critical, but process and staffing in this area is almost more critical. Left to their own devices, vendors will do whatever is comfortable and easy for them, not what is best for YOUR CUSTOMERS.

There were lots of great responses to my initial LinkedIn post - I’m sharing some of them here:

• Sean Pruett said “Curated marketplaces could be the next evolution that solves some of these issues. Focus doesn’t have to be on a category, why not something like a platform for small regional “makers”? Once it’s set up for one region it scales to other regions quickly and easily. Layer unique, magazine worthy content on top of the retail marketplace and you have a value added traffic driver on top of a value added platform.” He’s always such a smart thinker.

• Anthony Larkin added “It’s critical to partner with a provider that has the experience and expertise in launching AND growing successful platform businesses with enterprise level clients. Many forget to focus on the experience for sellers. It’s important to think about sellers like customers in your ecosystem and ensure communication, transparency and reduced friction for sellers as well as customers. Having the right software is critical but can your vendor also help you design and establish the right team and operations to support it? Important questions to ask.”

• David Juron shared “From a vendor perspective we see existing customers and startup on-boarding expectations and requirements that are all over the board. While to old standard of "the customer is always right" is still a driving force, asking and knowing your vendors existing capabilities goes along way in working with them to adapt to your expectations.”

• Harpreet Singh responded specifically to my saying “most sites have no idea why they exist” by saying “I think they know why they started but forgot to adapt to market changes.”

Thanks to all for sharing their insights!