Marketplace Series: Seller Payouts

Managing cash flows is paramount for any business in any industry. This is especially true in ecommerce, where a competitive advantage is given to marketplaces who make it easy for the cash to arrive in the sellers’ account.

The extent to which your marketplace makes it easy for their sellers to receive payment for orders that they fulfill can play a large role in whether the seller perceives your channel as an operational burden (from always being behind on cash) or as a strategic source of growth for their business.

General Advice

Unlike areas such as margins or shipping policies, payout policies are simple to implement: pay sellers as quickly as is possible while ensuring you do not put yourself in a negative cash position.

Thankfully retailers default to a privileged cash position as a result of dropship. Capturing the customer payment allows retailers and marketplaces to maintain a virtuous cash cycle. In contrast, sellers are frequently burned by aggressive terms and payment infrastructure that takes days to process.

Smaller sellers much prefer payments automation and are the easiest to convince about employing automated invoicing. Larger brands often have their own invoicing processes that they expect their channel partners to subscribe to. In either case, execution speed is appreciated regardless of size.

Sample Legal Terms

Below are sample legal terms that can be used as a template for your own contracts:

[Brand Name] will receive a payout from Stripe (Convictional) within 24 business hours after the item has been marked as shipped with a tracking number. The tracking number must be from a North American Postal Service including, but not limited to: Canada Post, USPS and more.

Implementation

To ensure a mix of fast payouts while ensuring positive cash cycles for marketplaces, Convictional partners with Stripe to automate payment once a seller marks an order as fulfilled. This helps incentivize sellers to fulfill orders quickly. They then receive a deposit into their bank account within 24 hours.

For sellers wanting to setup automatic payments, refer them to the How Invoicing Works guide. For sellers who do not wish to configure automatic payments via Stripe, please contact Convictional Support to discuss alternative options.