Automate Your Supplier Onboarding Process: The Best Practice Guide for Marketplaces

In a previous article, we established that being able to put the right product at the right time in front of a high-intent customer is the key to a profitable retail marketplace.

To do this, a marketplace needs to have a hand-picked selection of strategic suppliers who can offer a curated selection of products. For some highly competitive verticals, a marketplace also needs a steady stream of new suppliers, vendors, or collaboration partners.

The difficulty of sourcing a net new supplier, however, necessitates a smooth, ideally automated vendor onboarding process. Without this, a supplier can lose interest after giving you their initial contact information or worse, take the business relationship to a competitor.

In this article we outline a general supplier onboarding customer journey, including the actual forms and checklists we use to onboard thousands of sellers for our marketplaces. 

We also share common frequently asked questions we’ve fielded from new suppliers time and time again. 

Finally, we discuss how a retail marketplace can automate the supplier onboarding process so its team can focus on sourcing and merchandising, not in the minutae of manual onboarding.

But to get there, first we need to understand where vendor onboarding fits within a retailer’s sourcing and seller enablement funnel.

How supplier onboarding fits into the seller enablement funnel

We believe that seller enablement – how well a retailer empowers its sellers to succeed on its marketplace – is the competitive advantage for GMV growth. 

Modern sellers often expect real-time inventory integrations, a streamlined supplier onboarding, and a short time to the first sale. The complexities of seller enablement requires the retailer use technology, expertise, and education to take each seller through the seller enablement funnel.

We'll briefly touch on each stage before narrowing our focus towards seller onboarding and how to automate it.

1. Seller discovery is when the retailer undertakes sourcing and procurement for prospective suppliers.
2. Seller negotiation is when the retailer and the prospective seller both do their risk assessment and due diligence to establish the terms of a partnership that makes sense for both parties. This could involve multiple stakeholders, agreeing on the terms of the seller policy, and a formal approval process for both sides.

Once both the retail marketplace and the seller agree to the partnership terms, they move on to the next step of the funnel, and the focus of this article: seller onboarding.

3. Seller onboarding tends to take the most time. It typically involves an initial introductory call and an onboarding checklist that the retailer shares with the supplier, getting the suppler’s ecommerce platform connected with the retailer’s, and running tests to ensure orders are going through. Down the road, a retailer can even run webinars to onboard new vendors at scale.

The onboarding stage ends once supplier data – product data, order fulfillment workflow, and inventory management – has been integrated with the marketplace's system and the seller awaits their first sale.

4. Finally, once the seller receives their first sale, the retailer can move the vendor into a maintenance or vendor management phase.

Depending on each party's technology capabilities and respective ecommerce systems, taking a supplier from discovery to first sale can take months or weeks.

How to automate your supplier onboarding process

As we mentioned in the introduction, a painless supplier onboarding process is key to sourcing and retaining high quality vendors or sellers. Successful onboarding requires tight expectation management with regards to vendor data, business process timeline, and steps to completion. 

The goal of seller onboarding is to get the supplier to the first sale as smoothly and as quickly as possible. The metric we use to measure the success of a supplier onboarding process is through “time to first sale”. This measures how quickly a seller goes from agreeing to the business relationship to receiving their first sale from a marketplace.

Here is how a typical onboarding process works for us:

This said, onboarding experiences can range from the painless to the completely automated. Success or failure in the vendor onboarding process relies on two factors:

1. The seller’s technical capabilities
2. The buyer’s seller enablement prowess

The following steps take both into account.

First, a retailer’s merchandising team must establish who on the supplier’s team is the primary contact. This contact will most likely be the one uploading the documents and driving the partnership forward from the seller’s team.

A retailer must then list out all of the terms, agreements, NDAs, or insurance forms the seller needs to complete, submit, or sign. Ideally the retailer forwards an onboarding checklist or template to the seller.

The marketplace should also have a list of technical requirements a seller needs to integrate their inventory, products, and price lists, and receive orders. 

Depending on how compatible a seller’s system is with the marketplace, a seller might need to source software, integrators, or file format converters in order to plug into the channel. 

We have seen the most committed retailers set up initial calls, customize seller demos, personalize product documentation, and of course, have prompt email support — all in service of getting their sellers to their first sale. 

Finally, while the technical details are being hashed out, the rest of the merchandising team can prepare co-marketing materials in anticipation of the launch. Having a tried-and-tested marketing campaign to promote new sellers increases the likelihood that they will receive orders from the first day they list on the marketplace.

We can’t emphasize this enough: having a clear roadmap of one’s own onboarding process and the possible roadblocks guides the automation workflow. Suppliers onboarding through Convictional, for example, go through four steps:

1. Connect their platform to Convictional
2. Select their products
3. Set up their pricing
4. Confirm the retailer with whom they’re partnering

Depending on technical compatibility, each party might need more or less time and manpower to get the seller over the starting line.

For example, we helped B2C marketplace The Verticale onboard 50 sellers in 2.5 months without them having to increase their headcount. This was made possible because both The Verticale and its sellers were on Shopify and were used to leveraging APIs to integrate microservices into their ecommerce technology stacks.

After installing Convictional on their Shopify stores, new sellers on the marketplace could select products, set up pricing, connect with The Verticale, and synchronize their inventory within the span of a few minutes.

We even customized product validation to prevent order issues from happening and accommodated a diverse range of SKU redundancies and configurations, all without compromising on vendor data management.

Common questions new suppliers ask

Of course, supplier onboarding will vary from retailer to retailer, not to mention from one vertical to another. 

However, after successfully onboarding thousands of sellers for large retail marketplaces both manually and automatically, we’ve found that these are the most common questions new vendors ask during onboarding:

Q: What are the service level metrics I can expect for order fulfillment?

This varies from one marketplace to another. Convictional vendors are expected to fulfill at least 98% of customer orders. Vendors must ship orders within 24 hours of receiving an order. 

Q: How do you handle pricing?

A: New vendors enter their own supplier data, including their price lists. A price list is a listing of all of the products (SKUs) available for sale along with their wholesale price and retail price. These are used to determine the wholesale and retail margins. Each product must be priced in order for it to be visible to their retail partners.

With Convictional, seller price lists do not discount off of a supplier's MSRP. The retailer margin is applied to their MSRP to ensure  their retail price is consistent across channels.

Q: How do you handle invoicing and accounts payable?

Again, this varies from retailer to retailer. 

Convictional buyers and sellers, for example, all use Stripe to process online transactions. This allows for automated invoicing as orders are created. 

Through Stripe, invoices are posted once sellers marked orders as “shipped” in our system. Merchants and vendors can also set custom tax rates within their respective Stripe dashboards. 

World-class onboarding is the missing ingredient for supply chain excellence

Retailers who are committed to making the marketplace model work for them will need robust and flexible technology solutions, both in their customer-facing and vendor-facing fronts. 

While there are commonalities and defaults across all marketplace onboarding processes, each one will have subtle differences. 

A retailer needs to have an excellent understanding of supply chain management, their seller enablement funnel, and ultimately, what makes or breaks a new supplier relationship — supplier onboarding. 

By optimizing the onboarding process to shorten a seller’s time to first sale, the marketplace ensures that the sellers sees the business ROI in the relationship. This encourages high quality sellers to invest and prioritize the marketplace as a main distribution channel.

Unfortunately, most marketplace platforms that claim to have automated seller onboarding and enablement are merely facades. More often than not, they cost hundreds of thousands of dollars in set up costs, even before any sales have gone through. And these “platforms” are usually nothing more than a clunky dashboard or portal that sellers have to grit their teeth and use.

For truly automated onboarding, supplier portals are not enough. Instead, we recommend API-first, cloud-based software tools. This allows for real-time inventory tracking, self-serve supplier onboarding, and siloed risk management within each tool you use in your system.

Just as marketing differentiates a profitable retailer with one who is on the verge of bankruptcy, supplier onboarding is a defensible competitive advantage in a resilient retailer’s arsenal.