Welcome to the third stage of creating your marketplace! We’ll be going through the best practices for Retention, after Seller Acquisition and Seller Activation. This is the fourth post in our 4 part series on Seller Success, do read our first post before carrying on:

Attracting new sellers is important, but keeping the top sellers you have now is even more important. Research has found that the top 10% of marketplaces retain 91% of top sellers. At Amazon, 41% of its current top sellers were also top sellers last year, the year before, and the year before that. The message is clear: top marketplaces have low churn rates for top sellers. 

But other marketplaces are making the same efforts to recruit your top sellers. How do you build a marketplace that makes your top sellers want to stay?

This is where your marketplace acquisition funnel comes into play. It’s vital to remember that retaining top sellers is an integral, final stage in the funnel, after acquisition, activation, and revenues, instead of thinking of it as a separate task.

Why retention matters

New research from marketplace executives and managers has found that sellers commonly disengage from marketplaces due to insufficient competitive differentiation (46 percent) and insufficient sales (33 percent). These factors can be mitigated through a concerted effort to boost the top sellers.

Data from Kahuna (sellers could choose multiple options)

Marketplaces aim to achieve the famed Pareto principle, where 80% of your marketplace revenue will come from 20% of your sellers. However, only 16% of marketplaces have achieved this sweet spot. In order to keep your marketplace as efficient and as profitable as possible, you want be part of the 16%.

Following the Pareto principle, increasing sales for your top few sellers will bring in more revenue than encouraging a large number of middle-of-the-road sellers to raise their sales. With fewer sellers to focus on, you can pour more energy into improving their revenue, and you won’t need as much manpower to do so. 

Enable top sellers to shine

A key step in the Retention stage of your marketplace acquisition funnel is helping your top sellers to shine. Offer them the tools they need to differentiate themselves and grow their visibility and sales, both within your marketplace and across the internet. 

Sponsored product ads

Sponsored product ads, like Amazon’s Buy Box, sponsored products ads, and other paid advertising options, present a huge opportunity for sellers to capture customers for their products. Another good example is Flipkart’s sponsored ads like Brand Stories. Offer your top sellers privileged access to sponsored product ads and premium internal advertising space, so that they can enjoy increased visibility for their items.

Flipkart’s Brand Stories

Third-party logistics

Integrating a third-party logistics solutions helps your top sellers to offer competitive, attractive delivery options and returns’ policies. This frees up time for you to focus on other areas as the logistics providers help optimise your supply chain. Once your marketplace is mature enough, it’s even possible to consider offering marketplace fulfillment, along the lines of Amazon’s Fulfillment By Amazon (FBA). Connecting other third-party tools like marketing and inventory tracking apps makes life easier for your top sellers, raising their loyalty to your marketplace and reducing the allure of switching to another platform.


Every successful business is powered by data, and that includes your top sellers. While you already be analyzing some data at this point, are you getting a holistic view? Having access about customer behavior, demographics, shopping patterns, traffic sources, can help you can understand your customers better and fine-tune your own customer acquisition funnels. All this data will also be useful as we move to our next point…

Dynamic pricing & Recommendations

You need to walk a fine line between retaining control over your marketplace, and giving your top sellers the freedom to follow their own intuition and expertise. Enabling dynamic pricing provides your sellers with the tools they need to find the best price point for every situation, so they can maximize their profits. Dynamic pricing engines such as Amazon’s takes into account factors such as: purchase history, browsing history, impact of friends, trends for a particular product, social media mentions on the popularity of a product, purchases made by customers with similar purchase history, etc.

Dynamic pricing helped Amazon boost profits by 25% on an average

For example, on the Amazon Seller Central, the company uses its algorithms to predict when a certain product from a seller might go out of stock. This allows the company to recommend the seller to restock their product much earlier, creating a win-win situation for both parties.

Amazon Selling Coach: Amazon’s recommendation engine for sellers

While you would not directly change the prices of products from your sellers, it is possible to utilize the insights from these engines to suggest changes to sellers. Typical questions from sellers can be answered, such as:

  • What products should they add?
  • How much inventory should they add and for which products?
  • What is the best delivery mode for particular products to meet on-demand deliveries?

Account management

Assigning a dedicated account manager to top sellers is standard best practice for successful marketplaces. You don’t want top sellers to be put off by glitches in the system or a faulty customer interface. Account managers can help top sellers to master new features and connect with your new third-party service providers, access insights and analytics that improve their sales rates, and take advantage of your marketplace promotions. It’s important to make sure that your marketplace has enough human resources to give the right level of care and attention to each of your top sellers so that nothing holds them back. 

Keep an eye on your Retention success metrics

As you tweak your retention tactics for the final stage of your marketplace acquisition funnel, it’s crucial to keep an eye on your success metrics. Driving down churn rates for top sellers, ideally to below 10%, is your biggest KPI. 

Driving down churn rates for top sellers, ideally to below 10%, is your biggest KPI. 

You’ll want to constantly review your top sellers to check who is bringing in the highest revenues, and help them to improve their reach in your marketplace to fine-tune the Pareto principle to get 80-90% of your revenue from 10-20% of your sellers. 

Don’t neglect your products and pricing, either. You want to continually compare your marketplace offering with those of your competitors, working at maintaining a realistic price index that you can afford. 

Ensure your marketplace remains competitive

Your relationship with your top sellers is a two-way street. On the one hand, their products and pricing are what make your marketplace. On the other, your marketplace is what brings them together with their customers. 

It’s your responsibility to make sure that your marketplace can compete with other platforms in the same geography and vertical. You need to continually research rival marketplaces in order to:

  • Spot discrepancies between your top sellers’ offers, and those that they make available on another platform
  • Identify gaps in your catalog
  • Find pricing opportunities that promote your top sellers and advance your marketplace
  • Follow changes in your top sellers’ offerings on other marketplaces, like new products, updated pricing, and special promotions
  • Stay current with the hottest merchandising trends, so that you and your top sellers don’t miss out on the next big thing
  • Weed out products that underperform and churn, to maintain positive sales growth

Tools like, Google search, and careful searching on rival platforms help you to find the information you need to keep your marketplace competitive.

Keep your eye on your growth

Although the name of this stage is retention, it’s still important not to neglect the other stages of your marketplace acquisition funnel. You can never afford to rest on your laurels, so don’t give up on the acquisition, activation, and revenue stages while you focus on retention. You want to continue attracting the best sellers to join your platform, so that you can refine your top sellers to include only the best of the best. 

If you’ve exhausted all your local sellers, it’s time to think internationally. By this point, you should have a mature network of third-party logistics solutions, and be well placed to expand it by adding solution providers and partners in other geographies. You’ve already got a great marketplace acquisition funnel that’s tried and tested – all you need to do is adapt it for other cultures, and keep on building on your success.

Retaining top sellers is your crowning glory

Your marketplace thrives when you make it attractive for your top sellers. By giving them all the tools they need to shine, tracking your success metrics, and leveraging data to keep your marketplace competitive, ensure retention of a strong stable of loyal top sellers. At the same time, you’ll keep on improving by spreading the net even wider for more excellent vendors. 

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