It is a truth that in today’s world, people want exposure. Exposure to reach customers, high growth and sustainability. Therefore when starting a new business, whether e-commerce, subscription etc. people tend to seek for platforms that provide such functionalities that would ease starting process. This post is going to be for people who are thinking of joining a platform.
But before signing up and getting all hyped up about what they offer, you need to keep in mind that it can be an agreement made with the devil.
Platforms do have their policies, that might seem to ease the beginning process. Especially, when they are new, they give away so many stuff for free, it would be stupid not to join them. Well, the problem starts here. If they are not mature enough, how are they going to deliver what they are promising? You need to question their workforce, their infrastructure, checkout the owners/founders for their background.
Do they treat you as partners? Yup, if they are starting new, they must feel lucky that they have you on board. You will be their success story, so better they treat you well. In this case, you have to know that you have the upper hand and negotiate hard. What do i mean? Well, marketplaces continue doing their businesses based on the commission they get from your sales. So, try to make a long term contract for lower fees. Also define some SLAs that would make you feel safe. You should have the opportunity to secure your business when theirs is going bad.
Secondly, plan for future. If you grow enough, do you still want to pay those commissions? I believe not. So, try to understand how in the future you can break your ties and move on with your own or maybe another solution. Just like yours, they are a business and they can fall apart too.
Another point is, question their promises. Are they delivering on time? Yes, delays can happen. But how often and how long? If you are new to a platform, you should keen an eye on the health of the system all the time. Going forward, this might not be a problem if the system provided is providing your needs.
The biggest mistake made when signing up for a platform is not looking at their pricing strategy. If you feel like you are paying too much, always but always look for alternatives. If developing your own platform costing you 3 to 10 times more than entering that platform and if you believe you can sustain your business for 2-3 years, then it might worth to have your own platform. Because by paying the commissions, you will end up paying the same, but you will be bound to what they provide. Also there is a risk that they might charge you for your additional requests.
But if you happen to sign up for a mature platform, all of the above things might not be an issue. Only thing you have to ask yourself is becomes how you can leave the platform when the time comes? and if the commissions are not that high do you have to even leave?
Checklist for all platforms actually comes down to this:
If they are new in business:
- Do they have a healthy company structure?
- Who are the owners/founders?
- Do they provide everything they are marketing?
- What are their commission rates and what flexibility they provide? Will they ask for a higher rate next year? Is it a life long commission rate?
- How is their road map looking? If you are one of the very first customers, you have the right to at least discuss features.
Both for mature and new platforms:
- Plan your exit strategy
- Seek for marketing possibilities, do they give you tools or are you on your own?
- How are you going to manage your customers?
The answers you get, should make you feel comfortable. Overall, it is your money, time that you are investing and it is your right to question things. For bigger platforms, you may not have the chance to get all the answers, but look for reviews, try to reach out to other customers of the platforms and get their opinions.