Building Trust on Your Multi-Vendor Marketplace

Marketplace trust isn’t a nice to have, it’s a need to have. Take Uber, for example, where 15 million strangers trust other strangers to drive them to their intended destination every day. This requires a lot of trust. Will every driver get a five-star review? Will every passenger be a warm ray of sunshine? Certainly not. However, Uber has baked trust into its marketplace, so it continues to succeed. 

In this article, we’ll explore:

• Why marketplace trust is important
• Common mistakes that break trust on a marketplace
• Strategies to foster marketplace trust  

Why is marketplace trust important?

If buyers don’t trust you, they won’t make purchases. If vendors don’t trust you, they won’t list their items. If you fail to build trust, you can’t succeed as a marketplace.

For marketplaces, trust is incredibly fickle. With single-vendor ecommerce, buyers know who they’re buying from. But with marketplaces, the relationship has unknowns. Buyers either know the marketplace but not the vendor, or buyers know the vendor but not the marketplace. As such, marketplaces must go the extra mile to build and sustain trust. And if marketplaces break trust, it can lead to major issues like:

• Reputation damage
• Lost customers
• Lost suppliers
• Opportunities for your competitors
• Potential legal ramifications
• Lost revenue
• Operational disruption

Common mistakes that break trust

Trust takes time to build and seconds to break. Marketplaces commonly lose trust due to the following:

Poor navigation and filters

As a marketplace, you act as a middleman between your buyers and sellers. Your buyers are trusting you to find the items they're looking for, and sellers are trusting you to get their products in front of an audience. Without proper navigation and filters, you demonstrate to your buyers that they can’t easily find what they need on your platform and to your sellers that they can’t be found. 

Inaccurate product information

Problems arise when product information is incorrect, inconsistent, or misrepresented. Marketplaces that give individual vendors control over uploading product information are at heightened risk of inaccuracies. This doesn’t mean you shouldn’t go this route. Rather, keep in mind that certain guard rails should be put in place to ensure cohesion, consistency, and accuracy. 

Lack of transparency or poor communication

Gone are the days of unannounced deliveries. Buyer trust hinges on keeping them in the loop of the fulfillment cycle. For marketplaces, this is tricky. The marketplace often doesn’t have control over shipping and depends on vendors to deliver the product to the buyer. 

Ineffective dispute resolution

90% of consumers worldwide consider “issue resolution” their most crucial customer service concern. Relying on AI or a weak set of FAQs to resolve all customer service complaints only exacerbates the issue. 

Fraud

Unless you’re using a transaction processor that acts as the merchant of record (Think: Trustap), then your marketplace will be the merchant of record. This means when fraud occurs in a marketplace, it’s the responsibility of the marketplace to protect the user. 

Strategies to build trust on your marketplace

The internet is a crowded place, with so many options for people to both buy and sell items. Why should someone choose your marketplace? A large part of it comes down to trust. Users want to trust that you're providing them the best options, that you have their best interests at heart, and, of course, that they won't be scammed.  It’s your job as a marketplace operator to allay concerns — and ensure fears don’t become reality.

Here are five tactics you can use to build trust in your marketplace:

1. Establish marketplace standards

2. Use social proof

3. Vet and verify vendors

4. Set up marketplace protections

5.  Ensure clear and effective communication

1. Establish marketplace standards

Establishing standards for operations, conduct, and usage should be one of the first steps in developing a marketplace. Depending on your marketplace model, standards can be set in several ways.

Service level agreement (SLA)

An SLA is a legally binding contract that establishes standards for suppliers. It lays out how things work on your platform, what you expect from suppliers, what they can expect from you, and what happens when those expectations aren't met or are violated. SLAs can also protect a marketplace from vendors that break the terms of service and give you grounds to terminate the relationship.

Terms of service

Like an SLA, terms of service outline a set of regulations all vendors and buyers must follow. It should outline the details of acceptable use and determine limits of liability.

For example, Airbnb's terms of service contains policies on listing management, booking cancellations, anti-discrimination, and more.

Code of conduct or community guidelines

Peer-to-peer and service-based marketplaces should establish terms for respectful communications, appropriate behavior, safety, and use of personal property. Both buyers and vendors should abide by the code of conduct.

For example, Poshmark's community guidelines outline how they expect users to interact and penalties for inappropriate conduct.

2. Use social proof

Before Airbnb exploded, the concept of staying in a stranger’s home was unfathomable. Public guest reviews solved this problem.

Nothing establishes buyer trust faster than a five-star review … and nothing scolds bad behavior like a one-star.

Building user reviews into your marketplace is a three-fold process.

Showcase vendor reviews

Buyers are conditioned to use reviews as part of their buying process. In fact, according to a 2024 consumer review survey, 50% of consumers trust reviews as much as personal recommendations from family and friends.

Request reviews from buyers after a purchase

It's your job as a marketplace operator to remind and even incentivize buyers to leave a review. In fact, according to a Brightlocal study, incentivisation for reviews has increased YoY. For example, there’s been a 19% increase in discounts in exchange for reviews. It’s no surprise, as there’s an increasing understanding of the important role reviews play, and that consumers often won’t leave them organically (unless they have a bad experience!)

Enable vendors to rate buyers

Trust goes both ways, especially for service marketplaces that rely on buyer-vendor interactions. Buyer ratings protect vendors from buyers with a history of poor interactions.

3. Vet and verify vendors

Is your vendor a human — and will they be a good participant on your marketplace? It’s on marketplace operators to vet vendors to ensure they’ll positively contribute to the buying experience. Identity verification and vetting are essential to marketplaces where property, proprietary information, or safety are at stake.

Identity checks

Identity checks ensure that the vendor is who they say they are. There are several ways to verify a vendor’s identity, depending on the level of scrutiny you require.

• Email address: Email validation ensures a user is a real person. This method isn't foolproof—anyone can create a fake email address—but it will suffice if you need to ensure the user is human. 
• SMS: While SMS validation can't 100% verify identity, it's enough to confirm the account belongs to the user.
• Address: To confirm a mailing address, snail mail out a code. When received, the user inputs that code and gains access to the marketplace's full feature set.
• Photo ID, like a passport or driver's license: Request a photo ID, like a passport or driver's license, to confirm the person's profile and ID match. Apps exist to automate this process. 
• Background check: Perform a background check to ensure the applicant has a clean record. 

Vendor vetting during onboarding

The vendors on your marketplace represent your brand, so it is important to vet them thoroughly. Just as you would go to Uber with a complaint about an erratic driver, your marketplace buyers will come to you with vendor issues. 

Ensure your vendors are of high quality by vetting them during onboarding. 

• Check their certifications: Require proof of qualifications. For example, a marketplace for therapists should require verification of a therapist’s LPC license.

• Conduct a live interview: Just like hiring an employee, interview vendors to gauge their core competencies, how they manage sales and communication, and how they manage their business. 

• Perform a KYC check: If your vendor is an individual, perform KYC (know your customer), AML (anti-money laundering), and anti-fraud checks. If your vendor is a business, perform KYV (know your vendor) or KYB (know your business) checks.

Once your vendor is vetted, let your customers know. Verified seller badges are a great way to ease concerns of nervous buyers and drive more leads for those vendors. 

4. Set up marketplace protections

If your marketplace is the merchant of record and is in charge of handling transactions on your platform, you are liable when transactions go wrong, even if the vendor is at fault. As such, you must protect your vendors, buyers, and yourself from fraudulent activity.

Fraud is rampant online. According to Juniper research, merchant losses from online payment fraud will exceed $362 billion globally between 2023 and 2028. Marketplaces are particularly vulnerable to:

• Credit card fraud
• Payment & identity fraud
• Business email compromise
• Ransomware & cyber extortion
• Account takeovers
• Insider threats
• Data breaches
• Phishing

There are steps you can take to protect your marketplace from nefarious actors:

Payment processor protections

Payment card industry (PCI) certification is the minimum standard for processor security. Don’t consider a payment processor without it. A PCI payment gateway encrypts credit card data, obtains authorization from the issuing bank, and ensures the payment is secure. 

3D secure (3DS) is a second line of defense that prompts buyers to verify the transaction via a code sent to their bank or email. It adds some friction to checkout, but many customers will appreciate the extra layer of protection.

Escrow

An escrow-style process buys a marketplace time between when funds are received and when they are paid out to the vendor. For example, a marketplace could choose to hold the funds from the vendor until a day after the buyer has received the item. This is a key feature of Trustap’s transaction process, as funds are held until goods are received by the buyer. Once received, the seller then automatically receives their payment.

Two-factor authentication (2FA)

Many of us have experience 2FA in action. 2FA authentication requires two forms of identification to process a transaction beyond username and password, like a code from a generator or using your fingerprint. 

5. Clear and effective communication

Clear communication at every step of the buyer journey leads to trust — but there are a lot of steps to that journey. Your marketplace can foster clear and effective communication by:

Ensuring accurate product data

As you can imagine, having inaccurate product data in your descriptions can breach marketplace trust quickly. You can’t rely 100% on your sellers to input the right product data. Make it foolproof by leveraging your marketplace platform to standardize product information input and ensure buyers get what they pay for. For example, drop-down options can limit vendors' descriptors, and mandatory fields can ensure vendors include relevant information. 

Customer support options

A study by KPMG shows that 51% of respondents trust companies that make it easy to contact the people behind the company. In an ideal world, marketplaces should provide multiple ways to receive support, from chatbots to customer service staff to user-specific support portals. For example, Doordash has three support portals on its marketplace: one for customers, dashers (delivery), and merchants. That being said, at the beginning of your marketplace journey, it’s okay to keep it simple and start with one channel.

Order updates

Keep buyers in the loop. Buyers should receive status updates—and thus reassurance—at every step, from order receipt to dispatch to delivery.

Educational resources

Inspire marketplace trust by telling your users about the protections in place. Simply disclosing that you do a background check might give them the confidence to proceed with a transaction. You may also consider giving them a roadmap to have successful experiences by equipping them with the resources and knowledge they need to keep themselves safe. 

For example, Preloved, a second hand marketplace in the UK, sells puppies on their platform. To help customers avoid buying puppies that have been illegally smuggled, they share this checklist on their website. 

🔵 Use the marketplace trust action plan to start creating the strategy you need to foster marketplace trust 🔵

Facilitating trust on a marketplace platform

Building a trustworthy marketplace is all about building trust into your marketplace. To build trust, and keep trust, your marketplace platform should support:

• Vendor onboarding and dissemination of marketplace standards
• Social proof via reviews
• Vendor verification
• Fraud protection and payment processors 
• Clear and effective communication at every step of a transaction

To learn more about building trust on your marketplace, enroll in Marketplace Bootcamp (it’s free!)

About the author: Steve is the COO of Trustap— A tool that solves that solves many online trust issues while removing liability, cost, and operational burden from marketplace operators.