Primary building an effective reputation system on a marketplace 02
Primary building an effective reputation system on a marketplace 02

How to Prevent Lack of Trust in Your Marketplace

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Daryna P.

Copywriter

What stops customers from buying on marketplaces? Mistrust is one of the biggest factors. Even though online marketplaces have become commonplace, customers still treat such platforms with caution. Trust issues account for two-thirds of customers’ fears of the sharing economy, including privacy concerns and concerns about the quality of goods and services.

Online fraud only widens the trust gap in marketplaces. In 2017, over one million US customers fell victim to fraud attacks with total losses of $905 million.

Trust Issues in Online Marketplaces

As a marketplace owner, you should tackle your customers’ fears and provide customers with a secure environment. To help you out, we’ve gathered the most effective approaches to fostering trust in marketplaces.

#1 Multi-level identity verification

Customers need to know that the profiles of sellers and service providers in your marketplace are accurate, that they aren’t communicating with bots, that they won’t let a criminal into their house, and in general that providers on your site are reliable and able to provide the services they offer.

To mitigate risks in your marketplace, verify the identity of your users on multiple levels. Identity verification helps demand-side users gain trust, protects suppliers from fraud, and ensures that users won’t take advantage of the marketplace system, for instance by opening several accounts just to get a discount.

A simple way to verify users is via social log-in. When a user logs in with a social account, you’ll get basic data including their name, email, phone number, and interests. This type of verification is the least secure, however, as users can fill in false information in their social media accounts.

The next level of verification is an ID check. At this stage, you verify the applicant’s legal name, current address, Social Security number, and previous addresses. Beyond ID verification, you need to conduct background checks through official channels. Here is a list of channels you need to go through for US citizens:

  • National Criminal Database
  • Sex offender registries
  • Department of Corrections
  • Administrative Office of Courts
  • Department of Motor Vehicles

An interview is also an integral part of identity verification. The best option is to hold a face-to-face interview or at least a Skype interview. Phone calls and emails won’t give the full picture of an applicant’s personality.

If your marketplace provides freelance labor in areas including caregiving, you should сertainly check user references.

Some marketplaces use one to two verification methods; others combine many. Sittercity, for example, uses a four-step screening process that covers references, reviews, interviews, and background checks.

TaskRabbit has a robust screening process as well. Future taskers not only have to fill out an extensive questionnaire but also apply their essay and pass a background check and video interview. This is all done to protect customer safety.

#2 Content curation

No one wants to see damaged or overly used clothing on Tradesy or crummy apartments on HomeAway. Questionable content can scare customers from your marketplace. To encourage quality content and ensure that the right customers find it, you need some form of curation.

You can hire people to continually examine your content to find and feature the best products or service providers at the top of the page and downgrade or eliminate bad content. Airbnb replaced user-generated apartment photos with professional photos, for instance. This tactic helped Airbnb attract more renters and create helpful guidelines for people listing apartments.

Your community is your other tool in pursuit of quality. Who can better assess goods on your marketplace than customers who have already tried them?

#3 Social curation

Sampling helps customers make decisions regarding the quality of a product or service. In a physical store, customers can try and inspect goods in person. When it comes to an online marketplace, customers define the quality of goods and services based on

  • their friends’ recommendations;
  • other users’ ratings and feedback.

Let’s explore each of these social curation tools.

1. Ratings

Ratings are the most basic marker of quality that you can offer your marketplace customers. For instance, Designbro, a marketplace we've built, lets customers rate designers and their works on a scale of one to five stars, where one star represents poor work and five stars represents excellent work. This is the most common rating system among online marketplaces.

DesignBro Rating System
DesignBro provides a convenient rating system for entrepreneurs to estimate the quality of the freelancers' works

At Flywheel, drivers and passengers rate their experiences at the end of each ride. This rating system helps both sides trust that they’ll get what they’re expecting.

But setting up a rating system isn’t enough. You need to constantly look through the ratings and remove poorly rated providers from your marketplace. You’ll never see a driver with lower than a three-star rating on Lyft so that riders don’t have to worry about having a bad experience.

Ratings usually go along with written feedback.

2. Feedback

Before spending money on a product or service, new clients look at what other people are saying about the provider or the product. In fact, 88 percent of customers say that they trust online feedback as much as personal recommendations.

Marketplaces leverage different types of feedback. For example, Upwork customers can leave public feedback on their experience with a freelancer. This feedback is shown on the freelancer’s profile. Alternatively, customers can provide private feedback if they feel uncomfortable sharing publicly. Upwork uses private feedback to estimate a freelancer’s job success.

Feedback can be one-sided or two-sided. Before 2008, both sides of an eBay transaction could give each other feedback with comments. On eBay, the concern of sellers was mostly about buyers not paying for products. Once eBay acquired PayPal, these concerns disappeared and the company went back to a one-sided feedback system.

Most service-based marketplaces like Uber, however, use a two-sided feedback system because both parties rely on each other. A passenger can rob a driver or a driver can harm a passenger, for example.

Customers trust only personal recommendations more than publicly shared feedback.

3. Recommendations

Customers are likely to cooperate with providers recommended by their acquaintances, as people consider those they know to be the most reliable sources of advice. That’s why Airbnb uses Facebook data to show how many friends a user may have in common with a host.

Recommendations are especially crucial for babysitting. Parents just don’t feel comfortable leaving their child with a total stranger. In fact, 88 percent of parents still ask their friends or neighbors for recommendations.

At Sitter, customers can create private networks of other parents and trusted babysitters. Customers can then add the caregivers they know from their contact list to their network and view their friends’ caregivers. This helps parents find a new caregiver quickly based on their friends’ recommendations. All they need to do is send a single request to their trusted network.

Apart from creating a list of favorite sitters and browsing the favorites in their community, UrbanSitter users can look for a Repeat Families badge. Each nanny profile includes the number of Repeat Families they’ve had, indicating how many families that sitter has worked with more than once.

Marketplace owners can also build trust by outlining the best providers on their website.

4. Top providers

I bet you’ve seen an Elite tasker on TaskRabbit or a freelancer with a Тop-rated badge on Upwork. These titles show that a service provider delights customers with high-quality work and has the highest level of professionalism.

TaskRabbit Elite Taskers
TaskRabbit marks both New and Elite taskers

Fiverr has created a Seller Levels system. Once you join Fiverr, you’re automatically labeled as a New Seller. Every month, the system evaluates your performance, and if you meet the standards, the system will promote you to the next level. The system counts ratings, response times, order completion rate, number of on-time deliveries, and warnings.

Along with eliminating trust concerns of customers, rating labels give providers perks and thus encourage them to constantly improve the quality of their services. On eBay, buyers must wait at least seven days before leaving negative or neutral feedback for a PowerSeller. Top-rated sellers at Fiverr get VIP customer support and can get featured in promotional listings.

#4 Extra guarantees

Some marketplaces go beyond the security measures mentioned above and offer additional guarantees of safety by tracking a user’s location, providing insurance, and using blockchain and smart contracts. Let’s look closer at each of these options.

1. Tracking location

This feature is widely used among marketplaces providing transport services. To make drivers feel more comfortable, Uber lets them share their location, trip status, and related information with friends and family.

For passengers, Uber offers a family profile. With a family profile, you can register up to five accounts for your children, parents, relatives, friends, and anyone else. Once a person from your family account has requested a trip, you’ll receive a notification with the driver’s information and a map that tracks the progress of their trip via GPS.

Family Profile at Uber
Uber helps you provide a safe trip to your family members

2. Providing insurance

If you’re running a peer-to-peer marketplace, insurance is a means of protection that you need to consider. Hosts don’t want their apartments to be damaged by renters and customers are afraid of items being stolen in their houses. Insurance assures users that even if something goes wrong during an interaction, your marketplace will protect them.

Handy insures every booking made through its marketplace. The Handy Happiness Guarantee compensates customers’ requests:

  • Up to $20,000 for property damage caused by a professional’s negligence;
  • Up to $5,000 for losses from theft.

The online property marketplace Vrumi even uses blockchain technology to insure counterparty obligations. Vrumi insurance covers:

  • Public Liability for £2,000,000;
  • Building damages for £500,000;
  • Accidents to domestic staff for £5,000,000.

There are more applications for blockchain technology in the marketplace world.

3. Applying the blockchain

OpenBazaar is famous for using cryptocurrencies as a medium of exchange. Each user on OpenBazaar has a personal keypair to sign transactions and anonymize their data. Each contract requires multiple signatures from both parties to confirm the receipt of purchased goods. Once both parties have signed a contract, the funds are released to the seller. This prevents forged contracts and helps settle disputes if they arise.

ModulTrade also uses smart contracts for each transaction, letting small companies trade on the global market without the corresponding risks.

Another example of a blockchain marketplace is Soma, a social buying and selling marketplace. Soma facilitates trade and social interactions via blockchain technology and a native cryptocurrency ‒ the Soma Community Token, or SCT.

#5 Communication tools

Some marketplaces work against their customers: customers find awesome items to buy and want to get more information, but there’s no way to message a seller or the hold time for customer service seems endless. Lacking information, customers are likely to abandon the marketplace.

To overcome this trust gap, you need to create private messaging functionality.

1. Direct messages

Direct messages help customers inquire about products, clarify details, and agree on terms within your marketplace in a matter of minutes. Crowdyhouse provides direct chat between designers and buyers. Using direct chats, buyers can ask questions like “When can I expect delivery?” and designers can ask customers about their purchasing experience and if anything could be improved. By adding a direct chat feature, the company made interactions on the marketplace more transparent and saved 30 percent on support time.

Marketplaces like BlaBlaCar are afraid of customers bypassing the marketplace for payments, so they restrict private messages before payments are made and instead make users ask questions publicly. This may create unnecessary friction for users and nudge them to leave the marketplace, however. In this case, you’d better use messaging crawlers to look through chats and send warnings to users who write certain keywords such as email or payment.

Apart from direct messages, you can serve your customers with a forum where they can discuss any issue they’re worried about.

2. Forums

Etsy has one of the strongest online communities. In the Etsy forums, customers can gather and discuss a wide variety of topics ranging from shop questions and advice to pets and favorite foods.

Etsy allows customers to create teams to connect with other members. Customers can create teams just for fun or create teams that are devoted to a serious marketing goal. Each team can arrange its own forum and sign up for team digest emails with daily reports of the group’s discussions straight to team members’ inboxes.

Etsy customers can also create team pages to show off items from sellers in their team and help buyers discover their team. Additionally, teams can apply for the Etsy fellowship program. This fellowship program provides educational workshops, team-produced pop-up shops, craft shows, direction and feedback for online promotional campaigns, and more.

On a global scale, forums help engage customers, stimulate sellers to push more products, and encourage customers to buy more.

Secure your marketplace

There are lots of safety measures and features you can apply to your marketplace. The minimum security set includes ID verification and social curation tools like ratings and feedback.

If you’re running a product marketplace, you can go with a one-sided feedback system. If you’re running a service marketplace, you’d better consider a two-sided feedback system and additional safety precautions such as background checks for providers and insurance for both parties. In case your marketplace deals with large amounts of money, look closer at smart contracts.

Here at RubyGarage, we have expertise in building various types of marketplaces. To see what we’ve built, check out a travel marketplace Wanderist as well as DesignBro, a quality-oriented design crowdsourcing marketplace. If you have any ideas for securing your marketplace, drop us a line and we’ll be more than happy to help you realize your vision.

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