Home Virto Commerce blog Vendor Onboarding Explained: Process, Checklists & Best Practices

Vendor Onboarding Explained: Process, Checklists & Best Practices

Jul 1, 2024 • 10 min

Vendor onboarding is a fundamental process for the smooth and efficient operation of an ecommerce platform, whether it's a traditional B2C marketplace like Amazon, a niche B2B marketplace like ePlane, or an internal supplier portal.

The quality of vendor onboarding on an ecommerce platform can determine not only how quickly your suppliers can start selling their products (your customers can start buying them), but also your company's reputation and the overall success of your digital commerce business.

In this article, we'll take a look at what the supplier onboarding process looks like in the digital commerce space, and more specifically in B2B marketplaces. We'll share the key steps and best practices involved in the process, and how it varies from onboarding in B2C marketplaces and supplier portals.

What is vendor onboarding?

The term "vendor onboarding," also known as "supplier onboarding," has many meanings and connotations depending on the context, industry, and other factors. For the purposes of this article, we'll look at the process from two different perspectives:

  • A company onboards vendors for its procurement purposes (vendor = supplier)
  • A company onboards vendors for its ecommerce marketplace (vendor = customer)

Case 1: Vendor onboarding for procurement

Almost every business relies on a wide variety of suppliers to meet its specific industry needs, including components, materials, hardware, software, and more. In this case, vendor onboarding is the process (one of many) of integrating these suppliers into the company’s procurement workflow. The main goal of onboarding here is to properly integrate suppliers into the company's procurement process to streamline their search, management, order placement, and compliance with the company's standards and requirements.

Vendor onboarding on a marketplace

Vendor onboarding on a supplier portal. Source: Supplier Registration Guide

The onboarding process typically includes steps such as:

  • Researching and evaluating suppliers based on specific criteria (e.g., product quality, reliability, pricing)
  • Collecting and reviewing legal and compliance documentation
  • Registering in the procurement platform (also known as a supplier portal) and setting up accounts
  • Linking supplier information to the company's existing internal systems (e.g., ERP)
  • Training and performance monitoring.

Compared with online marketplaces, procurement platforms are only accessible to vetted suppliers and one company as a primary customer. As a result, onboarding is more tailored to the specific needs of that customer. The result of efficient onboarding is a streamlined sourcing process, stronger supplier relationships, and improved operational efficiency.

In some cases, procurement platforms can be operated by group purchasing organizations that act as intermediaries between customers and suppliers. One example is OMNIA Partners OPUS, which is the first public platform that connects procurement professionals with approved suppliers without a punch-out process.

Case 2: Marketplace supplier onboarding

Unlike the first case, in this scenario, vendor onboarding is a strategically important process of attracting, enrolling, and integrating new vendors (sellers) into the marketplace. The main goal of this process is to create a thriving ecosystem for sellers to effectively start offering their products and services through the platform (thereby increasing its attractiveness to buyers).

Vendor onboarding on a marketplace

Vendor onboarding on a B2B marketplace

The vendor onboarding process in this case typically includes:

  • Attracting new sellers to the marketplace
  • Facilitating registration, including the submission and review of legal documents to ensure that sellers comply with platform policies, etc.
  • Integrating sellers' systems with the platform (e.g., via API), uploading product catalogs, and setting pricing and delivery terms
  • Support and training on platform features
  • Vendor performance monitoring
  • Ongoing support to help sellers optimize their operations on the platform.

With a smooth onboarding process, a B2C or B2B marketplace owner can expand its product offerings and increase sales, increase user satisfaction, and differentiate itself from similar marketplaces.

However, online marketplaces can have very different onboarding workflows, depending on their type (B2C, B2B, product-based, service-based, etc.) and the industry in which they operate.

Let's examine how supplier onboarding can differ between B2B and B2C marketplaces and then a closer look at the specifics of onboarding in B2B marketplaces.

Vendor onboarding process in B2B vs. B2C marketplaces

Vendor onboarding is relevant to any type of online marketplace or multi-vendor ecommerce platform, and B2C and B2B marketplaces are no exception. Yet, due to the difference in the niches they operate, the customers they serve, the products or services they offer, there are several differences in how they onboard their vendors.

Vendor registration and verification

Although it's not always the case, B2B marketplaces typically require more extensive background checks on sellers than B2C marketplaces. This includes verifying business credentials, financial stability, industry certifications, quality assurance reports, and sometimes requesting references from other businesses.

As a result, the approval process can take longer than on B2C marketplaces (months versus days), where registration and verification can be fully automated via a self-service portal and require more basic checks.

Relationship management

B2B marketplaces emphasize building long-term and trustful relationships with vendors, as customers tend to buy their products from the same supplier for many years. Thus, contracts are often tailored to meet the specific needs of the business relationship, including negotiated terms for pricing, delivery schedules, and service levels.

In B2C, relationships are more transactional since the number of vendors and products is generally higher. Onboarding in B2C marketplaces focuses more on scalable growth without compromising quality or operational efficiency. Vendors are usually expected to adhere to standard marketplace terms and conditions.

A one-stop shop for seamless supplier onboarding for B2B marketplaces

Regulatory compliance and fraud prevention

Unlike B2C, B2B marketplaces typically have more stringent industry-specific regulations and standards. Onboarding ensures that sellers comply with these requirements, reducing legal and compliance risks.

In contrast, B2C marketplaces are more susceptible to fraudulent activity, so onboarding emphasizes thorough vetting and verification processes to mitigate fraud risks.

Technical integration

In many cases, sellers in B2B marketplaces need to integrate their ERP systems with the marketplace to automate order processing and inventory management. API and EDI integrations are also common. On the other hand, B2C marketplaces (not in all cases) provide built-in tools for listing products, managing inventory, and processing orders, so sellers may not need complex integrations.

B2B and B2C marketplaces may have different approaches to supplier onboarding due to the nature of the business, industry regulations, relationships between buyers, sellers, and platform owners, and many other factors. In fact, the process may vary across B2B marketplaces in the same niche, as companies may have their own unique characteristics and requirements for their suppliers.

At the same time, some steps and procedures may look very much the same. Let’s look at the common onboarding steps that vendors go through in a B2B marketplace.

Supplier onboarding steps in a B2B marketplace (with checklist)

B2B and B2C marketplaces may have different approaches to supplier onboarding due to the nature of the business, industry regulations, relationships between buyers, sellers, and platform owners, and many other factors. In fact, the process may vary across B2B marketplaces in the same niche, as companies may have their own unique characteristics and requirements for their suppliers.

At the same time, some steps and procedures may look very much the same. Let’s look at the common onboarding steps that vendors go through in a B2B marketplace.

Onboarding steps in a B2B marketplace

Onboarding steps in a B2B marketplace

Step 1. Registration

If a company already has a pool of suppliers, the first step for them would be to register and create accounts on the platform. This is where they provide initial information about their business, company name and contact details through a vendor onboarding form. It may also be the stage where they sign agreements and contracts, including terms of service, privacy policy and platform rules.

On some platforms, this is also the stage where sellers are required to submit necessary documents, such as business licenses, tax IDs, financial statements, and any industry-specific certifications. However, this can be done at a later stage, after initial review and approval.

Step 2. Vendor evaluation and approval

Once all initial information is submitted, the platform's procurement, finance, and legal teams can review it and conduct in-depth research into the supplier's business credentials, financial stability, and compliance with legal and industry standards to prevent any risks and issues down the road.

At this point, as the platform owner, you can also request additional information from suppliers to complete registration and negotiate and finalize terms of service, including payment terms, return policies, and service level agreements (SLAs).

Step 3. Profile and digital store setup

Once approved, sellers can return to the platform to complete their company profile, including a detailed description of their business, products or services offered, and other relevant information.

Here, they can customize their digital store design and upload brand assets that give the store the desired look and feel. If they haven't done so previously, vendors can also set shipping terms, delivery times, and payment methods.

Step 4. Catalog setup

Then, vendors can set up their product catalogs by uploading information about the products, including product IDs, descriptions, images and pricing, and setting up relevant categories, navigation and filters. If the catalog is big enough, this step may require technical integration to avoid manual processing.

Step 5. Technical integration and training

Finally, once all integrations and training are complete, sellers can pilot their storefronts to ensure that everything is working properly, including order processing, payment systems, and logistics. At this stage, sellers can see if there are any issues they need to address or if they need additional support from the platform team. After this, sellers are officially onboarded, and their listings become visible to buyers on the platform.

Step 6. Launch and support

At this stage, suppliers are integrated with the platform's various back-end systems for inventory management, order processing, and data synchronization. This can happen earlier if, for example, a supplier has a complex and extensive catalog that they cannot upload directly to the platform.

It's also the time when the platform team steps in to provide training and resources to help sellers understand platform functionality, best practices for listing products, and optimizing sales

These are the typical, basic steps that vendors can go through during onboarding on a B2B ecommerce platform. However, as we mentioned before, the process is not set in stone, and can differ a lot from one platform to another, based on industry, business, and other specifics. You can use this supplier onboarding checklist as a template to create your own vendor workflow.

But how to figure out which steps are the most essential for your ecommerce platform? Read on to learn the key tactics and best practices for efficient vendor onboarding.

Supplier onboarding best practices in B2B ecommerce

So, how do you organize an efficient and smooth supplier onboarding process in B2B ecommerce? At its core, it starts with understanding the specific requirements and key components that will ensure its efficiency, simplicity, and convenience for both vendors, customers, and platform operators.

Of course, effective supplier onboarding looks different for each type of B2B ecommerce platform. However, there are several strategies that are relevant to all of them.

#1 Establish a clear process (from the very beginning)

Whether you're running a pharmaceutical R&D marketplace or an aerospace supplier portal, your suppliers need clear instructions and checklists for each stage of their onboarding. This means breaking down each onboarding step into smaller tasks and providing relevant status updates to keep everyone on both sides of the platform on the same page.

Consider self-service portals that allow suppliers to navigate through onboarding steps, submit required documents, complete compliance checks, or as simple as update their profiles without additional manual intervention from your end.

#2 Provide comprehensive training and support

Make sure to provide as much help and support on every stage of the process. This can take shape as:

  • an extended training program with webinars, video tutorials, and interactive guides to help vendors understand how to get the most out of the platform,
  • a dedicated support channel to help suppliers with any questions or issues during and after onboarding, or
  • an in-depth, easy-to-access knowledge base with answers to FAQs, troubleshooting guides, and platform updates to help suppliers resolve common issues on their own.

#3 Prioritize compliance and risk management

As we mentioned earlier, each supplier needs to be thoroughly evaluated before they can do any business on a platform. This includes checking their:

  • financial stability
  • regulatory compliance
  • operational capacity
  • market reputation, and
  • other factors critical to your particular case.

Be sure to double-check and request any additional information or specific contract terms to mitigate any risks arising during onboarding. And, once they're on board, use automated tools to monitor vendor compliance with industry standards and regulatory requirements continuously.

#4 Focus on vendor’s experience as much as customer’s

Much has been said about prioritizing the customer (buyer) experience in ecommerce. But when you run an online marketplace, your sellers are also your customers, so their experience is just as important as the buyer's.

What goes into a seller's CX? It can include clear, step-by-step onboarding instructions, a mobile-friendly version of the seller portal, flexible payment options, advanced analytics, multiple support channels, marketing and advertising tools, and more.

What's next?

As we can see, vendor onboarding is an essential process in online marketplaces. It can have a direct impact on the success of the platform and the business as a whole, since sellers, along with buyers, are the primary users of the platform. But seller onboarding doesn't stop once they've been granted access and launched their product catalog or digital store on your platform. To ensure a successful, long-term relationship, it's important to support your sellers beyond the initial setup.

One way to do this is to set KPIs, such as delivery speed, order accuracy, and customer satisfaction, that you and they can track to understand how well vendors are performing. Based on these insights, suppliers can analyze what they need to change or improve in their operations.

In addition, don't hesitate to ask your suppliers for their feedback about the platform to understand if there is anything you, as the platform owner, need to change to help them use the platform more effectively. Just like buyers, B2B marketplace vendors are also the users of the platform, and they need to have their say in the conversation.

Another option is to create a self-service supplier portal where suppliers can independently manage various aspects of their relationship with the company, in addition to their primary account on your B2B ecommerce platform. For example, they can submit invoices, track payments, update product information, manage orders, access important documents, and communicate with the platform team. Not only can this expedite many administrative and tedious tasks for both you as the platform owner and your suppliers, but it can also significantly improve the overall efficiency of your suppliers' performance and your marketplace as a whole.

If you are seeking B2B or B2C ecommerce management software with comprehensive vendor onboarding capabilities or want to enhance your existing workflow and kick-start a new vendor onboarding process with a robust vendor portal, visit Virto Commerce’s Vendor Portal to learn more.

One eCommerce platform for all your procurement needs

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