In 1455, following his conquest of Constantinople, Sultan Mehmed II established a covered market to invigorate the devastated city’s economy. It enticed Arab, Turkish, and Venetian merchants to travel long distances to a place they knew they’d find customers. The market lives on in modern-day Istanbul as the Grand Bazaar, one of the oldest and largest covered markets in the world.

There are at least two insights to pull from this history.

The first is about the power of the marketplace model to efficiently match supply and demand. As a provider of financial infrastructure for 75 of the top 100 digital marketplaces, we’ve seen firsthand how that power compounds at internet scale. Last year, digital marketplaces accounted for trillions of dollars in value and roughly half of all online transactions.

The second is that marketplaces thrive when sellers and service providers thrive. It’s a lesson that successful marketplaces have always recognized, and it’s one that has renewed importance today. That’s because sellers now have more choices about where to sell, and marketplaces have more tools at their disposal for attracting and retaining them.  

While the fundamentals of in-person marketplaces have stayed constant for hundreds of years, digital marketplaces have been evolving rapidly. The earliest digital marketplaces, such as Amazon.com and Zappos, offered mostly basic transaction processing. Later, digital marketplaces added subscriptions such as Amazon Prime and DashPass by DoorDash as part of an investment in great customer experiences.  

Today, the most innovative changes in marketplaces are about providing more value to sellers. Many of them hinge on the kind of financial infrastructure Stripe provides. We’ve found leading marketplaces increasingly ask us to support them with three main types of incentives for sellers:

• Access to a global customer base
• An easy onboarding experience
• Financial tools like loans and spend cards available in the marketplace dashboard

Here’s why each of those matters, and how marketplaces are working with Stripe to provide them.

Global access

A 2022 study in the Journal of Business Research cited varying tax codes and compliance requirements as one of three main barriers to globalizing a digital marketplace. Overcoming these barriers can help marketplaces foster loyalty by providing sellers access to a global customer base.

For example, Github chose Stripe Connect to get their Sponsors program off the ground quickly and pay out to developers around the world. They were able to quickly double their global coverage to 68 countries, including Brazil, Indonesia, and India, to encourage global open-source contributions. This helped them move thousands of developers off of their waitlist.

Fast onboarding anywhere in the world

Fast onboarding is attractive to sellers but hard to achieve for marketplaces because compliance requirements vary by geography and the type of products or services being exchanged. 

We built Connect with two onboarding principles in mind. The first is that payments onboarding is a core part of the customer experience and should be optimized to reduce drop-off and collect the right information at the right time. The second is that onboarding flows should automatically adjust to appear in the right local language, with the right local requirements, so that marketplaces don’t have to manage this complexity themselves. 

These principles come to life in Connect’s prebuilt, hosted, and embedded onboarding flows, which allow marketplaces to handle identity verification and Know Your Customer (KYC) obligations and navigate other payments compliance requirements quickly.

Refurbed, a marketplace selling refurbished electronics goods, introduced Connect’s streamlined onboarding process to its sellers and saw a 3x increase in the number of sellers onboarded and 5x growth in sales volume.

Financial services built into the marketplace

Sellers need loans to grow their businesses, spend cards to manage expenses, and fast access to the income they’ve earned. Marketplaces that can provide these services are in a stronger position to earn seller loyalty.

Stripe Instant Payouts helps marketplaces attract and retain sellers by offering immediate access to payments for a small fee. Ninety percent of gig workers say they would use instant payouts if their platform offered it.¹

When demand for food delivery skyrocketed during the pandemic, marketplaces like Canada’s leading food delivery network, SkipTheDishes, were fighting bitterly for couriers. SkipTheDishes used Instant Payouts to introduce Fast Cash, which lets couriers get paid in as little as 30 minutes, and increased courier retention by 10% for the cohort that adopted it. 

“Stripe’s ability to integrate seamlessly into our system enabled an incredibly smooth launch of Fast Cash, which is a complex feature that spanned multiple working groups across the organization,” said Tyson McCann, former head of product at SkipTheDishes.

Instant Payouts is just one of a broader set of embedded finance opportunities including:

• Lending via Stripe Capital, which provides fast access to financing based on factors such as a seller’s payment volume and history on Stripe. For example, BloomNation provides embedded lending to its florists to help them relieve cash constraints and invest in growth.
• Card issuance via Stripe Issuing, which allows marketplace businesses to spend on credit or with earned funds. For example, Shipt was able to give its shoppers Stripe-issued spend cards to complete orders securely and quickly, saving shoppers the hassle of saving receipts.

These embedded offerings allow sellers to meet more of their financial needs in one place and open new, value-added revenue streams for marketplaces themselves.

Building a better marketplace for everyone

Stripe has a long history of building economic infrastructure for the internet. In 2012, that meant launching Connect, which supports platforms and marketplaces that serve more than eight million businesses, sellers, and service providers today. Now we’re helping marketplaces provide additional value to sellers through access to a global customer base, faster onboarding, and financial services.

To learn more about how Stripe can help your marketplace, visit our site or get in touch.