How to Transform a Digital Catalogue into a Full-Scale Marketplace

Why Digital Catalogues Need to Evolve

A digital catalogue is fundamentally centralized: a company owns the inventory, manages supplier relationships, controls pricing, and bears the financial burden of holding stock. This model works well for companies with limited scale or highly specialized product ranges. But it hits a ceiling.

A marketplace, by contrast, is decentralized. Sellers own and manage their inventory. The platform operator focuses on tools, trust, and traffic. This shift unlocks several strategic advantages:

• Exponential Inventory Growth: Instead of being limited by your own purchasing power, marketplace inventory scales with each seller you onboard.
• Reduced Capital Requirements: No need to purchase or warehouse inventory. Sellers carry that burden.
• New Revenue Streams: Beyond transaction fees, marketplaces enable advertising, seller tools, logistics services, and data insights.
• Competitive Moat: Network effects create a defensible position. More sellers attract more buyers; more buyers attract more sellers.
• Category Expansion: Sellers bring expertise and inventory in categories you couldn't stock at scale.

The challenge is that transforming from catalogue to marketplace is not simply a technology problem. It's an organizational, operational, and strategic transformation that requires clear leadership, cross-functional alignment, and disciplined execution.

Assessing Your Organization's Readiness

Before you commit to the marketplace transformation, you need to honestly assess whether your organization is ready. This is not a question of technology—good marketplace platforms exist. It's a question of people, culture, and strategy.

Strategic Readiness

Do you have a clear answer to: "Why are we becoming a marketplace?" Is it to expand into new categories? To reduce inventory costs? To drive faster growth? To increase customer retention through wider selection? A weak strategic rationale will lead to weak execution. Marketplace transformation requires investment and organizational change. Leadership must believe in the thesis.

Organizational Readiness

Catalogues are typically managed by a tight team: buyers, merchandisers, and a small operations group. Marketplaces require significantly more distributed leadership. You need:

• A dedicated marketplace leader with P&L accountability
• Product managers focused on seller experience (not just buyer experience)
• Business development and partnerships capability
• Merchandising and ranging expertise applied to multi-seller dynamics
• Operations teams able to support seller success at scale

If your organization is highly centralized or lacks these capabilities, you'll need to build them or acquire talent.

Financial Readiness

Marketplace transformation is not cheap. You'll invest in platform licensing, team hiring, seller acquisition, and systems integration. You should expect 12-18 months before marketplace economics are favorable. Do you have budget for this? Can your CFO tolerate margin pressure in the near term for long-term payoff?

Platform Selection: Why Marketplacer

We evaluated several marketplace platforms before selecting Marketplacer for Lasoo's transformation. The decision framework matters more than the specific choice, but I'll walk you through why Marketplacer was right for us.

Evaluation Criteria

Enterprise-Grade Seller Tools: Sellers need dashboards, inventory management, pricing tools, and reporting. Marketplacer provided comprehensive, intuitive tools designed for complex seller needs—not just simple listing portals.

Flexible APIs and Integrations: Our sellers had diverse systems. Marketplacer's API-first architecture allowed us to build custom integrations with major ERP systems, WMS platforms, and data management tools. This was critical for seamless onboarding of large retailers.

Multi-Channel Support: We needed to support marketplace sellers on our own platform AND on external channels. Marketplacer's infrastructure supported this without forcing sellers into a walled garden.

Merchandising Flexibility: Marketplaces require sophisticated merchandising—not just search and browse. We needed to combine seller-provided content with our own editorial control. Marketplacer gave us this balance.

Scalability: We committed to aggressive growth targets (120% MoM GMV growth). We needed a platform built for scale, with dedicated support from the vendor.

Local Expertise: Lasoo was Australia-focused. Marketplacer had Australian roots and understood local logistics, payment systems, and seller dynamics.

Build vs. Buy Trade-offs

We briefly considered building our own marketplace platform. This would have given us maximum flexibility but at enormous cost and time. By month 12 of development, we'd likely still be building core features while competitors moved faster. Marketplacer let us launch in months, not years.

The trade-off: we're constrained by Marketplacer's roadmap. If we need a feature they don't have, we either wait or build a workaround. For most teams, the speed and quality of a proven platform outweighs the flexibility of custom code.

Seller Acquisition at Scale: 60+ Retailers in 6 Months

You have a marketplace platform. Now you need sellers. This is the hardest part of marketplace transformation. You're asking established retailers to add a new channel, give you a cut of their sales, and learn new tools.

Who to Target First

Not all sellers are equal. We segmented seller prospects into tiers:

• Anchor Tenants (Tier 1): 5-10 large, well-known retailers with strong customer loyalty. These provide immediate credibility and traffic. We approached these directly with custom deal terms and dedicated onboarding.
• Growth Tier (Tier 2): 20-30 mid-market retailers with specialized expertise in their categories. These fill gaps and add depth to the catalogue.
• Long Tail (Tier 3): SMB sellers that we scaled through self-serve onboarding, standardized tooling, and product-driven acquisition.

We started with Tier 1. One large, reputable retailer on Lasoo created a halo effect. It proved the concept to others and reduced their perceived risk.

Deal Structure and Economics

Sellers care about three things: traffic, take-rate, and effort. You need to make the trade-off clear:

• Take-Rate: What percentage of GMV do you take? We started with 10-15% for anchor tenants, increasing to 15-25% for smaller sellers. This covered payment processing, platform costs, and our margin.
• Traffic Guarantees: Sellers don't care about platform potential; they care about actual buyers. We tied onboarding to traffic commitments: "Here are your first 30 days of traffic. Here's what category placement costs. Here's how you drive more."
• Support Levels: Anchor tenants got dedicated account management. Tier 2 sellers got weekly check-ins. Tier 3 got self-serve with responsive support. Set expectations clearly.

The Onboarding Funnel

We designed a structured seller onboarding process:

1. Discovery and Outreach (Weeks 1-2): Business development team identifies prospects, pitches the opportunity, negotiates deal terms.
2. Integration Planning (Weeks 3-4): We understand their systems, data structures, and inventory. Our engineering team designs APIs and data mappings.
3. Data Preparation (Weeks 4-6): Sellers (or we, with their help) prepare product data in GS1-compliant format with images, descriptions, and attributes.
4. Testing and QA (Weeks 6-8): Live testing on staging environment. Categories, pricing, inventory levels, order flow.
5. Go-Live (Week 8): Limited launch to verify everything works. Gradual rollout to full traffic.
6. Optimization (Weeks 8+): Ongoing: category expansion, pricing optimization, performance reviews.

This structured approach meant we could reliably onboard a seller every week or two. By month 6, we had 60+ retailers live.

Retention and Expansion

Getting sellers live is not the end. Many will churn if they don't see ROI. We tracked seller health with a dashboard: GMV, orders, conversion rate, seller support tickets. When a seller's GMV was stagnating, we investigated: Was their data accurate? Were their categories discoverable? Did they need category expansion or merchandising placement?

With this proactive approach, we achieved 85%+ seller retention in year one. More importantly, we expanded: sellers that started with 1-2 categories expanded to 5-10, driving significant GMV uplift.

Cross-Functional Execution Framework

This section is critical: marketplace transformation is not a technology project. It's an organizational and operational transformation. Without excellent cross-functional alignment, you will stumble.

The Team Structure

We built a dedicated marketplace unit with clear ownership:

• Marketplace Lead (P&L Owner): Accountable for GMV targets, unit economics, seller growth. Oversees all marketplace activities. Reports to CEO or Chief Commercial Officer.
• Product Managers: Split into buyer-side (search, discovery, checkout) and seller-side (onboarding, dashboards, tools) PM tracks. Each reports to the Marketplace Lead and collaborates with Chief Product Officer.
• Merchandising and Ranging: Multi-seller dynamics are different from single-supplier dynamics. Merchandisers need to understand inter-seller competition, category depth, and discovery optimization. New role, different mindset.
• Business Development: Dedicated BD resource focused on seller acquisition, partnership negotiation, and retention. Works closely with Marketplace Lead.
• Engineering: A scrum team dedicated to marketplace features, API development, and seller tooling. Not shared with other initiatives.
• Operations: Seller support, dispute resolution, payment processing, logistics coordination. Scaled with seller count.

Cross-Functional Cadence

Clear communication prevents chaos. We established:

• Weekly Marketplace Standup (45 minutes): All leads present. Seller onboarding progress, blockers, marketplace metrics.
• Bi-weekly Strategy Sync (60 minutes): Deeper dive on seller cohorts, merchandising strategy, roadmap decisions.
• Monthly Seller Success Review (90 minutes): Review health of each seller cohort, churn risk, expansion opportunities. Often included CFO and Finance.
• Quarterly Business Review (2 hours): Full leadership alignment on progress, pivots, budget allocation.

Without this cadence, teams operate independently. Engineering builds features the sellers don't need. Merchandising makes changes that break integrations. Business Development makes commitments ops can't deliver.

Collaboration with Engineering and Product

We worked closely with our core product and engineering teams, even though we had a dedicated marketplace team. Key principles:

• Shared Roadmap Visibility: Marketplace features went into the central product roadmap. Other teams understood our priorities and constraints.
• API-First Mindset: All marketplace features exposed APIs so sellers and third-party systems could integrate. This wasn't extra work; it was the default approach.
• Performance Ownership: Engineering took responsibility for seller tool performance and reliability. Seller dashboards had to be fast, even at scale.
• Documentation and Training: Engineering provided detailed API docs, SDKs, and webhooks. They hosted seller training sessions on integrations.

Merchandising in the Marketplace Model

In a catalogue model, merchandising is about optimizing a limited set of supplier-provided products. In a marketplace, merchandising is about orchestrating hundreds of sellers across hundreds of categories. It's a completely different skill.

The Merchandising Shift

From Single-Supplier to Multi-Supplier Dynamics: You can no longer guarantee that the "best" product from your preferred supplier gets top placement. You need to balance seller relationships, buyer preference, price optimization, and margin.

From Centralized to Distributed Inventory: You don't own inventory. Sellers do. If a top-ranked product goes out of stock, you can't redirect buyers to your backup supplier. You need alternative products ready, or you risk losing the sale.

From Manual Curation to Algorithmic Assistance: You can't manually curate thousands of products across hundreds of sellers. You need rules-based systems, algorithms, and seller-provided data quality standards.

Category Strategy

Define what each category is responsible for and who owns it:

• Category Owner: A merchandiser or buyer responsible for that category. They set pricing guidelines, featured seller placement, and category layout.
• Seller Mix: How many sellers in each category? Too many creates confusion. Too few reduces competition and selection. We targeted 3-8 sellers per core category, with clear role differentiation (e.g., premium, value, specialty).
• Content Standards: Enforce minimum data quality. Missing images, incomplete descriptions, or vague specs harm discoverability and conversion. We provided templates and data validation rules.
• Pricing Alignment: Monitor for extreme price variations that indicate data errors or unfair advantage. Establish floor/ceiling pricing if needed.

Discovery and Ranking

In a marketplace, discovery is the critical merchandising lever:

• Search Ranking: Don't rank solely by relevance. Weight seller ratings, price-to-quality ratio, availability, and seller fulfillment speed. Buyers want the best product, not the most expensive or from the seller with the most inventory.
• Browse and Taxonomy: Category hierarchy and faceted navigation guide discovery. We invested heavily in taxonomy, ensuring sellers' products mapped to the right categories and facets.
• Featured and Branded Placement: Sell placements to sellers (retail media), but ensure featured products genuinely serve buyers. A terrible product with premium placement will harm trust.
• Seasonal and Trending: Highlight trending products and seasonal categories. Automate where possible (e.g., winter apparel in Q4) but reserve manual curation for high-impact placements.

Seller and Merchant Performance

Track seller quality closely:

• Seller Health Score: Composite of on-time delivery, return rate, customer reviews, policy compliance. Low-scoring sellers get relegated or suspended.
• Product Performance: Track which sellers' products drive conversion and retention. Elevate high-performers in search and browse.
• Collaboration and Feedback: Share performance data with sellers. "Your product rank is lower because of incomplete descriptions. Here's how to improve." This shifts sellers from blame to collaborative problem-solving.

Monetization: From Listings to Retail Media

Marketplace monetization evolves in stages. Most start with transaction-based fees. As the platform matures, you unlock higher-margin, more efficient revenue streams.

Transaction Fees (Core Model)

The simplest model: take a percentage of GMV. We started with 10-15% for anchor sellers, scaling to 15-25% for SMB sellers. This covered costs and generated margin. But it has a ceiling: if seller take-rate gets too high, sellers leave.

Retail Media (High Margin)

As our marketplace matured, we introduced advertising. Sellers could pay for featured placement, sponsored search results, and category takeovers. This was a game-changer.

Why? Because retail media has fundamentally better economics than transaction fees:

• Seller Ad Spend ≠ Lost GMV: A seller buys a featured placement; some of that is incremental sales, some is redirected from organic results. But the seller perception is positive: "I spent $100 on ads and drove $500 in sales." They're happy to spend more.
• Higher Margin: We captured 100% of ad spend, vs. ~20% of GMV as margin from transaction fees. Ad spend was pure profit after platform costs.
• Buyer Benefit: Unlike pure advertising (which clutters the experience), retail media can improve buyers' discovery of niche sellers or new products.

We achieved 20% of seller ad spend uplift within 12 months of launching retail media, translating to 8-10 points of margin improvement on marketplace P&L.

Other Revenue Streams

As you scale, explore:

• Seller Tools and Services: Premium seller dashboards, analytics, inventory management tools. Subscription revenue from high-volume sellers.
• Logistics Services: Offer negotiated shipping rates or fulfillment services. Margin from logistics partnerships.
• Data and Insights: Anonymous category trends, seller benchmarking, demand forecasting. High-margin SaaS for sellers.
• Payment Services: Offer payment processing; take a small margin on top of processor fees.

Don't chase all of these immediately. Build foundation (transaction fees + basic retail media), then expand based on seller and buyer feedback.

Results and Key Metrics

This case study was grounded in measurable outcomes. Here's what we achieved at Lasoo:

Growth Metrics

• 120% Month-over-Month GMV Growth: Within 6 months of marketplace launch, we achieved 120% MoM growth. This was driven by combination of seller expansion (growing number of active sellers) and per-seller productivity (higher average order value, more orders per seller).
• 60+ Retailers Onboarded: From zero marketplace sellers to 60+ retailers in 6 months. This included anchor tenants, mid-market retailers, and SMB specialists.
• Category Expansion: Marketplace enabled us to enter categories we hadn't offered before (e.g., specialty foods, niche home goods) because sellers brought expertise we lacked.

Financial Metrics

• 15% Revenue Uplift: Marketplace contributed incremental revenue, net of marketplace costs. Transaction fees + retail media advertising drove higher-margin contribution vs. our core catalogue business.
• Improved Unit Economics: Because we didn't own inventory, we reduced warehouse costs and inventory carrying costs. Marketplace P&L was healthier than catalogue P&L per dollar of GMV.
• Retail Media Monetization: 20% seller ad spend uplift translated to 8-10 points of margin improvement on marketplace business.

Operational Metrics

• Seller Retention: 85% of sellers stayed active month-over-month. Churned sellers were primarily low-productivity (under $10K monthly GMV). Valuable sellers showed high stickiness.
• Data Quality: 90%+ of product data met quality standards (images, complete descriptions, correct attributes). This was critical for search and discovery performance.
• Buyer Engagement: Repeat purchase rate on marketplace products was 3x higher than on catalogue products, indicating higher customer lifetime value.

Strategic Achievements

• Network Effects: Marketplace created a self-reinforcing loop. More sellers → more selection → more buyers → more attractive to new sellers. This is the holy grail of marketplace scaling.
• Defensibility: Competitors found it hard to replicate our seller base. Sellers had invested in data quality, learned our tools, and were seeing results. Switching cost was meaningful.
• Category Leadership: Marketplace enabled us to claim leadership in categories (e.g., "Australia's largest online X marketplace") because seller breadth gave us scale no single vendor could match.

Concluding Thoughts

Transforming a digital catalogue into a full-scale marketplace is ambitious and demands discipline, patience, and organizational commitment. But the payoff—in scale, defensibility, and economic potential—is substantial.

The playbook is clear: assess readiness, choose the right platform, execute seller acquisition systematically, align your organization cross-functionally, invest in merchandising and discovery, and build monetization beyond transaction fees.

Do this well, and you'll build a sustainable competitive advantage in your category.