Online Marketplaces and Freelance Partners Revolve Around Payments
Partner Payables Operations Can Be a Tightrope to Long-Term Scalability and Loyalty
It’s not hyperbolic to say payments are probably the most important aspect of the partner relationship in online marketplaces. Payments prove that there is a relationship otherwise freelance partners wouldn’t participate, and there would be no supply chain or service network.
By the way, this phenomenon isn’t isolated to marketplaces. Society as a whole is becoming more reliant on “unattached,” self-employed providers. According to FreshBooks, the number of Americans working for themselves will triple to 42 million by 2020. They’re trading stability for autonomy. But as we look at every industry from media companies to e-commerce to online services, unattached suppliers and service providers are becoming the norm. The crowd-based dispersed business model is actively transforming how we think about how we get things done. That transformation should inform how you structure your backend operations – including payables.
Smaller, emerging marketplaces start with making manual payments, either by cutting checks, making PayPal payments, or even sending electronic payments (e.g. ACH or wire transfers) through their bank. This works when you have a dozen or so partners. But by the time you reach 100 partners, or when you have your first partners that are beyond your domestic borders, complexity and volume jump.
This puts your marketplace on the dangerous precipice of failure. Failing to pay partners or pay them on time can wipe out your entire product and service offering capability. No partners? Nothing to sell. You are done.
In our upcoming report Global Marketplace and Gig Economy Payment Satisfaction, we detail the challenges marketplaces face in paying their freelancers from the partner perspective. When survey respondents were asked if they ever stopped or would you ever stop working with a marketplace because of a payment issue, the response was clear: 73.7 percent said that they would leave a marketplace because of payment issues.
Yet the general consensus from the survey is that the majority of freelancers are dissatisfied with their marketplace payment experiences, with 50.4 percent saying the process needs to improve, and another 8.7 percent stating outright that they were not satisfied.
It’s is a high-risk position to be in if your partners are willing to walk away because of payments and the general satisfaction of the payment experience is problematic. That is a perfect storm towards disaster.
For marketplaces to thrive, they need to be just as aware of payments on the supply side (freelancer payments) as they are on the demand side (customers). In many cases, those freelancers are representatives of the marketplace and have one-to-one contact with customers. Their satisfaction needs to be prioritized and a great payment experience is one of the most effective ways to ensure that.