With the advent of internet and technology driven trade, e-commerce is emerging as the leading channel for sellers across industries to reach out to their customers. But driven by increasing competition between different platforms, and limited opportunities to create a differentiation for partners, eCommerce firms are facing a tough challenge retaining sellers. It is highly critical that platforms analyze and manage churn of their existing seller / vendor base and keep it to a minimal so that they do not lose the foundational revenue base they have built with a lot of hard work.

From our experience, a 1% churn in sellers leads to a cumulative value loss of anything between 2-3% over a 2 year period. That means, if your platform is doing $100M of annual sales, a 1% churn is causing you a value loss of $2-3M. Imagine the loss with 20% and above churn levels. But the bigger problem is that churn is also silently killing your business and eroding your value proposition to customers, which has an even bigger value impact.

At Praxis, we work with leading e-commerce platforms across segments and continents. Analyzing platform data and interviewing category leaders, we realize that given the similarity of the nature of businesses, the reasons for seller churn are highly similar, only with different depths of impact across different reasons for different segments / continents. The more interesting thing emerging is that >55% of the sellers leave platforms for reasons other than only commercial benefit. So what are these reasons sellers are leaving your platform and what can you do about it?

  1. Sellers do not find your platform “value for money”: This does not mean that your platform is not a bang for the buck, but it mostly means that the packages and pricing models that you have, typically do not excite the entire breadth of sellers on your platform, meaning certain categories of sellers need a new package / model of pricing. What are some leading indicators of this? The levels of churn vary across packages, acquisition rates are low across certain sizes of sellers etc. It is advised platforms do a package value benefit analysis across seller categories annually to determine optimal packages and pricing, as seller mix can change over time. It is critical to think of packages by different seller segmentation – by age, by size, by type of products, by requirement of services etc.
  2. Your platform is not generating enough traffic: This is the holy grail of platform scale. Supply demand matching is core to build any platform, and mostly, building one side critical mass first is generally the right approach. Do you have enough traffic that will cater to different types of sellers on your platform? If no, the ideal way is to first create the critical mass of traffic by on boarding known sellers who will not churn, or simply aggregating existing supply on the internet, and gradually phasing out the same and replacing with your own organic seller supply. There can be numerous ways to approach this issue, and to be honest, this is a rather tricky one to solve. The green light here is that demand estimation and product market fit are the bigger problems platforms need to solve and not bother about the churn at this moment if this is the root cause.
  3.  Seller discrimination”: Believe it or not, this, by far comes across as one of the most highly quoted reasons for churn. Sellers can be discriminated in many ways – having a high average page number for their listings, service levels basis size of seller, marketing and visibility of sellers on the platform etc. What is the solution here? No one size will fit all. One interesting way to offset this problem is by using the standard carrot and stick approach – incentivize sellers for engaging more with your platform and vice versa. Creating a fair competitive environment will make it clear to your sellers that you mean business, and your platform is not a socialist democracy. Also, communicate with sellers enough about why they are being discriminated and how to change that. From our experience, flags and alerts that explain discrimination (in a positive way) have created positive sentiment with sellers and they often take corrective actions to move up in the ladder.
  4. No ongoing business performance management: Mostly, all platforms have the approach of explaining how to generate maximum value from it and then leave it to the sellers to make the most of it. But this does not work. Platforms should take more ownership of their seller business performance and take responsibility of having regular check ins and updates about how their sellers are performing, where they rank, how much is their business potential and what can they do to accelerate their sales. Thankfully, a lot of data analytics and reporting tools can be used to conduct regular and technology driven business performance reviews with sellers, and also trigger critical meetings if performance goes down.
  5. Wrong expectation setting at the time of selling: Are you clearly aware of what your sales personnel are communicating to sellers to get them to your platform? Are standard communication templates with terms, conditions, typical benefit to expect, case examples, and packages / plans supplemented to your business development teams? Having a clearly tracked and documented sales process will minimize churn that happens due to miscommunication during sales. This is one absolutely avoidable cause of churn and a rather simpler one, but is difficult to detect.
  6. Inefficient relationship management and service support: Service is key. Sellers demand more of you and that is a positive force to your business. Sellers also demand problem solving rather than communication of internal processes. Individual sellers are small businesses, and to be honest, they do not care much about the internal processes of your platform but all they care about is their problem getting fixed. Does your platform have in place an exhaustive grievances management ticketing system? Are the TATs for your issue resolution process in line with seller expectations? Do sellers have a clear account reconciliation template that clarifies all their questions and minimizes human cost of this engagement?
  7. High competition: Sellers want to compete in markets where the competition is low. Cab aggregators strictly control the amount of supply they have in markets because if demand is lower than the supply, their drivers will not make enough money and eventually they will leave their platform. Sellers are highly aware of how much supply you are adding and how important they are for you. Also, interestingly, sellers care more about their pricing and margins than the overall revenue which your platform aspires to maximize, so attention and attractive pricing is key. Further, depending upon the segment you are operating in, seller quality can go up or down as you penetrate more in the market.
  8. Lack of understanding of the full potential and features of your platform: Our single most effective question to all platforms here is that do you have a drafted “on boarding” process of your sellers / business partners? Who does that on boarding? Who is on boarded? What all features and benefits are explained in the on boarding? Do you use videos, case studies, examples etc., to make your on boarding sessions more interesting? Is there an ownership to follow up the seller till he/she fully starts extracting full value of the platform? Does your platform have the necessary analytics tools and engines to suggest features and uses of the platform to sellers in a personalized manner?
  9. Sellers do not feel valued: Yes, softer aspects become important as well. Why is this important? Customer loyalty is one big driver of success in the e-commerce space and if your sellers do not have any bond with your firm, they will move away with even the slightest of an economical advantage. Do something for sellers that is non commercial – e.g., joint holiday packages, gifts for family, educational loans for children etc., which they will value and which will increase loyalty.
  10. Defining and analyzing churn: Finally, it is critical to define churn in the right way looking at the business of your platform. Does inactivity drive it? Does lack of purchase of paid plans drive it? Is there a minimum supply of goods / services you expect from them? Once you have defined it, it is very critical to analyze churn at different cuts. For example, analyzing across age of sellers – platforms should ideally strive for a more normalized churn across age of sellers as peaks in either – new / middle aged / old sellers will cause significant risk to the stability of the platform. The other way to look at churn is by different formats / types of sellers – is your product market fit right for all the categories? How can it be fixed?


Praxis churn predictor analyzes the gamut of big data captured from all systems and predicts future churn on a seller by seller basis. The predictor then dives into the causes of churn, and recommends the right actions your sales staff needs to take on the ground. Our solutions use highly sophisticated and tried & tested machine learning and analytics techniques, augmented with user friendly and interactive real time dashboards. Our churn predictor also provides the necessary value benefit analysis tools, focusing your actions on only the sellers that matter the most to you. Please get in touch with us and we will be happy to talk more about our experience in analyzing and managing seller churn.