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# Customer Interview: Charles Davis, CRO ## Industrial Marketplace Scaling Challenges **Date:** January 2, 2026 **Duration:** 30 minutes **Participants:** - Charles Davis, Chief Revenue Officer, Industrial Marketplace ($110M ARR) - Sarah Mitchell, Enterprise Sales Director, Salesloft + Clari - [Note-taker] Marcus Chen, Solutions Architect **Company Context:** Industrial Marketplace is a B2B supplier platform focused on industrial components and raw materials. Founded in 2018, the company connects manufacturers and distributors with specialized suppliers globally. --- ## Transcript **[0:00]** **Sarah:** Charles, thanks so much for making time today. We've been following your growth trajectory—110 million ARR is impressive for the space. Before we dive into the specific challenges you're facing, I'm curious: what's keeping you up at night right now in terms of scaling? **Charles:** *laughs* Where do I even start? Look, we've hit a really interesting inflection point. We've got product-market fit, we've got customers who love us, we're growing revenue at healthy rates. But we're running into these structural headwinds that aren't just sales problems—they're go-to-market problems. And frankly, sales tools like yours are part of solving them, but they're not the whole picture. **Sarah:** That makes sense. Let's start with the biggest one you mentioned in our pre-call—supplier onboarding. That seems like it's become a real bottleneck. **Charles:** Yeah, it's actually the biggest constraint on our growth right now. So here's the dynamic: we've built a great platform for buyers. Our buyer experience is solid. But suppliers are the lifeblood of any marketplace, and our supplier onboarding is... manual, expensive, and slow. We have a team of seven people whose entire job is onboarding suppliers. Seven people. And we're still not keeping up with demand. Our average supplier takes about 8 weeks to go from first contact to actually listing inventory. In the short term, that's fine—we're still growing 40% year-over-year. But we can't scale that team linearly with our growth. It'll blow up our CAC. **Sarah:** What's actually taking so long in those eight weeks? **Charles:** Several things. First, we need to verify they're legitimate businesses. That takes time. We do background checks, verify credentials, sometimes physically visit facilities. Then we have to educate them on how to use our platform. A lot of our suppliers are not digital-native. Some of them are still using fax machines, I'm not exaggerating. We have to hand-hold them through data entry—getting their products into our system with proper SKU mapping, pricing, compliance documentation. Then there's the whole payment and banking setup. We're essentially becoming their distribution channel, so we have to set up payment terms, verify their business entity, make sure everything's compliant. And honestly? A lot of suppliers ghost us in the middle of the process. They don't understand the value yet, they're skeptical, they're worried about conflicts with their existing distribution. **Marcus:** Do you have a sense of what percent actually complete onboarding once they start? **Charles:** About 60-65% of suppliers who get that first call make it all the way through. So out of every 100 inbound leads, we're losing 35 to 40 people between initial contact and first sale. Some of that is natural attrition, but a lot of it is just... friction. Process friction. **Sarah:** What would meaningful onboarding automation look like for you? **Charles:** The dream would be a self-serve portal. KYC integrated directly with third-party verification services. Automated data ingestion for product catalogs—I know this exists in some verticals. We could probably automate 50% of the current process. Get people to first inventory listing in maybe three weeks instead of eight. And honestly, incentives matter too. We've been experimenting with performance bonuses for our onboarding team when suppliers hit certain milestones—first inventory added, first sale completed. That's helped with velocity, but our head of people thinks we're creating the wrong incentives long-term. We need to solve this with better process and automation, not just throwing money at the problem. **Sarah:** That's smart thinking. What's the gap you're trying to close with those suppliers who ghost? **Charles:** That's the chicken-and-egg problem, which is related but different. A lot of suppliers don't see the value because there's not enough demand. They list their products and nothing sells for six months. Then they get frustrated and leave. **[5:30]** **Sarah:** Let's talk about that—the marketplace cold start problem. How bad is it? **Charles:** It's one of the hardest things to solve. So we have about 1,200 active suppliers right now, and they collectively have about 80,000 SKUs in our system. But here's the problem: demand is concentrated. Maybe 15% of our SKUs drive 70% of transaction volume. It's a classic long-tail marketplace dynamic. We have suppliers with really specialized, niche products. They're valuable—our buyer stickiness is actually incredibly high because we have breadth nobody else has. But these niche suppliers struggle to get volume. They're on our platform for six months and they're selling three units a month. That doesn't justify their effort in maintaining listings, updating pricing, managing inventory. **Marcus:** How much of the demand concentration is by design versus just how the market works? **Charles:** Good question. Partly it's natural—industrial procurement is still dominated by a few high-volume categories. Fasteners, basic metals, common components. But we've also been conservative about buyer acquisition because we knew we didn't have the supply breadth to satisfy them. It's a catch-22. **Sarah:** Tell me about your approach to solving this. **Charles:** We're trying a few things. One is anchor customers. We've been doing really targeted BD with a few large procurement organizations—ones that buy across a broad range of categories. We've actually embedded small teams inside two of them to help them optimize their procurement through our platform. That drives volume, which drives supplier confidence. The second is seeding inventory ourselves in high-demand categories where we're thin. We've actually contracted with some larger distributors to take their content, normalize it, and get it onto our platform. We're not reselling—that would create conflicts—but we're essentially creating a supply floor for certain categories. That's helped stabilize the marketplace. Third is being much more intentional about which suppliers we recruit. Instead of taking anyone with a verified business, we're looking for suppliers who have products in categories where we already have decent buyer demand. It's less growth, but it's healthier growth. **Charles:** The reality is that marketplace cold start requires patience and capital. We've raised enough that we can invest in losing money on anchor customers for a while. But most platforms don't have that luxury. And even for us, it's a tension with investors who want to see faster growth. **Sarah:** You mentioned distribution partners as part of the solution. That gets into the next topic I wanted to explore—traditional distribution. How has that relationship been? **[10:00]** **Charles:** *sighs* This is probably where I'm most frustrated, honestly. So in industrial procurement, distributors are gatekeepers. They have relationships with buyers that go back decades. They have credit lines, they have logistics networks, they have brands. The traditional model is: manufacturer sells to distributor, distributor sells to buyer. We're essentially a parallel channel. And distributors are not happy about that. We've had companies tell us—and I appreciate the honesty—"We like what you're building, but we can't recommend you to our customers because it threatens our position." **Sarah:** How much business do you think you're losing to channel conflicts? **Charles:** It's hard to quantify, but it's real. We have some suppliers that are great partners internally—they're active, responsive, innovative on our platform. But they won't market us to their end customers because they don't want to cannibalize their distributor relationships. That's completely rational from their perspective. And some distributors are actively working against us. They're telling suppliers, "If you go direct to the marketplace, we'll reduce your credit line" or "We'll slow down our service to you." I don't know if that's legally defensible, but it's happening. **Marcus:** How are you thinking about competing against that? **Charles:** It's not about competing, really. It's about finding coopetitive models. We've actually started to realize that some of our best supplier partners could be... distributors themselves. Not traditional distributors, but logistics partners, resellers, regional players who see us as a way to expand their reach without massive infrastructure investment. We're experimenting with a partnership model where they become "super suppliers" on the platform. We give them tools to manage their customer relationships, they give us inventory and distribution relationships. We share economics. It's still early, but I think this is actually where the growth is. We also did something interesting with one regional distributor—they actually joined our board in an advisory capacity. Sounds weird, right? But it gave them a seat at the table to understand our strategy, and it gave us credibility with other distributors that we're not trying to disintermediate them. We want to be the infrastructure layer, not the competitor. **Sarah:** That's a sophisticated approach. Do you think the traditional distributor relationships will eventually see you as infrastructure rather than competition? **Charles:** *pauses* Honestly? Not all of them. Some will. The smart, forward-thinking ones will realize that they can't compete on breadth anymore—we can offer breadth they can't. So they'll become partners. But others will double down on their relationships and margin protection. That's fine. We're big enough now that we don't need 100% of the market. **[15:00]** **Sarah:** Let's talk about economics, which touches on something you mentioned earlier—these long-tail SKUs and thin margins. How are you thinking about the unit economics? **Charles:** This is a real challenge. Our average transaction value is pretty low—maybe $2,500 to $3,500 for B2B, but with a lot of variation. We take 3-5% transaction fee, so we're making between $75 and $175 per transaction on average. Some transactions are much bigger, some are much smaller. But here's where it gets tricky: we have operational costs around every transaction. Payment processing, currency conversion, logistics support, dispute resolution, fraud prevention. When you're looking at a $400 transaction, your operational cost as a percentage gets really high. **Marcus:** What's the tail composition? Is it just volume of low-value transactions, or is there something else? **Charles:** Both, actually. Lots of small transactions in the long tail. But also, a lot of low-velocity SKUs. We have suppliers with products that move twice a year. They need to maintain inventory listings, update prices, respond to inquiries. But they're only making a few hundred bucks in revenue through us annually. That's not sustainable. **Sarah:** How are you approaching the pricing question? **Charles:** We've tested higher take rates—going from 3% to 4%, 4% to 5%. What we found is that it doesn't really change buyer behavior, but it does change supplier behavior. Higher take rates means suppliers are more selective about which products they list. They start removing the lowest-velocity SKUs. Which actually is good for the marketplace—less clutter, higher quality. But there's a limit. Push it too high and suppliers just stop selling. We have benchmarking data from other marketplaces—Alibaba charges similar rates, eBay's higher for some categories. So we're probably not getting squeezed too hard. But we're also not optimizing for take rate. We're optimizing for GMV and liquidity. **Marcus:** Are you seeing any volume strategy angle? Like, is there a way to play in the ultra-low-margin, high-volume part of the market? **Charles:** Not in the traditional sense. We don't have the logistics infrastructure to compete on commodity fasteners and basic components. But we have been exploring vertical rollups. Like, can we acquire smaller vertical marketplaces and consolidate them onto our platform? That's actually more interesting to us than trying to be the cheapest commodity player. **Charles:** The other angle is partnerships with 3PLs and freight companies. If we can offer our suppliers integrated fulfillment, we can actually improve their unit economics. They list with us, we handle fulfillment and logistics, they get better margins than they would selling direct. That makes the low-volume SKUs viable. **[20:00]** **Sarah:** Let's shift to the buyer side for a moment—you mentioned enterprises wanting procurement integration. Tell me about that. **Charles:** Yeah, so our larger buyers—and we're talking about companies with $500M+ revenue doing industrial procurement—they want to integrate our platform directly into their procurement systems. SAP, Coupa, Ariba. They want our APIs to look like their existing procurement workflows, they want real-time inventory visibility, they want automated ordering and invoicing. Right now, our integration story is okay but not great. We have some API endpoints, we've done a few custom integrations, but we're not at the level of sophistication that enterprise procurement teams expect. **Sarah:** What does that gap cost you? **Charles:** A couple of things. First, it slows down the close cycle. We've had deals that take 4-6 months to close because they need custom integration work. That ties up our engineering team, which is resource-constrained. Second, it limits deployment scope. A buyer will deploy us with one procurement team, and other teams want to use us but can't because they don't have integration. So we get narrower penetration than we could have. Third—and this is the harder one—it limits switching cost. When we're deeply integrated, buyers have to think about switching costs. When we're just a website they visit, we're easier to replace. **Marcus:** What integrations are most critical to your buyer base? **Charles:** SAP and Coupa for sure. Those are the big two in the industrial space. Ariba is important too but less prevalent than in other verticals. We're also getting requests for Netsuite, some Salesforce integrations for suppliers. We've actually built a pretty robust API layer—that's not the constraint. The constraint is that we don't have the bandwidth to do all the customization that individual buyers want. We need to build more plug-and-play connectors that work for the use cases without requiring custom engineering. **Sarah:** What does solving this look like? **Charles:** Honestly? We probably need to hire 3-4 people just focused on integrations and procurement system expertise. Someone who really understands SAP supply chain module, someone who lives and breathes Coupa. That's not cheap. But it would probably accelerate our enterprise ACV and reduce sales cycle time. **Charles:** We've also started to think about this as a competitive moat. If we're deeply integrated with the major procurement systems, it's harder for competitors to displace us. So it's not just about closing deals faster—it's about building durability. **[25:00]** **Sarah:** Let me step back and ask: if you think about all five of these challenges—supplier onboarding, cold start, distribution conflicts, long-tail economics, and enterprise integration—how do you prioritize them? Where's your focus for this year? **Charles:** *leans back* That's the real question, isn't it? If I'm being honest, I think the interconnected ones are more important than the individual ones. Like, supplier onboarding and cold start are related. If I can reduce onboarding time and improve the supply-demand balance, I get better retention and faster liquidity. We're doubling down on three things: One: automation and self-serve in supplier onboarding. We're actually exploring white-labeling some third-party KYC solutions. If we can get onboarding from eight weeks to four weeks, that changes everything. Two: being much more intentional about anchor customers and category strategy. Instead of trying to be good at everything, we're going deep in industrial categories where we can be the best. That reduces the supply-demand friction. Three: enterprise integration, but strategically. We're not trying to integrate with every system. We're picking Coupa and SAP first, building those really well, then expanding. That gives us a reference and a playbook. **Sarah:** That's smart prioritization. And how are you thinking about the channel and distribution angle? **Charles:** That's a longer-term play. The coopetitive model is interesting, but it takes time to develop. We're not going to solve that this year. What we're doing is finding the smart distributors—the ones who get it—and making them successful on the platform. When we have 5-10 distribution partners generating real volume, that becomes a story that attracts others. **Marcus:** Do you have a sense of how much of your growth over the next couple years is dependent on solving these problems versus execution risk? **Charles:** *thoughtful pause* I think 60% of our growth is execution risk—hiring, product iteration, operational scaling. That's in our control. 40% is really these structural marketplace dynamics. If we don't solve the supplier onboarding problem, we can't scale supply growth. If we don't figure out the cold start problem, we'll have happy suppliers on a platform with no demand. If we don't crack enterprise integration, we'll be stuck with smaller deals. **Charles:** But here's what's interesting: they're not independent problems. Solve one, and you often solve pieces of others. Better onboarding means faster time to first sale, which means better cold start. Better cold start means more demand, which makes distribution partnerships more attractive. Deeper integration means bigger customers, which validates the whole platform more to suppliers. **Sarah:** That's a healthy way to think about it. One last question: what would actually change your approach? Like, what would you need to see to think about these differently? **Charles:** Good question. If we start seeing consolidation in the traditional distribution space—like, big distributors acquiring smaller competitors—that actually changes our strategy. It would validate the coopetitive model faster. Or if we nail enterprise integration and start getting tier-one procurement organizations at scale, that de-risks the cold start problem because you have big anchor buyers. The thing that would genuinely worry me is if we can't solve supplier onboarding faster. Because then we're constrained on supply growth, and there's only so much we can do about that without significant capital investment in automation and technology. **[29:30]** **Sarah:** Charles, this has been incredibly valuable. I think the areas where Salesloft + Clari can help are pretty clear—especially on the enterprise sales side and using data to understand where your best buyer segments are, which should feed back into your supplier strategy and category prioritization. Can we set up a follow-up with your head of sales to talk about specific ways we could support your enterprise buyer acquisition? **Charles:** Absolutely. Sarah, I appreciate the thoughtful conversation. You didn't come in with a pitch deck trying to convince me you're the solution to everything—you actually listened to what we're facing. That matters. Let's definitely follow up. **Sarah:** Thanks, Charles. Really appreciate your time. --- ## Key Takeaways ### Immediate Opportunities 1. **Supplier Onboarding Automation** - Largest bottleneck; reducing from 8 weeks to 4 weeks would materially improve supplier retention and marketplace liquidity 2. **Enterprise Integration Strategy** - 4-6 month sales cycles being compressed by integration work; dedicated resources could accelerate ACV and deal velocity 3. **Category Prioritization** - Focusing buyer acquisition on categories with strong supply could improve cold-start dynamics and supplier confidence ### Medium-Term Challenges 1. **Chicken-and-Egg Liquidity** - Requires anchor customer strategy and seeding inventory to create marketplace gravity; capital-intensive but essential for platform health 2. **Distribution Channel Conflicts** - Traditional distributors are resisting; coopetitive model is emerging but slow to develop; need 5-10 proof points 3. **Long-Tail Unit Economics** - SKU-level economics are challenging; solving through 3PL partnerships and super-supplier model rather than pricing ### Strategic Insights - Charles is prioritizing interconnected problems over individual solutions - Execution risk (60%) is being managed; structural marketplace dynamics (40%) are the real constraint - Coopetitive distribution model is the bet, not traditional competition - Integration is being positioned as a competitive moat, not just a feature ### Sales Approach Effectiveness - Consultative, problem-first approach was received positively - Charles values listening over prescriptive solutions - The conversation revealed that this is a marketplace infrastructure challenge, not purely a sales or marketing challenge --- ## Follow-Up Actions - [ ] Schedule meeting with Charles's VP of Sales to discuss enterprise buyer acquisition strategy - [ ] Research Coupa and SAP integration case studies in industrial marketplaces - [ ] Prepare analysis on how to identify and prioritize enterprise anchor customers - [ ] Explore use cases for better sales forecasting in marketplace supplier/demand dynamics - [ ] Document coopetitive distribution models for future marketplace clients --- *Transcript prepared by Marcus Chen, Solutions Architect* *Follow-up scheduled for late January 2026*