How to approach sellers to signup (initially) and list their products in a startup marketplace website

Boy you like a challenge don't you... Put yourself in the shoes of someone that has something to sell - someone considering an online marketplace. Immediate thought is eBay. Followed maybe by Amazon marketplace. What do you offer that the eBay or Amazon marketplaces cannot offer? Without something to differentiate yourself you will find it very hard to get off the ground.

Niche marketplace... Going up against the likes of eBay is going to be almost impossible. What you may need to do is focus on one niche and make your site better than the generalist marketplaces for selling in this particular space. You may be able to partner with high-profile websites in the niche, piggy-back off their brand and reach, whilst trying to build up your brand and ultimately trust.

Offer a marketplace platform... There are probably lots of big forum-type websites that might want to offer their members a way of trading/selling goods. Instead of trying to build a single marketplace, how about building a marketplace platform that can be sold/licensed to already established sites to provide them with marketplace capability. This may scale better, require less marketing effort from your point of view and puts the onus onto the site owners to drive traffic, encourage sellers and provide content.

What they may want to know: Is your site appropriate for what they're selling? How much are you advertising your site? Isn't that part of why they're paying you? How do you make the whole process of selling something on the web easier/cheaper/more effective by using your site?

You should know a small group of people that are already interested in your site and can't wait for you to complete it. If not, I would get moving in that direction.

Have you talked to the vendors to see what their objections are? If you know that then perhaps you can address them.

Try Risk-Reversal - don't charge the first vendors until they're making money. Do all the work of listing their product for them. Offer to let the agreement be temporary (you can't really force it to be permanent anyway).

If none of that seems to work, talk to a few of the vendors and ask them what objections they still have.

The objections that I, as a software vendor would have are:

You're just gong to cannibalize my own sales. You're only going to fullfill sales, not generate sales. (this is an extension of cannibalizing sales) You're not going to get any sales and it's a waste of my time to even negotiate an agreement with you.