Sellers on the Government e-Marketplace (GeM) must have a good vendor rating to be able to compete for government contracts, as this rating directly correlates to how visible they are to buyers. The GeM has taken the idea of seller ratings and developed it into a sophisticated algorithm that determines whether a seller's products appear in a buyer's search results and ultimately whether a buyer selects the seller or a competitor. In recent years there have been over 80 lakh registered sellers competing for government orders totaling Rs 5 lakh crore per year, so understanding the vendor rating algorithm has become essential for sellers’ continued survival on this platform.
The New Vendor Rating 3.0 Algorithm marks a major shift in how the GeM evaluates and rates sellers. The days when price only determined a seller's chances of winning an order are gone with the introduction of the New Vendor Rating 3.0 Algorithm. The Vendor Rating 3.0 Algorithm now includes five analytics that evaluate Seller Reliability, Delivery Quality, Product Coverage, Timeliness of Delivery, and the Incidence of Complaints against this Seller. Each of these five parameters is fed into the vendor rating algorithm to create a dynamic vendor rating, which will change automatically based upon actual performance rather than on buyer reviews. Therefore, each order-fulfilling activity, delivery activity, and incident of a seller that is resolved has an impact on that seller's visibility and competitiveness in the GeM platform.
Understanding the Five Parameters of Vendor Rating 3.0
The overall seller score is calculated with help from a rating system based on five different data points, weighted appropriately. Each of these five data points gives a seller a score in a particular area that can be beneficial to their business. Here is what you need to know about each of these data points.
Seller reliability measures the seller's historical performance with respect to their ability to consistently deliver on multiple orders. It is not sufficient to have only one successful order; the score is based on the seller's ability to maintain quality performance over many transactions, whether they are dozens or hundreds of transactions. Seller reliability is based on multiple pieces of information, including the seller's order acceptance rate, order cancellation history, and regularity in fulfilling orders based on the seller's delivery commitment.
Quality of delivery refers to the actual quality of the seller's products as confirmed by their government buyers through the CRAC (Consignee Receipt and Acceptance Certificate). When a buyer receives a product, they visually inspect the product to see if the product meets the criteria set forth by the buyer (i.e., specifications). If the product matches the required specifications, there are no damages, and the product performs as described, the seller receives a high Quality of Delivery score. Unfortunately, if the buyer does not receive the product in accordance with the agreed-upon specifications, or if the product is damaged or not usable due to a manufacturing defect, then the seller will substantially reduce the Quality of Delivery score. Quality of delivery also has a very strong correlation to buyer satisfaction and repeat purchases.
Sellers who sell a broad range of goods across business categories on GeM will have more opportunities to sell than those with a limited offer. For example, selling office furniture: if your offers include listings for chairs, tables, storage units, and accessories, you will score more highly than sellers listing just chairs. Additionally, this encourages sellers to increase their presence on GeM and offer buyers more choice from a single seller's account, reducing the buyers' need to search through multiple vendor accounts to find the right product.
Timely delivery indicates the extent to which an organization meets its stated delivery deadlines. GeM automatically tracks agreed-upon delivery timelines against product delivery dates, flagging late deliveries; therefore, even minor delays may negatively affect an organization’s rating. Repeated instances of late deliveries can have a drastic effect on an organization's rating. In addition to considering initial delivery commitments, the GeM algorithm also considers approved extensions. It is preferable to commit to realistic delivery timelines that can be met, rather than making quick delivery commitments and having to request extensions thereafter. Making this type of commitment sends a poor signal to buyers regarding the organization’s planning abilities.
Incident history is a record of all complaints, disputes, and grievances made against you. All incidents raised by buyers are tracked and recorded; the types of incidents include quality complaints, delivery disputes, specification mismatches, payment-related issues, service problems, etc. The way in which you handle incidents is just as important as the frequency at which they occur. If an incident is resolved quickly and satisfactorily, it will decrease the negative effect on your ratings. A long history of unresolved incidents or patterns of similar complaints indicates that you have systemic issues that can substantially decrease your ratings.
How Vendor Ratings Impact L1 Price Comparison and Order Allocation
The ability to win orders is greatly affected by the mechanics of the rating system; the GeM (Government e-Marketplace) L1 (Lowest 1) comparison system, in contrast to the past, has moved beyond just being based upon price. Seller ratings are a key component in determining placement amongst competitors for orders and influence the ranking of sellers significantly.
The buyer's search for a product starts once they have defined their filter, and the system provides the buyer with an L1 comparison, listing the sellers qualified to provide that product. Prior to Vendor Rating 3.0 (which was introduced in 2020), the seller with the lowest cost was always ranked at the top in the system for L1 comparison; under Vendor Rating 3.0 (which was introduced in 2020), the seller ratings are now taken into account, and a higher-rated seller, even if they have a slightly higher price than a lower-rated seller, will rank higher than that seller in the system if the buyer's order value exceeds the minimum limit (value threshold) set by GeM.
Because the government buyer has encountered far too many situations where the lowest cost leads to poor quality or late delivery or incomplete orders, and therefore, GeM's implementation of ratings into the ranking algorithm for L1 comparison indicates GeM's recognition that the lowest price may not necessarily be the best value.
Small and Medium Enterprises (SMEs) can now obtain specifications from up to five different sellers using any of the available Marketplace Search capabilities (direct, reverse auction, and custom). For all SMEs, buyers can also select sellers by using the marketplace-specific criteria of that marketplace as well as standard items for all similar types of products that they offer.
Buyers can search for products related to the SMEs' specifications and see which sellers have the best ratings; however, in reverse auctions and custom bids, ratings have more impact on buyer confidence in the technical evaluation of the seller. For example, if the buyer receives a technical bid from two sellers who provide the same technical bid but one seller has a higher rating than the other, the higher-rated seller will usually be given preference in the shortlist. After the shortlist process is complete, the lowest price will usually win the final L1 award between those sellers who have met the minimum technical qualification set by the buying organization.
Many MSME purchase price preference mechanisms also interact with seller ratings and supplier selection criteria for MSMEs. MSMEs within L1+15% can match the lowest price received by a vendor through a reverse auction and can purchase a maximum of 25% of the total quantity awarded to a vendor through the reverse auction process. If there are several MSMEs submitting bids under the purchase price preference mechanism and one of those sellers has a higher rating, they will generally have the first opportunity to match the lowest price received by the vendor and take that order. This means that if a vendor has submitted identical bids on all scores, the seller's rating will often act as the deciding factor for which bid wins.
Buyer Visibility: How Ratings Control Search Results and Product Placement
The vendor's ratings determine how well the government buyers can find products on GeM. Similar to other e-commerce sites, the search algorithm for GeM uses ratings as one of its primary metrics for ranking product searches. Buyers can search for a category of items (e.g., computer), and the algorithm will rank the categories based on several different factors, including price, specifications, delivery schedule, and most importantly, vendor rating. The vendors with the highest ratings will appear closer to the top of the search results than those with lower scores. Since most government buyers arrive at their final decision for the product based on page one of the search results, the location of a vendor's product on the search result page can greatly impact the volume of orders placed by that vendor.
The "Verified Vendor" badge a vendor earns when they successfully complete the Vendor Assessment process increases the vendor's rating and visibility on the GeM market platform. When a vendor has the "Verified Vendor" badge, buyers know that the vendor's manufacturing facility and quality systems have been verified by RITES and that RITES has confirmed the vendor's documentation related to the purchase order as a valid buyer. Buyers have the option of filtering their searches for "Verified Vendor" badged vendors ONLY, especially if they are searching for specialized/high-value goods. If a vendor does not have the "Verified Vendor" badge, that vendor is not part of the filtered search list even if their pricing is competitive.
The sections of GeM's marketplace where products are showcased can also be seen to link to products based on their ratings. Higher-rated sellers will be given priority visibility in the various category browsing sections, as well as in the recommendations of products and the related suggestions for additional products. This kind of organic promotion gives you free visibility and helps to attract additional buyer traffic to your catalog.
On the other hand, sellers who receive ratings of less than three stars have less visibility on the platform. While they will still show up when products are searched for, they will not show up in the filtered results when buyers apply filters that have a minimum rating threshold set. When buyers are assessing procurement bids of one lakh or two crores, it is common practice for buyers to apply filters that only show products from sellers rated four-star-plus, which significantly limits the opportunities that lower-rated sellers will receive in transactions where the purchaser evaluates price according to significant financial considerations.
The algorithm that is used to find products also considers how the seller's average rating has changed over time. If a seller's average rating has steadily improved with newer purchases, the algorithm will place this seller ahead of a similar seller who has an average rating that is declining in recent orders. This means that sellers who work on increasing their performance will receive a reward from the search algorithm, while sellers whose performance is deteriorating will incur a penalty from the search algorithm.
Building and Maintaining a High Vendor Rating: Practical Strategies
Understanding how ratings work is easy, but building and sustaining high ratings requires a systematic approach throughout your business. Here’s how successful sellers manage their ratings.
Set realistic deadlines when bidding on an order and when creating your catalog; promising delivery within a short timeframe and then not delivering on time is self-destructive. When you set a deadline, make sure you can meet it by allowing for delays in obtaining materials, delays in manufacturing, delays in shipping, and delays caused by bottlenecks. A successful 15-day deadline will get you rated higher than a 10-day deadline you could not meet.
Establish a quality control system that guarantees that product specifications remain consistent across the board. The main reason for low-quality ratings is because the product did not meet the specifications listed on the catalog or website. Before you ship an order, implement a quality check so that you can guarantee the products will arrive at the customer’s home matching exactly what was advertised. If you sell electronic products, make sure you test the products for functionality before you ship them. If you sell furniture, confirm the dimensions and finish before shipment. If you sell textiles, ensure that you verify the fabric and colorfastness. Prevention is always cheaper than dealing with product returns and complaints about quality.
Engage with your buyers during the entire order fulfillment process. If you anticipate delays caused by raw material shortages, production issues, or logistics issues, communicate these anticipated delays along with a new estimated timeline as soon as possible to your buyers. Buyers tend to be more understanding of delays communicated proactively than they do when those delays are not communicated to them until a product arrives late because the product did not ship out of your facility on time. Additionally, providing your buyers with timely communication in this manner can often reduce instances of formal incident generation, which helps protect your incident history score.
Use proper packaging and trustworthy logistics to avoid damaging products during the delivery process. A product arriving at the buyer's location damaged negatively impacts the quality rating associated with that product even if the product left your facility undamaged and in good condition. Invest in quality packaging materials, especially for fragile products. Choose reputable logistics companies that have appropriate handling procedures in place. If you ship high-dollar products, consider purchasing insurance against damage while in transit. The additional cost is minimal compared to the benefit of protecting your rating.
Respond promptly to requests for information from your buyers and to any incident reports they may submit. When a buyer submits an incident report, GeM monitors your response time as well as the quality of the resolution provided. If you receive an incident report regarding a quality issue, provide your buyers with proposed resolutions within 24-48 hours of receiving the incident report. If the incident report is related to a delivery issue, provide the buyer with a revised estimated timeline for potential delivery. If you receive an incident report regarding a dispute over a specification, provide the buyer with documentation that supports your position. Timely and satisfactory resolution of incidents helps to mitigate the negative impact of the incident on your rating.
Keep catalogs updated with the correct data to avoid incorrect specifications on orders. Continually evaluate product listings and confirm that all photos, specs, and descriptions correctly match what you are selling. If sweet items go out of date or have an error in description, customers will be unhappy when they receive their products and will leave low reviews for you. When specifications change or parts are no longer available, you need to update catalogs as soon as possible.
Once an order has been delivered satisfactorily, kindly ask buyers to complete a CRAC for that order within a reasonable time frame. Some buyers may wait to finish a CRAC even after receiving an order that met their expectations; this leads to delayed payments and longer than necessary pending orders. A polite reminder will help customers finish CRACs, helping you close orders more quickly and improve your metrics.
The Vendor Assessment Factor: How VA Certification Boosts Your Rating
Sellers frequently miss the value of the `VA` (vendor assessment) certification awarded by RITES as a large multiplier in the seller rating, and while the VA review process does determine eligibility, it is a strategic advantage because of the way it will enhance your seller rating.
The completion of the vendor assessment process earns the seller the VA badge, which they can display on their seller profile for everyone to see. This indicates to both potential buyers and the GeM algorithm that the seller has passed through a rigorous third-party verification. The GeM rating algorithm places increased emphasis on vendors with a VA certification, treating the VA badge as a mark of reliability and increasing the seller's overall rating score.
In addition to the algorithmic advantage, VA certification also improves other areas of the seller's rating through indirect means. Both the desktop and video assessment processes have resulted in a better organization system being established within the seller's operation. This includes standardized processes for quality operations, standardized manufacturing processes, retention of accounting records and accounting procedures, and consistent regulatory compliance. Improvements in these areas have produced better quality products, increased reliability of delivery, and a decreased number of incidents, which all improve the seller's rating naturally over time.
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When searching for suppliers of high-value items or technical equipment, many government buyers will actively search for vendors who have been certified by the VA. This certification will allow these buyers to find vendors who have been certified by the VA, while competitors without this certification will not be visible to these buyers. For vendors who sell Q1 and Q2 products, the VA certification is a requirement, and it is the only way they will be able to compete in these markets.
For vendors who are certified by the VA, the certification is valid for three years, which means that they will have the advantage of enhanced visibility and a higher rating status during that time period. While the assessment fee of approximately Rs 5,000-15,000 should be budgeted as a strategic investment to enhance your rating, rather than as a compliance-related cost burden, the increased visibility, improved ranking, and number of order wins will often yield returns considerably in excess of the cost of obtaining the certification.
Rating Recovery: What to Do When Your Score Drops
There will always be things that affect your ratings negatively no matter how hard you try. Sometimes it may be a singular incident causing this drop; other times it might just be a misunderstanding by the buyers or a glitch with your operations. The more important question is, if your ratings do end up being affected by something negative, what can you do to recover quickly instead of allowing those negative ratings to destroy your business?
The first step is to find out why your ratings dropped. You need to go into your seller dashboard and look at your order history, delivery performance, and incident history to try and determine the reasons for the rating drop. GeM provides extensive data for each of your transactions, which includes data on which products received poor ratings and what the reason for each was. If you have had multiple incidents of poor quality for a particular product, you should remove all of those products from your online store until you are able to fix the manufacturing problems. Similarly, if you are working with a logistics partner who causes frequent delivery delays, you should change logistics partners. Lastly, if your production capabilities are not able to meet your committed timeframes in certain areas, you should revise your delivery timeframes for those areas in your catalog. You should act quickly to stop the decline of your ratings before implementing any recovery strategies.
In incidents that affect your ratings negatively, you will want to ensure that they are all resolved, even if that means a financial loss for you on the specific order. By offering refunds, replacements, or other resolutions to the buyer, you will be showing the algorithm and any potential buyers that you value quality. Once the resolved incidents age out of the rating formula, they will no longer be affecting your ratings negatively.
Reconsider any cases you think have been wrongly reported, and prove with documents that quality complaints made by buyers are inaccurate, and submit documents through the GeM dispute resolution system. If you successfully overturn an incident that has been reported erroneously, it will eliminate the negative effect of that incident from your rating. Be discriminate in this process, as every incident that you challenge may make you look defensive, which likely will not help you moving forward.
While continuing to recover from your past issues, focus on perfect execution of your new orders. The GeM rating algorithm places more weight on recent activities than on older rating history. Gradually you should pull your overall seller rating back to where it was by executing many consecutive perfect orders, receiving positive feedback through CRAC reports, and having incident-free orders. Just as you would do with repairing your credit history, you cannot remove the issues that exist in the past; the best method of repairing your credit history (seller rating) is through consistent positive behavior and building a long-term trust relationship with GeM and your customers.
Another option may be to strategically grow your product catalog. If you add new categories of products that you can deliver and perform excellently in, you will open new opportunities to earn positive ratings for yourself. These ratings will begin to offset and counter the negative ratings from your troubled categories, which will help pull your overall seller rating upward while you continue your efforts to repair the problems.
The Bottom Line: Ratings as Competitive Advantage
Changes to GeM Vendor Rating 3.0 have disrupted the competitive environment of the platform; price still plays a role but is not the only component to a seller's overall success. Visibility on the platform and L1 rankings, order allocation, and how much business a seller will get from the government versus their competitors will now be driven primarily by this rating.
Sellers who do not consider their ratings as a priority and only focus on winning bids and do not take delivery performance or buyer satisfaction into account will be increasingly pushed to the side of the marketplace. A lower rating will mean a seller will continually have less visibility into the marketplace, decreasing their ability to take advantage of ordering opportunities and ultimately preventing them from recovering their ratings through good performance. This cycle will continue until they either adapt their thinking or leave the GeM platform.
On the other hand, sellers who view their rating as a strategic opportunity will continue to build their business through creating a positive momentum with their high rating, increasing their number of orders, demonstrating their performance, and creating repeat buyers that contribute to the stability of their rating and ultimately additional sales through success.
Instead of interpreting ratings as an indication of how well you did in the past, think of them as an opportunity you can control to get more of in the future. Each part of your GeM business should be thought out with the goal in mind that it will impact your ratings. Is the shipping time realistic for when the product will be shipped? Is the specification accurate? Will the packaging protect the product from damage? Will the customer receive accurate information about the product to avoid any misunderstandings?
In 2025, the sellers who approach GeM with this thought process, coupled with delivering operational excellence in e-commerce fulfillment, will be the sellers that succeed on GeM. Sellers who only think about price and ignore their ratings are finding out that no matter how much they discount their products, price has no value if potential buyers don't find your products when they search for them or choose to purchase from a seller with higher ratings.
Grow your vendor rating systematically by providing excellent service across the board consistently. Invest in Vendor Assessment Certification to create powerful algorithms that improve your vendors' credibility and enhance buyer confidence through it. Constantly monitor your vendor rating, immediately address problems, and use every order as an opportunity to develop your vendor rating, not just an avenue for generating revenue.
When executed correctly, your vendor rating is the most incredible asset of your business on GeM. Greater than having the lowest prices, more significant than having the largest catalog, and more enduring than any ephemeral bidding strategy. With 8 million sellers in this marketplace, your vendor rating is what sets you apart from your competition and makes you visible, credible, and, ultimately, successful.
