The amount of places both virtually and physically where you can sell your products has exploded over the last decade. There are more ecommerce sales channels than ever before and yet most businesses stick to what they know.
Omni-channel retailing (or should that be Etailing) is just getting started. So, it’s vital you understand what options are available, allowing you to scale your business effectively and efficiently.
If you’re only running a Shopify or WooCommerce website, you could be missing out on almost unlimited growth. So, it’s important to understand what ecommerce sales channels are available and strategically select the best ones for your business.
Ecommerce sales channel basics
A sales channel is a place where customers can purchase your products or services. We have two buckets: Direct and 3rd Party.
Direct
Think of direct sales channels as an asset you own and are in control of. These include:
- Your website
- Mobile app
- Pop-up stores
- Branded retail locations
- Affiliates.
3rd Party
With 3rd party channels, you give up some control in return for market access, such as selling on:
- Marketplaces (e.g. eBay or Amazon)
- Social commerce (e.g. Facebook Marketplace or TikTok Shop)
- Wholesaling (e.g. selling products to Walmart or Best Buy)
- Strategic partnerships (e.g. having your product included in a subscription box).
With that defined, we can explore some of the options available and then make a strategic decision on where is best to sell our products.
Pros and cons of owning your sales channels?
Many brands are comfortable with direct channels as they control them and so can quickly respond to market changes.
Pros
As you control your online shop or mobile app, if you want to offer a discount, you can launch a savings code within a few minutes and let customers know about it on social or email.
You could be having a slow month and want to boost sales. So, you try email marketing to connect with past purchasers in the hope you can entice them back.
You don’t have to wait for another company to take action. Nor do you have to comply with someone else’s rules.
Sounds great, doesn’t it?
Cons
While directly owned ecommerce sales channels are good, they do have downsides. Starting a D2C brand can be expensive, as can scaling it. Almost no one has heard of you, and so you face an uphill struggle to make sales, especially at the start.
Taking your online offering to physical retail stores can be incredibly expensive and is a different beast altogether. But you still own everything!
Why use 3rd parties to drive purchases?
Amazon, Etsy, Best Buy, Walmart, and others are all well-known retailers. They already have the trust of your ideal customers and want to bring them new products to keep them making purchases.
Add to these social commerce options, such as Facebook Marketplace, TikTok Shop, and Instagram Live, and you have a range of channels you can use to grow your revenue and make more profit.
Pros
You can make sales on day one on these platforms or in their retail locations without having to invest millions in your own marketing, website, and physical stores. In return, you pay them a percentage of the sale.
Having a partner who can help you sell products means you can focus on marketing them and creating new designs. You don’t need to be involved in solving logistics problems, handling difficult customers, or dealing with returns.
Cons
That said, the fees can be eye-watering high. You’re also giving up control as they can dictate how, what, and where you can sell. Fail to comply with their rules? You’ll be banned and might never be able to sell on that platform again.
Amazon is notorious for removing sellers for minor policy infractions without explaining why or allowing them to make the required changes. Plus, it can be a nightmare to actually talk to someone at these companies who can help you.
How to choose 3rd party ecommerce sales channels for your brand
As a strategic decision, you need to consider the pros and cons of each available ecommerce sales channel and what resources it’ll take for you to generate meaningful revenue.
You might only be able to handle one or two channels as you have a limited budget and resources. However, you might have a large team, so can test more options.
Here’s how to assess a potential channel to ensure you use your budget well.
Product market fit
It’s best to start by analyzing if there’s an audience for your product on that platform. You’re unlike to sell welding equipment on a TikTok shop as your target market might be on eBay. However, if you sell customized cushions, you might find Etsy is a better choice than Amazon.
You want to ensure some sellers are already active on the platform offering something similar to you. If you find pages and pages of products that look like yours, it’s probably best to find another platform, as there’s too much competition.
It’s also worth looking at the demographics of each platform as that will give you key market insights and help you to confirm if your market lives there.
Fees
Paying 60% of your revenue in fees will drive you out of business; and quickly. So, carefully calculate the overall cost of selling an item on that channel and decide if that makes sense.
You might find that certain ecommerce sales channels are highly attractive on the surface but actually overcharge for the opportunity and aren’t worth using.
KPIs
How will you measure if a channel is successful? One way is to use KPIs. Pick two or three data points to measure that illustrate the big picture and allow you to make data-driven decisions. Don’t rely on your gut or what you think might be worth trying!
Opportunity cost
As a small business, there’s an opportunity cost to every activity. You have limited resources, time, and money. So being strategic with every decision is a must to ensure you’re making progress and aren’t swimming in circles.
It can be tricky to calculate the opportunity cost as it involves understanding multiple variables. You might want to consider how much profit you make on each item.
Many business owners forget to properly size up the opportunity to expand to more ecommerce sales channels and end up spreading themselves too thin.
Brand fit
It’s also important to choose opportunities that fit with your brand image and place your values before profit.
For example, if you run an eco-friendly soap brand, trying to get your products into Exxon garages probably isn’t the best idea. However, working with locally owned farm shops could be more in line with your values.
Why you might benefit from a multi-channel approach
Many brands use a multi-channel approach that doesn’t involve eBay or Amazon. Instead, they are using their own website, wholesaling to independent retailers, and hosting several pop-up shops throughout the year.
Other brands are using a mix of their own website with marketplaces and live shopping events on their social channels.
The benefits of this approach are numerous. You can reach a wider audience across different platforms. You can more closely align what you’re selling to the customer’s preferences and shopping habits on that platform.
Taking an omnichannel approach also means you can diversify your income streams and reduce reliance on any of your ecommerce sales channels.
Need a partner who can design your rocket-fuel ecommerce growth strategies and supervise their execution?
