After setting up your e-commerce store, you review the design elements, and user experience and are ready to start selling. In any business, sales is a priority.
Getting your store set up and running the website is only a part of launching a successful e-commerce business. Next, your need to focus on executing a killer sales strategy.
Selling online is more convenient than selling in a brick-and-mortar store. This is because the former isn’t bound by limitations such as catering to the demography of the specific locale, or employing only specific sales channels, etc.
But an e-commerce business must be flexible enough to utilize multiple channels for driving sales. And implementing such a strategy is now the norm thanks to multi-channel selling. Businesses dominate a highly competitive market only by meeting customers’ expectations at a place where customers spend their valuable time.
They do this by offering exceptional e-commerce experiences and by establishing clear brand identities- both of these factors are in complete control of the business owners.
As an up-and-coming e-commerce business owner, you would like to catch up with the trend too. Let us take a look into the type of sales channels and how can you set yours up to ensure the longevity of your business.
But before that, let’s cover the basics.
What is a sales channel?
A sales channel is the medium that a business chooses to engage with its customers and sell its products, directly or indirectly. These sales channels include retail, wholesale, traditional marketplaces, e-commerce, online mobile apps, and more. Each sales channel caters to a specific section of the demographics with varied interests. While they are overlaps, most sales channels are unique and come with their own advantages and disadvantages.
Why use a sales channel?
Now, you must be wondering why use a sales channel in the first place? There has always been a gap in the demand and supply i.e. the consumers and the producers. And a sales channel bridges that gap and ensures that businesses can reach their target audience.
It is important as what you offer through your e-commerce store is in your control, but the demand for it is scattered and lies with your ideal customer. A sales channel is where the connecting line is drawn between production and consumption. It also helps in streamlining the output of various products, and sorting and distributing them according to the wants and needs of the customer.
The success of sales channels depends on the type of sales channel that the business adopts. And the right sales channels can help the business grow exponentially and generate revenue, garnering success.
Now that we know what a sales channel is and understand its importance, let us look into the type of sales channel.
The types of sales channel
There are three main types of sales channels that you can adopt, depending on what works best for your business.
The three types are:
Direct sales is a channel when a company sells its products and services to the customer directly, without the involvement of a third party. The direct route allows for the production and distribution points to be connected quickly and without having to give up quality time on middlemen.
Although cutting out the middlemen may sound like a good idea considering you will keep all the profits made, however, when you scale your business or expand it, you direct sales may impact your production efficiency and sales effectiveness.
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Through the indirect sales channel, the sale of goods and services can be made by a third party such as an affiliate or a partner instead of business personnel. This can be used in conjunction with the direct sales effort or can be used instead of hiring sales staff.
This method of sales can also help the business make more sales quickly without investing heavily in personnel. Businesses take this approach when sales are outpacing the speed of hiring salespeople. Indirect sales is also preferred when the product sales is insufficient and doesn’t warrant a large sales force.
However, this type of sales channel does have some drawbacks – brand quality and purpose may be compromised. This approach may add fees that can cut into margins, cause issues and problems that are difficult to resolve. With indirect sales, there are times when customers are not able to grasp the objectives of the brand.
Multichannel sales is the process of selling products through multiple sales channels simultaneously. Due to the rise and popularity of digital channels, this type of sales channel is now relatively easier to launch and manage. Businesses can sell on an e-commerce website, or online marketplaces, wholesale platforms, or simply through social media.
Multichannel sales increases sales opportunities as you can reach a larger pool of potential customers,
Now that we have looked at the types of sales channels, let us look at some tips that can help you choose which is the right channel for you.
Tips for choosing the right sales channels
Your sales channel choice can make or break your business. By choosing the wrong channel, you may not reach the right type of customers or attract enough customers or generate sales.
Here are a few tips that can help you choose the right sales channels:
Determine your goals
You should, first and foremost, have clarity about the goals you want to achieve as a result of setting up your sales channel. Underline your purpose to analyze which channel will work best for your business and to generate high sales and high profits.
Your goals can broadly fit into four objectives:
This goal can help you choose your sales channels that align with your price range but helps you increase sales volume and reap returns faster.
If your goal is to grow quickly, then a logistically oriented goal is beneficial. For instance, if you want to increase the number of channels your product should appear, it is important to invest in a shipping provider with short and faster delivery.
If you are conscious of the impact of your business on the environment and want to reduce your carbon footprint, choosing an ecological sales channel is important.
A sustainable sales channel most often entails higher costs incurred on your business.
If your goal is to perform better than the competitors in terms of distribution or production, then your choice of sales channels should reflect that.
Consider your business model
Every sales channel will not be suitable for your business. Factors such as products and services offered by your business influence your choice of sales channels.
Your choice of sales channels should fit the business model. If it doesn’t, then you are setting your business up for failure.
For instance, an important factor in the customer experience is returns. If you have an online shop, a solution for this can be approached easily in the direct sales channel. But the same cannot be said about the indirect sales channel approach. If you sell high-end products or luxury items using the indirect sales channel then quality control and product maintenance can be difficult.
Therefore it is essential to analyze and understand exactly which sales channel or combination of them fits your business model.
Observe the target group
A thorough examination of your target audience can help in choosing the sales channel. For example, young customers are more likely to purchase from online means whereas the older generation would prefer to purchase via retail stores and other offline methods.
Analyzing your audience can provide a lot of insight into choosing the right sales channel for your business.
Observing the market
Competitor analysis can provide great clarity when it comes to choosing a sales channel for your business. It can serve as a guide, not as a blueprint that can be copied.
You can understand the competitors’ business models and different sales channels that have worked for them, but again it’s not a guarantee that they’ll work for your business.
Therefore, realize the capabilities of your business and your business’s unique selling point. If you are caught copying the strategies of your competitors, then the question arises: how are you different from your competitors? To drive sales and generate revenue, you should stand out in the market and have a unique approach.
Consider the impact and corporate image
Different sales channels can have different impacts. But it can also have the customers react negatively. Unclear e-commerce websites and style-over-substance type apps may end up causing friction in the customer journey, preventing customers from making a purchase.
Your choice of sales channel also influences the marketing strategies, therefore it is crucial to choose one that positively impacts the brand image.
Keep these tips in mind when choosing your sales channels.
Let us now look at which sales channel may prove to be the most profitable one for your brand.
Which Sales Channel is Most Profitable for your Brand?
Choosing the right sales channel mix can help your business and brand grow exponentially, and choosing the wrong ones can land you in a lot of trouble.
Here’s a list of the main sales channels that you can utilize based on how it fits with your brand and business model.
This channel includes permanent and pop-up shops (like a short-term rental, a booth in an expo, or a stall at a fair). Retail channels help in building relationships with your customers and getting proper and timely feedback since you will be interacting with them in real-time.
And another advantage is that this cuts out the middleman, helping the product reach straight to the customers. Additionally, you will have all the sales profit in hand as it is a type of direct sales approach.
However, you may have to spend money on hiring a sales team, paying the necessary fees for a brick-and-mortar shop, and will have to solve the issues between the staff and customers personally.
This channel involves selling your products to other parties who’ll then sell in retail. Some businesses may completely adopt this channel as their only sales approach while others may use it as an additional sales channel. This is essentially beneficial to those who have a lot of stock and inventory. This can also be advantageous in the way that the third-party retailers will work on the sales and marketing while you can focus on manufacturing.
However, a lot of capital will be required to create and store the inventory and it can also be expensive if the inventory doesn’t sell. Additionally, you won’t be able to interact with your customers direct which may later cause problems.
The reseller channel is used when someone increases the value of a product and sells it at a higher price and this can be done by establishing an affiliation with the retailer, repackaging it, or improving the existing product.
This can help in lowering the overhead cost, adding value to the product can increase the profit margins and this can be done by anyone. However, the pricing and availability of the product may fluctuate, there’s no guarantee of a constant increase in margins and you’ll have to adhere to the terms and conditions set by the reseller.
When generic products are relabelled with a brand’s identity, it is as known as white labeling. This significantly reduces the cost of production, you can sell various products and trending goods without wasting the time to manufacture and these products are highly like to be market tested. However, this channel is a highly competitive approach and there are chances of identity theft that can harm your brand’s image and prices can always be fluctuating.
Direct to consumer (DTC/ D2C)
When you are selling directly to the consumer, from your e-commerce website, then this channel is known as direct-to-consumer. And the majority prefer buying from brands directly rather than multi-brand retailers.
You will get a better understanding of your customers through the data gathered on your website which can help in improving sales lead generation and marketing campaigns. This also doesn’t create any restrictions when it comes to presenting the brand and the products. And you get to keep all the profits of your sales.
However, you will have to bear the marketing and logistics costs and due to the highly competitive environment, it can be difficult to get your brand name out there. And it may cost if you wholesale or white label.
B2B Sales (Business to Business Sales)
This channel is used when you are selling business-to-business i.e selling your products or services to another business. Here, the business will have more spending power, and if you land a big client, then this can help increase the visibility of your company and products. Additionally, if you have a good relationship with your client, they’ll become a repeat customer.
But this is a very limited market space and companies usually have a lot of procedures to fulfill before making the purchase. And since you are selling to another business, it will cost higher to create the product or service.
The partnership sales channel is employed when a business or an individual needs to act as an extension of the existing sales team. For instance, influencers. Social media influencers, who promote products, are an example of this sales channel. The company gets the benefits of the reach and audience of the influencer in exchange for a commission. This expands the reach of the brand and brings on board a set of customers that trust some factor regarding this channel and it saves a lot of money in marketing.
However, you may not get direct access to the customer and sales data, you have to maintain that profitable relationship with the partners involved and there is a risk of being misrepresented by the partners.
Examples of using multiple sales channels
Since a single sales channel puts limitations on engaging with various customers via different mediums, many brands opt for multiple sales channels.
For instance, Apple uses multiple sales channels to increase its sales and boost revenue. They have retail brick-and-mortar stores where they encourage customers to interact with their products before purchasing them. They also have an online store where they directly sell the products to customers in those locations where they cannot open brick-and-mortar stores, helping the products reach a wide range of people and locations.
They also sell through other sales channels such as Amazon and BestBuy where the products are sold often at a discounted price but Apple has access to not only their customers but also to the trusted customers of Amazon as well. Again, Amazon helps Apple reach those locations that Apple does not have direct access to. Therefore their reach and audience increase exponentially as both companies are giants in their fields.
So Apple is a great example of a company that employs multiple sales channels. And all the sales channels work together and support each other.
Why an online store should sit at the center of your sales channel strategy
An online store provides various opportunities for sales and customers beyond the scope of what a physical store can offer. Listed below are some reasons why there should be an online store at the center of your sales channel strategy.
Ease of use
Setting up an online store from scratch may appear to be a herculean task. But various e-commerce builders offer you a plug-and-place method that simplifies building an online store. Once set up, these online stores can help seamlessly connect with other sales channels when you want to grow the business.
Building within a siloed ecosystem
An online store should not be limited to a single platform. Customers are always following the trends on what products to purchase and which platform to purchase them from. Now when selling on a single platform that constantly changes policies and algorithms can cause problems. Additionally, users move on from one platform to the other.
For instance, online shoppers are slowly hopping from Instagram to Tiktok to explore brands and shop from them.
This mitigates the risk of investing only in one sales channel and lets you keep drawing shoppers at trending shopping channels.
An online store helps you move past the obstacles that a traditional marketplace has. For instance, traditional marketplaces control the branding and products, they own the customer and are entitled to your interactions with them. This shifts the focus of the customer from the brand to the marketplace, therefore you cannot differentiate yourself and stand apart in the market.
Building an online presence through your e-commerce website can help you curb these obstacles and preserve your brand identity.
Building a brand story
Social media or an online store applauds a compelling brand story, this is not effective in a traditional marketplace.
How to build a strategy across multiple sales channels
When you start your business, you are more likely to focus and prioritize one sales channel but you can gradually implement multiple sales channels to grow your business. Here are something to keep in mind building this strategy
Prioritize your channels based on profitability
Multiple sales channels are not one-size-fits-all, so you’ll need to underline the best channels for your business. And you should consider these factors:
- Your target audience
- The channels with the lowest overhead
- Channels used by your competitors that are successful
Once you can profit through one channel, then you can prioritize other channels accordingly.
Create a different strategy for each sales channel
Every sales channel will require you to create a different strategy to grow. For instance, you will have a different strategy when selling via online stores than the ones used in the brick-and-mortar shop. Even different strategies will be required if you are selling online depending on the platform. Shopify may require a different marketing approach while Instagram demands another one.
Manage inventory and fulfillment
You need to assess your inventory and understand the ways you can increase the number of sales and your inventory should accommodate that goal. You need to ensure that you can fulfill these orders that are pouring in to convert one-time buyers into repeat customers.
Ensure quality customer service across sales channels
Expanding your business means more customers and more customers mean more issues that can arise, so ensure to maintain a good quality of customer service.
Keep an eye on your sales and analytics
Keep a close eye on the sales each channel is driving. It will take some time for the new channel to give the results and then set up a new channel, but after having analyzed your data, the approach may become self-sufficient and self-running.
The market is constantly changing and so are sales approaches to keep up with the changes. So it is vital to constantly analyze your sales strategy and upgrade your sales channels to keep the business operating smoothly and generating revenue.
We hope that this guide provides you with clarity and tips on choosing the best-fitting sales channel for your e-commerce business.