Expanding to new marketplaces should unlock growth—but in my experience, what should lead to profit often turns into patchwork pandemonium. Each new channel adds more complexity: different tools, siloed teams, and disconnected data. What starts as a strategy for scale quickly snowballs into a web of fragmented channels.
What do we mean by fragmented channels?
One of the biggest roadblocks to growth I’ve seen is when selling channels and systems become disconnected, requiring duplicate efforts and manual work to keep each channel updated. Instead of a unified omnichannel platform, you might be juggling separate inventories, overhauling product content, and adjusting pricing strategies to remain profitable. This fragmentation simply slows everything down, often without you realizing it.
In this recent report from Coresight, retailers cited complicated and multiple sources of inventory as the top challenge in both product delivery (68%) and returns management (84%). “Limited real-time information” also ranked in the top five issues, cited by 69% of retailers and 70% of brands for returns. (Real-time information is typically easiest to access when you have centralized inventory data.)
The industry knows that disconnected systems are creating blind spots. But it’s tough to find a fix when these gaps don’t show up as line items on a budget. Instead, they’re often masked by top-line growth, and don’t surface until profits plateau (or worse, dive off a cliff).
In my experience, here are five of the most common hidden costs that brands run into when expanding to new channels—and some tips on how to solve them before they erode profitability.
Hidden Cost 1: Overselling and Stockouts
A consumer searches for your product on Amazon and clicks your listing . . . only to be met with “unavailable.”
These moments don’t just hurt the bottom line—they damage customer loyalty and your standing on marketplaces. Without centralized inventory management, even basic fulfillment becomes a liability. And when inventory isn’t synced across channels, it leads to costly mistakes: Retailers lose a staggering $1.8 trillion globally each year due to inventory distortion, with out-of-stock issues accounting for more than half of that.1
You might see the cost there, but the harder hitting hidden impact is what happens next: When faced with a stockout, fewer than half of consumers will make a substitute purchase, and nearly a third will buy the item elsewhere.2 One day out of stock can tank your product’s rank by over 28% on Amazon, and after 3+ days of being out of stock, rank can fall by 83%. These hits take months to recover from.3
Hidden Cost 2: Manual Processes That Drain Resources
If your team is still juggling listings, pricing, and orders with manual tools and workarounds, then you’re paying an invisible tax on growth.
The thing is, you probably know this: the inefficiencies of manual work are no secret. But if you’re like the e-comm professionals surveyed by Coresight, you’re not investing in automation and operational systems to fix it:
“Despite identifying returns, product content, and delivery as the top three profitability challenges, brands and retailers continue to overinvest in areas like marketing and marketplace expansion, while underinvesting in automation and systems that address these core operational pain points.” – Coresight report
Manual inefficiencies are widespread and costly, with 60% of brands and retailers reporting a known impact. Returns especially hit hard, with 83% of brands citing lack of automation as a major concern (we have a whole report on the impact of returns coming out soon—stay tuned for that!).4
The growth investment is understandable, of course. It’s a competitive world out there, especially now. But the overfocus on scaling without the scaffolding of connected automation will drain more resources the more you grow. Automation and operational systems would not only have a direct impact on margin in your current state, but enable faster growth, if only they became a priority. And the stakes are high: it can cost $50 to $150 to manually process just one purchase order. Multiply that by thousands of SKUs, and the resource drain is staggering.5 (Want to read more about the impact of manual processes? Check out this Trotec case study, where they achieved a 20% increase in GMV after implementing new automations.)
Hidden Cost 3: Inconsistent Product Listings That Undermine Consumer Trust
Your product listings are the digital shelf, which make them the most important online real estate you own. Discrepancies in product descriptions, titles, and images can lead to mismatched expectations. And those mismatches lead to returns.
Returns cost US online businesses more than $800B annually, and poor product data is one of the biggest avoidable returns drivers.6 Product content isn’t just a conversion tool—it’s a profitability lever. But 67% of brands say they still struggle with product content optimization, especially when listings must meet different standards across fragmented, disconnected marketplaces. According to Coresight, this is the single biggest challenge brands face in building sustainable growth and profitability.
Hidden Cost 4: Lack of Visibility into Channel Profitability (and Beyond)
Top-line revenue is only part of scalability. The true test is whether your channels are delivering profit (not just volume). If reporting is fragmented or incomplete, brands often can’t see which channels are profitable (and which are quietly bleeding).
You can’t fix what you can’t see. Eighty percent of brands told Coresight they lack the insights needed to identify their most profitable channels. This lack of visibility makes it all too easy to invest in underperforming platforms or pull back from high-profitability ones without realizing it. This misalignment can sneak into more granular decisions as well. A push for two-day shipping might help the commercial team hit revenue goals, but it can strain logistics costs. Without item-level cost visibility, commercial teams could say this was a great decision—then end up hurting profitability. More granular operational insights help at every level, and often more than you might think.
Hidden Cost 5. Lost Agility in a Fast-Moving Market
Speed and strategy are key to scaling. But brands that can’t react quickly to shifts in demand, pricing, or fulfillment lose more than time—they lose market share. Coresight found that across product assortment and content management, the inability to respond to change was cited by over 60% of respondents as a key roadblock to profitability.
New marketplaces launch and gain traction fast. Trends spike and fade overnight. Winning means moving quickly. When launching a promotion means updating listings across five different systems—or when a supplier issue takes days to reach the e-commerce team—disjointed operations turn growth liabilities. In a fragmented setup, rolling out new products or adjusting assortments is often a slow, manual process. If a new trend arises (e.g. a sudden spike in demand for a certain style or gadget), a fragmented operation may take weeks to get the product listed everywhere, by which time more nimble competitors have already captured the sales. One analysis noted that retailers with disjointed channels often waste 15–20 hours a month reconciling product data across systems.7
Those delays are essentially lost revenue. Speed and coordination are table stakes in today’s digital world. And the best way to move fast is to have connected visibility and data.
The Strategic Shift: From Fragmented to Connected Commerce
The most successful brands aren’t scaling with fragmented, brute force. They’re scaling with intelligence. Unified commerce platforms empower these brands to:
- Sync inventory across all channels in real-time
- Standardize product data to build trust and boost conversions
- Automate order routing and listing updates
- Generate cross-channel reports that show true profitability
Growing fast while fragmented will hurt you in the long run (and probably the short run, too). But scaling smarter will enable growth across channels without growing pains.
Want to see what unified commerce looks like in action? Talk to one of our Rithum experts to learn how to simplify and scale multichannel selling.
- https://www.retailtouchpoints.com/features/industry-insights/ihl-study-inventory-distortion-will-cost-retailers-1-77-trillion-in-2023
- https://hbr.org/2004/05/stock-outs-cause-walkouts
- https://dataweave.com/blog/amazon-stock-out-impact-on-ecommerce
- https://coresight.com/research/unlocking-success-the-pathway-to-profitability-for-us-brands-and-retailers/
- https://www.ascendsoftware.com/blog/the-average-cost-of-processing-a-purchase-order-a-detailed-analysis
- https://nrf.com/media-center/press-releases/nrf-and-happy-returns-report-2024-retail-returns-total-890-billion
- https://www.linkedin.com/pulse/unmasking-hidden-complexities-channel-expansion-brandon-pemberton-lzdjc/
