What Is Multichannel E-Commerce
In years past, e-commerce was one channel in a go-to-market strategy. It now consists of a multitude of channels: online retailers, marketplaces, direct-to-consumer (D2C) websites, social commerce, drop shipping, webshops, subscriptions, C2C and more.
Multichannel e-commerce is the methodology through which a brand sells via several online avenues instead of one.
From a consumer perspective, the abundance of options equates to convenience. However, as buying becomes easier, selling gets more complicated, especially for brands. In fact, we found that only 10% of US consumers start their product searches on brand websites.
Each new channel comes with its own unique audience and opportunities. Ignoring the potential within a channel can mean losing future customers. Skill, experience and technology strengthen a brand’s ability to identify and leverage the right options efficiently.
Advantages of Multichannel E-Commerce
Though balancing a diverse mix of multichannel strategies and operations can be complex, brands stand to gain significant market advantages from the endeavor.
Optimized Customer Journey
With so many options at every click, consumers can chart increasingly complicated paths to purchases. Nearly any online experience could be a potential opportunity to spur a transaction within a few simple clicks. The shortened path from inspiration to a decision to purchase indicates that now, more than ever, consumers can rapidly transition from a variety of online activities to a purchase. Additionally, the proliferation of mobile browsing — even while in a brick-and-mortar store — means consumers are always shopping. But one theme remains constant throughout all of these shifts in buyer perspectives: consumers still expect brands to meet their demands wherever they shop.
A multichannel approach allows you to not only give your customers more options, but also meet them where they are. As you expand to a new channel, your audience grows to incorporate the users of that channel.
Experimenting with new channels and new ways of connecting with consumers is a solid growth strategy, but it often comes with a trade-off. For example, it’s challenging to create an optimized customer experience on all of the marketplaces and retail sites where your consumers shop. The costs of listing, marketing, storing and fulfilling for each channel become prohibitive beyond a certain scale and can easily overextend your business.
Brands must take a more tactical approach.
Increased Business Resilience
In business, heavy concentration on one revenue stream, without cultivating the potential within others, increases risk over the long term. And as a brand with products to sell, you don’t want to rely entirely on one or two channels.
Most brands see a multichannel strategy as an avenue for growth, and rightly so. But channel diversification is also a great way to protect your business from disruptions.
The COVID-19 pandemic exposed the weaknesses of some brands and retailers. In particular, sellers who relied heavily on a limited number of channels, fulfillment partners or supply chain sources experienced sudden, debilitating challenges. Some sellers were able to recover by quickly pivoting selling strategies. However, many were not so fortunate.
To effectively weather disruptive forces beyond your control, you should consider building a resilient e-commerce business based on four key pillars of diversification:
- Channel Diversity — List and advertise your products across multiple channels, including marketplaces, retailers, search engines, your website and more.
- Fulfillment Diversity — Expand your shipping capabilities so you’re not dependent on a single method of delivering products to your customers (both B2B and B2C).
- Geographical Diversity — Tap into new sources of demand in multiple markets, usually through international partnerships with distributors, retailers or marketplaces.
- Supply Chain Diversity — Mitigate risk by creating backup plans for sourcing or manufacturing your inventory.
While diversification requires dedicated time and resources, it could be what makes a difference when disruption arises.
Streamlined Internal Operations
Diversifying your marketing, selling and fulfillment strategies, while initially requiring substantial work, eventually yields lasting benefits such as improved internal communication, direct attention to and resolution of ongoing logistics challenges, data-driven knowledge of specific sales channels and more.
Successful brands tend to be operationally agile and understand the importance of:
- Cross-team communication and transparency. The actions of your marketing team have a direct impact on your selling efforts. Likewise, your marketplace team may be aware of recent selling trends that can inform decisions about your ad budget allocation. Therefore, it only makes sense that the objectives, KPIs and actions of each department are aligned with the teams they impact the most.
- Logistical preparedness. Every time you expand your operations to a new channel, the challenges your team faces grow exponentially. The brand’s entire product catalog must meet the unique content standards of every channel. Pricing must remain consistent, yet competitive. And inventory levels must remain up to date across every site so that you’re not unknowingly selling out-of-stock products. The bottom line is that you’ll be wasting a lot of time and resources if your team isn’t prepared for multichannel selling.
- Channel expertise. Mountaineers attempting to climb Everest for the first time rely on a sherpa to guide their way for many reasons — familiarity, efficiency and expertise. Likewise, you need a dedicated individual or team that can help you navigate the unique challenges presented with each new channel your brand sells on. It’s truly the best way to ensure that you’re aware of every requirement, update or new offering a channel may present.
How to Sell on Multiple E-Commerce Channels
Adding new channels to your network is an excellent strategy for reaching more customers, optimizing your customer journey and creating a resilient distribution. But you need a methodical approach to launch and operate each channel successfully: If each new channel takes years to set up and vastly increases your team’s workload, the costs may well outweigh the benefits.
We identify five focus areas correlated with successful multichannel operations. For every new channel that you want to add, develop and implement a plan for each of the following areas:
- Connection. Thoroughly review and understand the channel requirements. Build connections for efficient inventory management, product information and ongoing monitoring after launch.
- Marketing. Operate campaigns that ensure your products are highly visible and sales take off.
- Sales operations. Manage and consolidate inventory to replenish products and avoid out-of-stocks. Create compelling product listings. Adjust prices to remain competitive, visible and profitable.
- Fulfillment. Develop fulfillment options following the requirements of the channel and prepare to meet consumer expectations for timely communication and product delivery.
- Optimization. Through intelligent monitoring, collect data to feed KPIs and gain insights to increase the channel’s performance.
Connecting Products to Multiple Channels
As the e-commerce landscape continues to fragment into various experiences that involve different audiences and sales channels, the need to engage with consumers where they’re shopping — and help them feel connected to your brand — becomes more critical than ever. Marketplaces are rising as digital malls, with many curating experiences for their specific target audiences and specializing in particular categories. In addition, shoppers seek inspiration and peer recommendations through social media. Even in physical retail stores, consumers search for comparable pricing or products or reviews to help increase confidence in their purchase. If you’re not present where buyers are looking, you risk losing those critical connections that allow you to link to a more extensive network and build a more robust platform for your brand.
Engaging with D2C Channels
The Popularity of D2C
Many brands are entering the world of direct-to-consumer (D2C) sales for a variety of benefits, both financial and logistical. Beyond simply diversifying to reduce risks and increase resiliency, goals for brands going D2C include:
- Increased sales — Over 50% of consumers prefer purchasing from brands over retailers if given the opportunity, in part because brands are a more trusted source of product information.
- Larger margins — Eliminating an intermediary boosts revenue, as long as additional fulfillment, advertising and other operational costs don’t eliminate those margins.
- More customer data — Many retailers aren’t transparent with customer data that can indicate which products are selling, who is buying what and more. More interaction with your customers means more knowledge about what they like and how to market to them in the future.
- A broader assortment of products — Many retailers will not carry your entire line of products, so going direct gives you flexibility on product assortment, as well as pricing, branding and more.
Website or Webstore?
Almost every brand has a website to showcase its products. But not all brand websites are webstores, and making a website shoppable is not trivial. While it’s in the DNA of some brands, including digitally native vertical brands (DNVB), others see themselves more as manufacturers and may not invest in internal resources to manage a customer-facing e-commerce platform.
Selling D2C on a brand website has many advantages, though, if your organization can execute it. Many of the benefits we listed above are amplified in a webstore scenario, such as larger margins and no marketplace commission, unfiltered customer data (you even retain the email addresses to build your database) and a full assortment of products.
No matter which platform you decide to build on, turning a D2C website into a thriving new sales channel comes with two massive challenges:
- Integration. Ensuring your website works in sync with your overall structure from a perspective of product data, fulfillment and, crucially, inventory is vital. Unless you get integration right, the effort your website will require could outweigh the benefits.
- Marketing. A website doesn’t spontaneously generate traffic. In the next section, we will discuss how brands can drive traffic to their sales channels, including a brand website. Without an ambitious marketing strategy, though, it’s unlikely sales will surge.
Operating an underperforming webshop is almost as resource-consuming as running a successful one. If your brand cannot execute well on integration and marketing, then it may be to your advantage not to sell on your brand website. You can still work to transform visitors into consumers by funneling them to shoppable channels.
Selling Through Third-Party Marketplaces
Marketplaces made up 67% of global e-commerce sales in 2021, exceeding $3.2 trillion. Marketplaces offer a chance for brands to expand their global footprint and tap into the millions of active consumers searching for products.
Brands that successfully sell on marketplaces tend to follow three distinct phases: 1) launching successfully, 2) building a winning strategy and 3) defending their position.
- Phase 1: Launch Successfully
The key to getting started with marketplaces is to bring compelling product information to purchase-ready consumers without causing channel conflict. This means addressing data feed requirements, resolving listing errors, registering your brand (where required) and more.
- Phase 2: Build a Winning Strategy
Once data feeds have been mapped, and expansion strategies have begun, it’s time to put some advanced strategies in place — ones that will not only improve performance but help your brand maintain a competitive edge, too.
- Phase 3: Defend Your Brand’s Winning Position
Achieving ongoing success on marketplaces requires persistent effort. And it’ll continue to increase in complexity with each expansion and additional channel. As a result, you’ll need to continually take steps to defend your position from competitors and protect profit margins, including advanced advertising, competitive benchmarking, ongoing repricing and winning the marketplace’s buy box at a high rate, where applicable.
For a more in-depth look at the essential strategies brands need to get the most out of marketplaces, check out our eBook, The Three Phases to a Winning Marketplace Strategy for Brands.
Winning on Amazon
Amazon is unique due to its sheer size and influence in the industry. It’s often the first location brands turn to when selling their products because it’s the first place consumers visit to buy products. According to a recent consumer survey we conducted in August 2021, Amazon is the first place 50% of shoppers in established Amazon markets (the United States, the United Kingdom, Germany and France) go to when they want to buy a product.
Seller Central vs. Vendor Central
Amazon is both a retailer and a marketplace. As a retailer, Amazon purchases inventory in bulk and resells it at a profit, via a wholesale model. And as a marketplace, Amazon lets sellers list items on its site and takes a commission on sales.
Both models coexist on Amazon. And for most consumers, the shopping experience is almost indistinguishable.
As a brand, though, choosing between the models makes a world of difference. Here is a summary of the main differences in responsibilities between the two (though there are exceptions).
The brand is responsible for:
- Fulfillment and logistics
The brand is responsible for:
- Advertising and promotions
- Shipping to Amazon
Historic brands with a culture of wholesale activity tend to favor Vendor Central. Conversely, DNVBs with habits of selling D2C often choose Seller Central. All options are on the table, though, and some brands leverage both models in parallel. One example would be selling most products through Vendor Central and using Seller Central for end-of-life, lower-margin products.
The Amazon Buy Box
Whether selling through Vendor Central or Seller Central, winning the Buy Box should be a key goal for your brand. Amazon groups all offers for a product on the same page. And the Buy Box is how it funnels clicks to the offer it deems most relevant.
You could think that when Amazon sells a product “in direct” (wholesale), it systematically claims the Buy Box for itself. But that is not always the case. If a seller comes up with a better price and has a good reputation, it could get the Buy Box and the lion’s share of sales that come with it.
Although Amazon doesn’t reveal exactly how it determines which sellers earn the Buy Box, you can employ some tried-and-true tactics to help you own this prized piece of real estate.
Working with Wholesale Channels
Adding retail channels to your online distribution can be a massive boost for your business. And for established manufacturers with a strong wholesale culture, retail usually makes up the bulk of online and offline sales.
Choices in Retail Partnerships
Large brands sometimes struggle to address all requests to distribute their products. Accepting too many retail requests bears the risk of increased intrabrand competition. It also could mean not having enough internal resources to guarantee each retailer gets the attention it requires. On the other hand, an exclusive distribution (where you have an exclusive distributor or retailer) may be too restrictive and inhibit your growth.
Mature brands often opt for a selective distribution. This is a system in which you identify the specific needs of your brand or products and select online retailers in line with your needs.
Drop Shipping: A Gateway to Retail Partnerships
For smaller brands or brands trying to enter a new market, having too many retailers may be the least of their problems.
Many retailers might push back on a less-proven brand and refuse to list its products due to storage and logistics concerns. And obviously, they may want assurances that whatever inventory they pay for upfront will sell. In that case, drop shipping your products for those retailers is a logical solution, provided you can fulfill the orders when you receive them.
Business-wise, drop shipping is an entirely different approach. It resembles traditional retailer sales in that the retailer negotiates a B2B price, sets the resale price and sells. But it’s a lot more like selling on marketplaces in that no B2B sale is made until a B2C conversion happens. And, of course, you are responsible for shipping each product.
List your products across more channels
Rithum™ helps connect your products to hundreds of global channels, including marketplaces, digital marketing channels, retailers with whom you have a wholesale or drop-ship relationship and your own webstore.See our platform in action
Multichannel E-Commerce Marketing
Multichannel selling is an excellent strategy for growth. The challenge is that the word has already spread. Consequently, many sales channels are getting increasingly crowded and it is becoming more difficult for brands to stand out.
Trading on new marketplaces and retail channels is relatively simple. However, driving qualified traffic to your product listings is a different story. With such a wide array of options, convenience replaces loyalty. As a result, it is easy to lose customers to competitors. The same goes for all digital channels including brand websites and social media platforms.
Something else to remember is that online visibility is not just about e-commerce. According to Google, during the 2019 gifting season, 86% of in-store purchases in the UK were researched online. And in a 2021 consumer survey conducted by Dynata for Rithum, 50% of global shoppers said they were researching products online more than before the pandemic (before buying in-store).
Online visibility has a significant impact on consumers and their journey to purchase. It is crucial to place your products in front of the right audience throughout the full digital journey.
Driving Product Discovery Online
With the pressure to deliver results, online activities and marketing strategies are almost entirely focused on generating conversion, leaving little room for investment in driving discovery. This equates to many missed opportunities left on the table.
So, how can you maximize your business potential? The secret lies in three key elements: correct targeting, optimization and campaign segmentation. In fact, some channels that have traditionally fit a specific mold in the past (discovery or performance) can now serve as full-funnel channels.
Segmenting your audiences, targeting and launching campaigns to cover the entire funnel will enable you to adjust investment accordingly and give product discovery a push whenever needed.
For instance, we usually associate paid search advertising with the consideration stage of the funnel. But with the correct strategy, this channel can work to support every stage of the funnel.
Using Retail Media to Stand Out on Crowded Channels
Catching the eye of consumers is becoming more and more of a challenge when selling online. Unbound by the physical constraints of brick-and-mortar stores, online retailers typically sport more extensive assortments. And equally important, marketplaces have even fewer constraints on how many vendors they can list. There are 1 million active worldwide sellers on Amazon only, with about 2,000 new ones joining every day.
How can you give your listings the best chance for visibility?
That’s where retail media comes in. Jockeying for position on these highly competitive channels may sound like an impossible feat. But with the right strategy in place, it’s possible to perform exceedingly well. Many brands and retailers have managed to increase revenue, sometimes by as much as 422%, simply by developing the right retail media strategic plan.
Retail media includes any advertising activity across retail sites and online marketplaces. Generally, brands leverage advertising campaigns to increase product visibility and boost sales revenue.
Compared to other forms of advertising, retail media has a few advantages:
- It sits right within the shopping experience, making it easier for shoppers to convert
- It allows brands to target shoppers based on intent
- It natively tracks campaign performance from start to finish since the full journey happens within the same platform
The trade-off of retail media, on the other hand, is that online retailers and marketplaces are more often becoming pay-to-play. Indeed, as more search results (also known as digital shelf space) become tied to advertising, this leaves less room for organic product discovery and lowers profitability for businesses.
Top retail media platforms include Amazon Advertising, eBay Promoted Listings and Walmart Advertising.
Retail Media Best Practices
Every channel implements retail media services differently. Some of them are in the early stages, and their advertising capabilities are limited. Others have a well-developed offering including advanced consoles, automated bidding systems and in-depth reporting. In both instances, it is essential to build a strong plan to maximize your activity’s potential.
- Identify your main goals. Remember to consider your overall business objectives to ensure a holistic approach and avoid conflicts. Consider your direct KPIs and the impact on the overall business profitability (for instance, your margins).
- Create a granular and efficient structure. Utilize the platform’s capabilities and leverage ad formats and campaign segmentation correctly. This will ensure the right visibility for your business at each stage of the funnel.
- Focus your efforts on data analysis and account optimization. Identify the components that drive results in line with your goals but exclude those irrelevant to your objectives. This will allow you to implement a correct budget reallocation and strengthen your activity for long-term success.
Using Advertising to Drive Conversion
When it comes to driving conversion, retail media is king. Purchase intent is high and most options involve a native ad format that can serve a naturally embedded checkout experience. Unsurprisingly, retail media often comes with high conversion rates.
However, with most campaigns tied to search intent, there is a limited amount of ad space available. The cost of advertising can quickly creep up, especially for popular search terms. To stand out, a multichannel plan is key.
Channels like social media and search engine advertising, for example, offer lower ad costs. Social media channels give you access to specific segments who have shown interest in your or similar products. You can reach your prospects and existing customers at any funnel stage.
Search engines allow you to be present when users are actively starting and navigating the journey to purchase: firstly identifying a need, then finding the right product and finally picking the best brand.
The disadvantage of these channels is that typically they generate lower conversion rates for two reasons. The first reason is the long length of the journey. The second reason is that these campaigns are rarely optimized for fast checkout.
The user’s journey involves many steps before the actual purchase. With distractions always within a click, the user is more likely to abandon the funnel before converting.
Social Media Checkouts
Simplistically, social commerce is when e-commerce meets social media. It enables consumers to make purchases within Facebook, Instagram, Pinterest and other social media ecosystems.
For years, social media has been used primarily as a resource for discovery. In the past, social media success involved a range of strategies that started with an advertising and organic activity and directed the journey to purchase outside of social platforms — whether that meant a brand’s website or transitioning over to Amazon listings.
Recent developments such as Facebook Marketplace and Instagram Checkout are drastically changing the scope of social commerce. Brands embrace a “less is more” approach to shorten the user’s journey to the bare minimum.
Rather than crafting strategies that involve days or weeks of consideration across multiple channels, sellers count on buy buttons for direct sales.
Most brands prefer to drive advertising traffic to their websites for profitability purposes. However, not all brands have a built-in e-commerce platform. This forces the user to leave the brand website and purchase the product from a retailer. The process disrupts the journey and increases the chance of losing the prospect somewhere along the way.
Even brands that have e-shops could lose sales. Nowadays, shoppers expect alternatives for comparison. Sometimes, shoppers only purchase a product from their preferred retailer.
The solution is to have brand campaigns linked directly to your preferred retailer sites or display a quick interstitial offering more purchase options. But make sure that links only drive traffic to pages with stock availability.
Product feeds and all the associated processes provide essential fuel for your campaigns.
Each advertising destination requires a set of unique attributes that enable the advertising campaigns to work. However, the destination requirements change frequently; therefore, there is a need for ongoing optimization.
If any of these requirements are not met, the advertising campaigns are not eligible to run.
How well you manage your product data feeds and the alignment with the performance activity will ultimately determine your long-term success.
Some of the best feed practices we can recommend include implementing steps to:
- Iterate on product titles. Always create titles based on a consistent structure (e.g., Brand + Attributes + Product Type + Model No).
- Approach each channel individually. Using your Google Shopping feed for Facebook or Instagram, for instance, may not be the best strategy.
- Showcase discounts and promos. This can lead to higher engagement with the ad and more relevant traffic for your products.
- Don’t operate feeds and advertising in silos. It’s usually better to have the same team operate both, or at least ensure smooth communication and alignment across activities.
Managing Multichannel E-Commerce Sales Operations
Managing an extensive distribution network with many channels can be challenging. But increasing your presence and driving interest for your products will be for nothing if you can’t reliably turn potential buyers into customers when it matters.
Whether it’s a marketplace, a retailer or even a webstore, every channel requires three elements before sales can begin: product information and content, pricing and inventory levels. And, if everything goes according to plan, every channel should generate orders you must process.
Every channel will receive and send this information differently. As you expand your network, you want to make sure your systems can communicate with all channels and the need for manual intervention does not surge with your growth.
Product Information Tailored for Each Channel
Product information and product content are essential. In a 2021 survey conducted by Dynata for Rithum, 34% of US e-commerce shoppers said they had already given up on a purchase because the page did not have enough information. More crucially, without the right information, the product will likely never emerge as visible to the appropriate pool of purchase-ready customers in the first place. Including content is the bare minimum, but constructing high-quality content has a massive impact on brand image and buyer conversion.
Product content has very different specifications for each channel. And even if there are common data points, such as title or description, the structure of that data point can vary widely based on the retailer. And each time you expand to a new site, there’s yet another template to follow.
We typically recommend a three-step strategy to manage content optimization:
- Streamline the source. Make sure you have a single source of truth for product content and ensure content makers know what the destinations will be.
- Audit regularly. Regularly compare your content against channel requirements to get a clear picture of what you need to change in your approach.
- Leverage automation. Automated content optimization, data transformation and uploads can help you save time, ensure your data is compliant and use existing product data to populate fields that are not available in your product data by default.
It is always possible to take content to the next level. Improving content is a multifaceted process. Here are a few strategies to upgrade product content:
- Research the demographics, preferences and purchase habits of the audience within each of your sales channels and tailor your content to appeal to that specific audience.
- Read customer reviews and adjust your content to set better expectations. For example, if customers complain that one of your products is smaller than they expected, add an image that gives perspective to demonstrate its size.
- A/B test key elements like product titles and hero images. You can A/B test on channels you control, like a brand website, but also on marketplaces and some retail channels.
Multichannel E-Commerce Pricing
Pricing is massively influential in e-commerce. With so much at stake, discounts, repricing and promotions have become the norm for most channels. Customers expect them. Managing a multichannel pricing strategy can prove demanding, especially when factoring in retail channels, which usually define their prices freely.
Repricing on Direct Channels
Pricing is a highly strategic matter for most brands. It is tied to many business-critical variables like demand, brand perception and profitability. And promotions are a great way to drive traffic, interest and conversations about your brands.
Brands selling on direct channels like marketplaces or brand websites usually have room to manage prices. But pricing for a brand website is very different from pricing for a competitive environment like a marketplace.
On marketplaces, the brand can’t ignore the competitive environment it is selling in. Odds are high that most shoppers are considering a few different brands before making a purchase. And in most cases, the cheaper option could gain an edge. This means brands have to consider the pricing and movements of their competitors. In some cases, lowering prices to capture extra sales may be prudent. When the competition is low, opportunities may arise to set higher prices and increase margins.
(Not) Managing Retailer Pricing
In most geographies worldwide, antitrust laws ensure that retailers can price their products however they want. While this is undoubtedly beneficial to customers, some brands can see it as a threat: Margins erode as retailers compete on price to capture sales. As a result, brands can face tougher negotiations or retailers dropping some unprofitable products entirely.
It’s also possible that in markets with few sales channels, some retailers abuse their monopoly situation by increasing resale prices above the manufacturer’s suggested retail price (to capture extra margin, at the cost of overall sales volume and price consistency).
However, brands can take action to influence retail prices while abiding by local regulations:
- Synchronizing promotions. Quench your retailers’ thirst for promotions by planning and incentivizing market-wide discounts. Coordinating efforts within your network of retailers can help generate more sales for your brand compared to competitors, rather than simply generating more sales for one retailer compared to others.
- Keeping a close watch on price-matching dynamics. It has become common among retailers to leverage repricing algorithms. They use them to price match competitors, prevent sales losses and maximize margins. While you may not control these price fluctuations, you can learn from them. As a brand, staying up to date on the latest product repricing trends means you can plan your pricing strategies accordingly.
- Be creative in boosting retailer sales. At times, a retailer will become disappointed with the sales velocity of a particular product. Using “where to buy” technology to send qualified leads to the retailer’s website can help increase sales velocity in an organic and profitable way.
Find more creative ways to (not) manage retailer prices in this eBook: Creative Pricing Strategies for Brands: Proven Tips for Boosting Your E-Commerce Profitability.
Leveraging Off-Price Channels
Life cycle length varies tremendously between products. While some industries or brands have evergreen products, others have fast-rotating collections. For the latter, overstock can be a problem. How do you get rid of leftover inventory when the new collection arrives?
Retail channels usually deal with this problem with sales, clearances and discounts. But too many promotions will begin to erode the image of the brand. Third-party clearance channels are another option, although they often come at an image cost for the brand.
To manage excess inventory effectively, brands can consider a separate online channel that acts as an extension of their own ecosystem. This way, they can deliver a direct-to-consumer experience aligned to their existing e-commerce operation in an effective and scalable way, while remaining in control of brand equity.
In presenting off-price goods as prime-aged inventory, brands can also attract a new audience, some of whom may go on to become full-price customers.
Multichannel Inventory Consolidation
If a channel displays a product as in stock while it isn’t, consequences can include a very disappointed customer — and possible sanctions from the platform.
Keeping inventory updated across multiple direct channels (marketplaces, brand website) is hard work, especially during busy seasons when staff is already juggling multiple priorities. The more channels you list on, and the more SKUs you have, the more complicated the process can get.
But fail to take inventory updates seriously, and your company could soon find itself battling negative reviews, lost sales and high costs associated with warehousing surplus stock.
You know it’s time to revisit your process for updating inventory when you receive an order for an out-of-stock item. This scenario is a common one for brands actively expanding to new channels: each time you add another sales channel to your portfolio, the risk of overselling increases.
When that happens, the only solution is to leverage automation and ensure that your inventory remains permanently updated across all your channels.
Every Channel Can Be a Sales Channel
Always Offer a Direct Path to Purchase
As a brand manufacturer, if you don’t provide interested consumers with a seamless shopping experience or a clear path to purchase, you’ll likely lose them.
Think of all the touchpoints that a consumer may have with your brand. Do they all come with a “buy now” option? A common example is brands that do not sell products on their websites. Another would be awareness campaigns that aren’t tied to a specific checkout page.
While scoring some quick sales is usually not the goal for these websites and campaigns, it’s always worth considering that today’s consumers can cover the full funnel and become purchase-ready very quickly. But they can also get distracted very easily, increasing the likelihood of losing them due to the lack of an easy path to purchase.
No Webshop? No Problem
If you don’t have a D2C webshop, or if you just haven’t deployed that particular channel, it’s not the end of the world. But it’s still very important that your website does not become a funnel dead end.
Avoiding this significant hazard to sales requires opening your website to shoppable options. Ensure your website, especially its product pages, funnels visitors toward a channel where they can convert.
Level 1: Your website has links to your online retailer and marketplaces and lists potential brick-and-mortar channels where your products can be found.
Level 2: Each individual product page on your website links directly to retailer or marketplace product pages.
Level 3: Every product page on your website links to pages that have confirmed availability, and to brick-and-mortar locations near the shopper, with confirmed in-stock product.
Multichannel E-Commerce Fulfillment
In a survey by AlixPartners, 60% of respondents said they browse for products based on their preferred shipping options. Consumer expectations around shipping change over time and differ from region to region. But the trend is definitely moving toward faster, cheaper shipping, more flexibility and easier returns.
In many mature e-commerce markets, Amazon has contributed to heightening expectations. They introduced Prime in 2005 with free two-day shipping for members. More recently, they have moved to free one-day shipping for eligible purchases, and even same-day Prime delivery in some geographies.
You’ll likely never invest as much as Amazon has in logistics, but with the right tools and right partners, you can still match evolving customer expectations and sales channel SLAs.
Understanding Channel SLAs
When working with a variety of channels, it is important to understand and meet Service Level Agreements (SLAs). Marketplaces and drop-ship networks typically measure seller track records (e.g., percentage of orders fulfilled on time, percentage of orders canceled). Those who frequently fail to meet the agreement could face penalties or even suspension. For instance, Amazon Sellers can obtain the Prime badge if they commit to maintaining one- and two-day delivery speeds.
Conversely, it might be unnecessarily expensive to use high-end, fast shipping solutions that perform beyond the SLA baseline. As your multichannel distribution grows, the most optimal fulfillment stack may consist of a variety of logistic partners. But what you get in saved costs, you may lose in added strain on your resources, unless you can automate how your orders get routed between fulfillment methods.
Implementing Standardization and Scalability
Fulfilling orders through multiple channels requires balancing customer satisfaction, SLAs, shipping costs and inventory levels. It also means your brand will have to deal with more shipping scenarios, varied SLAs, packing requirements, returns, tracking — and that’s on top of the increased volume of orders.
Whatever your fulfillment strategy, its success depends on how standardized and scalable your operations are.
Standardization comes from automation. You want to get your distribution to a place where no one has to think through every order. You can leverage business rules to determine the best shipment method for each order depending on factors such as SLAs, the weight and the size of the package and the respective cost of each method.
Scalability means your capabilities can handle more volume or steep variations in volume (during holiday shopping season, for instance). If your brand experiences large variations in order volumes, whether it is due to growth or seasonality, relying on your own fulfillment capabilities can quickly become either inadequate or inefficient.
Working Out of Your Own Warehouse
Smaller brands typically have their own warehouses and ship their own orders.
As they connect with more and more channels, they find themselves logging through different seller portals to download packing slips. Shipping label printing can also become an issue when you are handling hundreds or thousands of orders every day.
Ideally, your warehouse employees should only have to pick, pack and ship.
That’s where being equipped with the right warehouse management software (WMS) comes into play. Ideally, this middleware is connected to all your selling channels, merges different workflows into just one and makes some decisions for you based on automation rules.
As brands grow, they usually move away from shipping orders themselves and turn to a network of third-party logistics partners (3PLs).
3PLs come in all shapes and sizes and picking the right one(s) is among the most crucial strategic decisions.
Consider these data points when evaluating different 3PL opportunities:
- Current and future volume of daily orders
- Current and future number of SKUs
- Size and weight of your items
- Storage requirements (e.g., temperature control, flammable, food-grade certified, dry storage)
- Location of your shoppers/geographies you want to cover
- Shipping speed requirements from your channels
- Special requirements of your channels, like Seller Fulfilled Prime for Amazon
- Your current software systems
- Need for customer service, tracking, returns
- Special considerations (e.g., tracking serial numbers for electronics)
Regardless of your choice in partners, the next big priority is to get everything to work in sync: your factory/warehouse, your orders and your partners.
Leveraging Marketplace Fulfillment Capabilities
When marketplaces such as Amazon, Walmart or Zalando have their own fulfillment capabilities, it’s definitely worth considering.
Advantages of marketplace fulfillment options include:
- Compliance: Easily meet the fulfillment requirements of the marketplace — it’s easier than getting the Merchant Fulfilled Prime validation. Plus the marketplace handles all the complexity attached to fulfillment, such as customer service and returns.
- Conversion: Your products show as fulfilled by the marketplace, which is a plus for some shoppers.
- Expansion: It allows you to open new markets without developing any other foothold in the region.
Disadvantages of marketplace fulfillment options include:
- Complexity: Because you’ll probably still need to use 3PLs for other channels, marketplace fulfillment could become one more partner to handle.
- Dependence: As you integrate further with one marketplace, you could become over-reliant on a single channel. During the first weeks of the pandemic, Amazon halted the shipment of nonessential items. Sellers with their own fulfillment capabilities were the only ones who could still sell.
- Cost: The gains in compliance and conversion come at a cost. Marketplace fulfillment can sometimes be pricier than other options.
There are, however, ways to mitigate the complexity. For example, it may be possible to use marketplace fulfillment to ship orders from other channels, such as through Amazon Multi-Channel Fulfillment. Additionally, proper software automation could help automate business decisions and save time and work on every order.
Optimizing Multichannel E-Commerce Operations
As a growing brand selling through multiple sales channels, properly implementing new channels is key to achieving successful results. Adding more channels to your network only works if each new addition positively contributes to business goals and any resulting pressures on your resources remain manageable.
First of all, it is important to realize that an individual channel could harm your business. The most common case is a channel that does not generate enough revenue to justify its strain on your resources. But that is not the only risk. Here are some examples of how poorly performing or underoptimized channels could negatively affect your business:
- Your D2C website costs a lot to operate and maintain but fails to generate enough traffic and sales
- A marketplace channel has very detailed requirements, generates mistakes and requires too much attention
- A retailer repeatedly misrepresents your products and hurts your brand image
A multichannel e-commerce strategy focuses on generating business growth by implementing and operating multiple channels. With the right tools and organization, each new individual channel can generate positive outcomes without putting too much extra strain on your business.
As you add new channels to your distribution, your top goal is to get that channel to start contributing to revenue. Next, you will want that revenue to grow steadily as you assert your foothold on the channel.
A few things can help you maximize your revenue, especially when planning for long-term success:
- Channel mix: Build a strong multichannel strategy that includes different types of channels. A diverse channel mix can allow you to broaden your customer base while minimizing revenue cannibalization between channels. Channels should be chosen based on relevance to your brand, but in general, the more variety in your selection, the higher your revenue opportunities.
- Best sellers: For many brands, a handful of products drives the majority of revenue. Expand top-performing products to avoid relying on limited lines to drive your sales. Test your product portfolio by channel and support winning products with advertising.
- Availability: Out-of-stock products directly hurt your revenue and funnel sales toward your competitors. It is possible to optimize in-stock rates by properly allocating inventory between channels and anticipating demand.
Protecting Profit Margin
Profit margin is a great indicator of channel health. Together with revenue, it paints a great picture of how each channel contributes to your bottom line. Depending on channels, different costs in the following areas could trim your margins:
- Discounts and promotions
- Platform commissions/retailer margin
We often hear about the importance of revenue. However, relying heavily on sales targets can be misleading. Ensure you are not only driving sales but that you meet your profitability targets.
To maximize your profits, it’s crucial to be strategic with your product mix and apply a layered approach:
- Identify and group products by margin level and pricing
- Build your portfolio strategy by channels utilizing product groups
- Consider fees and costs associated with each selling destination
Returns can also affect your margin levels across all verticals, especially in the fashion category. The following steps can reduce the impact of returns:
- Consider requirements related to returns when selecting new sales channels
- Analyze the correlation between product line and return level
- Reassign products with a high return rate to a different channel
- Reallocate advertising budget to boost visibility on low-return products
Promoting a Strong Brand Image
As a brand selling on a variety of channels, brand image should absolutely be a key consideration. Ideally, you want to stay away from channels that negatively impact consumer perception — especially since the damage may not be contained to that channel. But measuring brand image and customer perception is tricky and costly. Even more so if you’re trying to determine which channels are driving it up or down.
When we think of brand image, we tend to focus on product content. But it is far from the only parameter that affects how consumers perceive your brand. Here are examples of how underoptimized channels could affect your brand image:
- Poor imagery: Content is missing or includes low-quality images
- Vague or misleading descriptions: Product-related texts (titles, descriptions, specifications) are incomplete or inaccurate
- No digital shelf presence: Your brand rarely shows up in product searches
- Heavily discounted prices: The pricing for a particular channel is far from your recommended price
- Out-of-stock products: Consumers have to find another option
- Negative reviews: Shoppers complain about your products
Trying to optimize all these parameters on a wide selection of channels can be daunting. It helps if the content and data you are sending is clean and matches the channel requirements. Then it’s a question of regularly auditing your brand presence, including on retail channels.
Managing Strains on Internal Resources
No matter how integrated, automated and optimized a channel is, it is likely to still require some work from your team.
For instance, listing your products on marketplaces could mean spending a sizeable amount of time fixing marketplace errors. Busy retail buyers may lead you to spend time monitoring out-of-stock products and trying to trigger new orders. And D2C websites require regular maintenance and oversight.
Strengthening Retail Channel Performance
Even if they are indirect channels, online retail channels still have a major impact on a brand’s success. Whether retail represents a fraction or the majority of your online sales, your retailers’ performance is your performance.
But retail channels are notoriously hard to optimize. As a brand, you do not directly build product listings and you do not control prices. There is, however, a lot you can do to optimize online retail channels. These four pillars include key areas brands can focus on to help improve retailer performance:
- Optimize assortment and availability: Getting the right products listed and keeping them in stock consistently should be a top priority. As a brand, you can monitor and remedy critical out-of-stocks, increase the number of listed SKUs and monitor third-party sellers.
- Improve pricing and promotions: In most geographies, brands can’t legally dictate retailer prices. However, it is possible to watch out for pricing mistakes, try to understand price-matching dynamics in the markets and execute synchronized promotions across your channels.
- Enhance your position on the digital shelf: The products that show up more often in front of consumers gain an edge. And brands can work to increase their position. Test how different keywords in titles and descriptions affect search position, use promotions and advertising strategically — and keep an eye on your competitors!
- Maximize content and reviews: Representing your products in the best light possible is every brand’s ideal goal. Ensure your product pages have approved and up-to-date assets, make the most of content and rich content opportunities and plan corrective action for pages with bad reviews or low averages.