September 14, 2021
Five Key Factors To Consider Before Going Multi-Channel
This blog post was originally published by Deliverr, which is now Flexport. The content has been adjusted to fit the Flexport brand voice and tone, but all other information remains unchanged. With the merging of Deliverr’s services (DTC fulfillment, B2B distribution, and Last Mile delivery) into Flexport’s existing international freight and technology services, we’re now able to provide merchants with true end-to-end logistics solutions spanning from the factory floor to the customer’s door.
Multi-channel and omni-channel sales, where merchants use multiple sales channels to diversify their revenue, have been a hot topic in eCommerce for some time. Most single-marketplace sellers have at least looked into “going multi-channel,” and 46% of eCommerce executives planned to invest in it in 2020.
Multi-channel sales are quickly dominating the eCommerce market – more sales channels mean more exposure, a larger customer base, and greater revenue security. Although Amazon still owns 47% of the eCommerce market share, sellers can achieve higher income and brand security by branching out.
In short, if you’re not operating on multiple channels, you’re leaving money on the table. At the same time, multi-channel selling is not as straightforward as you might think.
While multi-channel offers opportunities for diversified income, it also expands data, spreads current costs, and creates new costs. Keeping track of that is crucial to profit from multi-channel sales.
Why Is Multi-Channel Selling Important?
A large portion of eCommerce sellers start out on Amazon, and many stay there. But with multiple competitor marketplaces, ranging from Etsy to Wish, Walmart, and eBay, there’s no reason to limit sales to one platform - in fact, there are many reasons not to.
A 2019 survey conducted here at Flexport found that the primary reasons sellers diversify into more marketplaces include “increased sales opportunities,” “diversifying and spreading risk,” “improving sales,” “reducing market restrictions,” and “removal from original marketplace” (e.g., an Amazon suspension).
Diversifying Income – More marketplaces naturally mean more revenue sources. If one channel is suspended, you’ll still have a continuous revenue stream. You’ll also have more opportunities to drive revenue across peak and down seasons. For example, Amazon increases fulfillment costs during the fourth quarter, so switching marketing focus to a more affordable marketplace could drive continuous revenue without raising fulfillment costs.
Wider Customer Base – The customers shopping on Walmart.com are not the same as those shopping on Amazon or eBay. Every marketplace has its own loyal base, and they often care more about the marketplace than about the seller. A small percentage shop on multiple channels, but for the most part, when you move to a new channel, you’re introducing your brand to new customers and prospects. That means more potential sales.
Essentially, multi-channel selling is putting your eggs in multiple baskets. You’re more likely to get your product in front of someone, you’re less likely to lose everything if something unexpected happens, and you can utilize cross-marketing to drive visibility and awareness across all channels.
Considerations for Multi-Channel Selling
Multi-channel eCommerce is beneficial, but can quickly get complicated. You have to organize many moving pieces to keep inventory, data management, fulfillment, and pricing management aligned across channels.
That becomes more complex as you deal with terms of service and non-competition clauses, which could get you banned if you sell more cheaply on one channel than on another. Pay attention, as the following considerations can make or break your multi-channel eCommerce.
Synchronize Analytics and Data Management
If you sell on Amazon, you have one stock of inventory (possibly two, if you use Fulfilled by Merchant and Fulfilled by Amazon) in one place. Customer requests come into the same place, sales go out from the same place, and inventory updates in the same place.
If you diversify across three or more marketplaces, data comes in from all of those different sources, and if you don’t track that, things will go wrong.
For example, if you have 20 items of stock and sell 15 on Amazon, 3 on Walmart, and another 3 on eBay, you’ve oversold. A good problem to have, but one that will delay shipping time, reduce customer satisfaction, and likely earn you a negative review on at least one platform.
If you sell multi-channel, you need to synchronize data across channels in as close to real-time as possible. That means implementing a single platform such as an Enterprise Resource Management (ERP) platform, a Point-of-Sale system with multi-channel capacity, or a multi-channel inventory management system.
There are plenty of options available, depending on the size of your organization, potential growth, and other integrations such as third-party logistics or shipping providers.
Manage Shipping and Fulfillment
Most marketplaces are implementing stricter shipping SLAs, with platforms like eBay, Amazon, and Walmart giving priority to businesses that ship and deliver within two days.
Moving to FBA will allow you to meet that speed on Amazon. However, there are other considerations. For example, Walmart.com doesn’t allow you to send items in Amazon-branded boxes, which means if you fulfill through Amazon MCF, you could breach terms of service and potentially lose your account.
In this case, the right fulfillment solution can help. Work with a logistics partner to confirm SLAs, pick-and-pack requirements, and routing (which orders will go to them, which will go to FBA, which you’d like to fulfill in-house, and such).
Monitor Your Pricing and Repricing
Multi-channel sales require strict pricing management. Many marketplaces penalize and can even suspend accounts that offer their products at a lower price on other platforms.
For example, if you sell something on Amazon, but sell it at a cheaper price on another platform, you’ll be in breach of Amazon’s policy.
Monitoring for this and securing the right balance between being competitive, profitable, and fair to all your sales channels can get complicated.
Managing your pricing through a single platform will help circumvent this obstacle. For example, some sellers choose to manage pricing automatically using repricers. If your sales volume is low, you may be comfortable adjusting manually, but you must stay on top of it.
Maintain a Consistent Customer Experience
A negative customer experience is more than a lost repeat sale: it’s a negative review and a tick against your online reputation.
Managing the customer experience becomes considerably harder as you scale, mostly because you must continue to meet and exceed customer expectations across channels.
If you sell on one channel, you can log in and answer customer queries directly on their customer relationship manager. If you sell on three, maintain a Facebook and TikTok account, and have your own Shopify account, you’re getting customer queries from six channels. Logging in and checking all of them frequently is difficult and time-consuming.
Most merchants need a central management hub, which can import incoming questions from every channel and allow you to manage them all in one place.
Using a help desk or customer management software from the start means you won’t lose a customer because you forgot to log in. It can also save you from negative reviews, especially if a customer from Amazon or eBay contacts you on social media to resolve a problem, but you never answer. Plus, ticketing tools show the status of a customer request, which can save you considerable hassle as you scale.
Build To Scale
The primary reason for most sellers to move to multi-channel eCommerce is increasing sales. But, do you have the resources and infrastructure in place to keep up? Can you meet greater demands on customer service? Can you handle higher warehousing demand? In most cases, moving to a new channel won’t skyrocket sales so much that you can’t keep up – but it could. And you have to be prepared for growth, meeting shipping demands, and maintaining quality as you make more sales.
For most eCommerce sellers, that requires centralized management for as much data as possible, relying on fulfillment partners for pick and pack, prep, and shipping, as well as leveraging automation rather than simply hiring more people. That’s especially important as you move into peak seasons, because effective management will save you considerably on hiring, training, and additional employee costs.
Wrapping Up: Considerations Before Going Multi-Channel
Going the multi-channel route is a good choice for most sellers. If you have a healthy sales volume on one channel, there’s no reason why you can’t grow that to another – thereby increasing total revenue, diversifying your income sources, and solidifying your brand.
If you build safeguards into your infrastructure before you scale, you’ll be able to move to multi-channel sales without many of the obstacles of data management, or scrambling to keep up with multi-channel fulfillment.