How to Choose the Right Sales Channels for Your Ecommerce Business

by Rakuten Super Logistics | eCommerce Strategy

This is a guest article from Ecomdash, an inventory and order management software for online retailers. Ecomdash focuses on providing small to medium-sized businesses with actionable tips and strategies for building a lucrative ecommerce business.

The ecommerce industry continues to grow in size and evolve along with changes in technology and consumer preferences. Customers are flocking to new purchase options including: marketplaces, mobile apps, store websites, and social media channels.

Multichannel selling allows businesses to reach customers on multiple platforms–to be wherever their customers are, and keep up with the evolving ecommerce landscape. To remain competitive and increase sales, ecommerce retailers need to expand into additional channels based on their specific business and long-term strategy.

Advantages of Multichannel Selling

In addition to staying competitive in today’s eCommerce market, retailers find that implementing a multichannel selling strategy allows for the following additional benefits:

  1. New Customers – The more places your products are in, the more chances new customers have to find them. Some online shoppers prefer to buy from a specific marketplace and make purchasing decisions based on availability on that marketplace. Expanding your business onto growing marketplaces increases your opportunity to gain new business.
  2. New Options for Current Customers – Not only will you gain new customers, but you’ll provide your existing customers with new ways to buy your products, thereby improving the customer experience. Customers like to have choices and flexibility in purchasing options– multichannel selling allows you to provide that to them.
  3. New Revenue Streams – With better visibility across different channels, you have more potential for revenue growth. Multichannel selling allows you to implement a custom marketing strategy to an individual channel, where consumer preferences may be different.
  4. Easier than Brick and Mortar – In the past, expanding a retail business meant going through the process of opening a new brick and mortar store. The Internet makes it much simpler and cost-effective for businesses to grow.
Deciding Which Sales Channels are Right for Your Online Business

Realizing the need to expand into multiple sales channels is the first step; the next one is deciding exactly which are the best sales channels for your business. There are dozens of platforms out there, so deciding on which one to focus upon can seem overwhelming. Here are the key factors and some questions to consider when choosing the best sales channels for your business:

Your Business Model

  • Do you dropship?
  • Do you manufacture your own products?
  • Do you wholesale or sell strictly direct-to-consumer?

Your Brand

  • Is your brand categorized as upscale or luxury?
  • Does your brand compete on price?
  • Are your products considered a commodity?
  • Is customer experience a key differentiator?

Your Payment Processing and Cashflow Cycle

  • Which payment types are you able to accept?
  • How will these payment options work with different sales channels?
  • What are your cashflow requirements?
  • Does your profit margin allow for the additional fees or commissions required by the sales channel?

Your Business Goals

  • How do you plan to scale your business?
  • What are your long-term business plans?

Your Products

  • Do your products appeal to a large market or a niche?
  • Do your products require special handling or restrictions?
  • Do you sell personalized or handmade products?

Answering the above questions should help you in selecting the best sales channels for your business. Keep these in mind as you read about the following types of ecommerce sales channels.

Top Five Types of Ecommerce Sales Channels

There are many sales channels to consider. The following are five of the most popular sales channels available to sellers:

1. General Marketplaces

A general marketplace is a good place to sell items with mass appeal. They offer a wide-range of products, and appeal to many different types of customers. There are many benefits to selling on a general marketplace, with the top two benefits being marketplace credibility and large audiences.

However, the biggest drawback of a general marketplace is the inability to build a brand. Customers who buy products on Amazon typically do not associate the purchase with the third-party seller (you). This type of selling channel makes it difficult to create a memorable brand and build a long-term relationship with customers.

Another drawback is the number of requirements, rules, and fees set by the marketplace. Many of these marketplaces have restrictions on types of products sold. Additionally, If you sell unique or niche products, a general marketplace may not be a good fit.

Here is a list of a few general marketplaces:

  • Amazon
  • Jet
  • Rakuten
  • Sears.com
  • Walmart.com

2. Auction Marketplaces

The most popular auction marketplace is eBay. Auctions are perfect for collectibles, rare items, or when selling products in single quantities. Most auction marketplaces do not charge listing fees and seller cost is in the form of a commission– or a percentage of the sale price.

Keep in mind that sales on an auction marketplace can be slower than on a general marketplace. You also can lose money on the product if it doesn’t garner enough attention.

Examples of auction marketplaces:

  • AuctionZip
  • eBay
  • eBid
  • uBid

3. Social Media

There are a number of different ways to sell products on social media. From a Facebook Store to buyable pins on Pinterest, selling on social can be advantageous since it doesn’t require as much effort as a new website or marketplace. If you have a lot of social media followers, this type of sales channel can be a great choice to fast revenue.

Examples of social media selling sites:

  • Facebook Store
  • Facebook Marketplace
  • Pinterest Buy Pins
  • Instagram Buy Buttons

4. Handmade and Crafts Marketplace

If you sell handmade items, a marketplace such as Etsy is a great option. Etsy is the best-known crafts and handmade marketplace, and it has earned a favorable reputation amongst their customers. This marketplace also offers a wholesale option to sellers who want to sell in bulk.

The cost to sell on Etsy includes a listing fee and a percentage of the sale price of each item.

Other craft marketplaces:

  • ArtYah
  • Craftsy
  • Zibbet

5. Own Shopping Site

If you are ready to build your brand, it may be time to invest in your own webstore. Having your own shopping site means you don’t have to deal with marketplace restrictions, fees, and regulations.
Of course, building and maintaining your own site can be very time-consuming. Dealing with the design, functionality, and security is often a full-time job! While you don’t have to deal with fees, attracting the right traffic to a new site can be more costly than leveraging existing traffic to a marketplace.

While investing in your own online store may require increased resources, the long-term benefits are far greater than relying on a marketplace, which makes your own web store one of the best sales channels available.

Shopping cart platforms include:

  • 3dCart
  • BigCommerce
  • Magento
  • Shopify
  • WooCommerce
Moving Toward Multichannel Selling

No matter the sales channel, the determining factors that are key to making a solid choice remain the same: your business model, brand, payment providers, future goals, and products. When you take those points into consideration, finding the best sales channels can be easy, and has the potential to take your business to the next level.