By: Alexa Collins
Online Sales
October 16, 2023
16-minute read
Introduction
Implementing a sales channel strategy has become a necessity for every business. The strongest brands utilize multiple sales channels to meet customers where they are spending their time.
By providing convenient ways for customers to shop, you can expand your online business reach and increase brand awareness. It also enhances your business distribution across different platforms, making you less dependent on a single channel or marketplace.
Here, explore the different types of sales channels used by online businesses – and how you can benefit from them.
What is a Sales Channel?
A sales channel is the path businesses use to reach customers and sell their products. Online stores, brick-and-mortar shops, and social media accounts can all be potential sales channels. Sales channels can be used to find and target different customer audiences, which is why most businesses consider multichannel selling a good idea.
Top 10 Sales Channels
1. Online Store (Direct-to-Consumer)
The online store is the first sales channel that new entrepreneurs tend to create – and for good reason.
When designing your own store, you can dictate how your products are displayed. You also get complete visibility into customer data and sell products directly to consumers, meaning you keep all the profits.
This direct relationship can be beneficial for your brand. Research indicates that direct-to-consumer eCommerce is growing across locations and industries, with most customers preferring to buy from independent stores rather than multibrand stores.
On the downside, it can be challenging to attract traffic when your store is new and your brand is still growing. Here, it’s often best to use your online store as a hub for your other sales channels. With Shopify, you can set up multiple sales channels and direct those customers to your store.
Advantages: Low startup costs, build a free store with a free trial from Shopify, use your store as a hub for sales channels, utilize customer data to improve lead generation and increase sales, no third-party branding or product rules, keep all profits from sales.
Disadvantages: It can be difficult to attract traffic without a large marketing budget, you need to manage orders (Shopify can help with this).
2. Modern Marketplaces
Modern marketplaces are content-driven platforms that facilitate commerce. This includes social media channels such as Instagram, TikTok, Facebook, and Pinterest. Increasingly, it also includes streaming sites like Spotify.
One reason modern marketplaces are successful as sales channels is that buyers are already spending time there. Customers see products immediately, in a context they know. Adding a buy button to a social media post is often the next natural step.
For example, you can make posts and stories on Instagram shoppable. If a customer sees an item they like, all they need to do is click on the shopping bag icon, and they will be directed to a page where they can see more details and visit your store to complete the purchase.
Spotify, a music streaming service, is also a modern marketplace built for sales. Listeners can scroll through the band’s profile to preorder albums or purchase vinyl records and merchandise. For example, you can check out the Jamestown Revival’s tour schedule and order their latest album from Spotify.
Data from Black Friday 2021 showed that sales generated through social media integration nearly doubled compared to the previous year. The data suggests that customers increasingly prefer to make purchases on social media platforms.
Advantages:
Applications can help you track performance and improve your posts, you can collaborate with other brands and influencers for co-selling and mutual promotion, most social media platforms have useful templates for ads and creating posts.
Disadvantages: It requires continuous content creation to remain visible, it can be difficult to create content that fits social media algorithms.
3. Traditional Marketplaces
Amazon, Etsy, eBay, and Google Shopping are examples of traditional marketplaces. These channels feature a wide range of products, and customers typically search for the product they want to buy rather than the brand they wish to purchase from.
While traditional marketplaces come with a pre-existing customer base, these platforms require you to relinquish control over customer service and order fulfillment, imposing competition on margins.
Advantages: Putting your products in front of a large existing customer base, utilizing distributors and existing marketing channels.
Disadvantages: Paying a commission on sales made in traditional marketplaces, strict terms and conditions for branding and product promotion, fierce competition, including from international sellers at lower prices.
4. Retail
The retail sales channel includes both permanent and temporary stores, such as short-term rentals in a shopping mall or a booth at a craft fair or a kiosk at a local market. Retail channels provide the opportunity to build relationships with customers in person and receive live feedback. Retailing is a strong component of modern commerce.
Advantages: Face-to-face connection with customers, direct sales to customers.
Disadvantages: Many additional costs and the potential need for staff, high costs of operating in physical stores.
5. Wholesaling
Wholesaling involves selling your products to other businesses that sell them at retail. Some businesses choose to make wholesaling their only sales channel, while others use wholesaling as part of a multi-channel sales strategy.
Advantages: Moving a lot of inventory at once, merchants market and sell your products.
Disadvantages: Requires capital funding for inventory, storing unsold inventory can be costly, no interaction with your specific customers.
6. Retailers
Retailers are anyone who adds value to a product and sells it at a higher profit. Adding value to a product can mean associating with an approved retailer or repackaging it or even improving the product itself.
Advantages: Low operating costs, advanced selling opportunities.
Disadvantages: Price volatility and availability depending on the items you sell, unstable margins, compliance required with the original manufacturer’s resale terms.
7. White Label
White label products are generic products that can be customized with a logo or brand name. An example of this is the reusable bags sold by grocery stores at checkout. Trader Joe’s does not make its own bags but buys generic bags and prints its name on them.
Advantages: Low production cost, ability to capitalize on trends like the reusable stainless steel water bottle trend, market-tested products.
Disadvantages: Significant competition, prices depend on supplier prices for pre-printed items.
8. Mobile Apps
Mobile e-commerce sales are expected to account for more than 10% of total retail sales in the U.S. by 2025.
As consumers turn to apps for shopping, brands are building more capable applications. Brands offer filterable catalogs, innovative experiences, and coupons and special offers for people who download the apps and shop through them.
Advantages:
Users spend more time on apps compared to websites, use your app to offer special deals.
Cons: Apps can be expensive to build, apps require continuous updates as technology advances.
9. B2B Sales
B2B sales occur when one company sells products or services to another company. It is expected that 17% of B2B sales in the United States will be digital by 2023.
Advantages: Businesses have greater spending power compared to consumers, once a good relationship is developed with a company or business, you will gain a repeat customer.
Disadvantages: Companies may take a long time to make purchasing decisions, there can be higher costs in creating products or services for businesses.
10. Partnerships
A sales channel partnership is when a company or individual works as an extension of your sales team. For example, when a company uses social media influencers to promote its products through influencer marketing, this is a sales channel partnership. Influencers receive a discount on those products or a commission on all sales generated by their posts, and the company benefits from the audience reach and trust of the influencer.
Advantages: Built-in consumer trust, access to new customers, and cost savings on marketing campaigns.
Disadvantages: Your partners can misrepresent you, you won’t get as much customer data as with direct sales, you might have to sacrifice some of your profits to make the relationship profitable for your partners.
Why Should You Use Multiple Sales Channels?
These sales channels provide valuable ways to reach customers. But if you only use one channel, your business is limited to the scope and growth of that channel.
By using multiple channels, you can allocate your resources to the channel that performs best. Here are some examples of how Shopify merchants benefit from multichannel selling.
The Poster List
Adam Loudik, owner and founder of The Poster List sticker store in Long Beach, uses wholesale, personal offers, and online sales as three main channels for his business.
Since starting the business in 2006, Adam has found that some channels thrive while others decline, often in response to unforeseen external factors such as rising interest rates and the COVID-19 pandemic.
“In the beginning, offers were the most lucrative, then from 2010 to 2015, that changed and wholesale became more important,” says Adam. “In 2017, the retail clothing space declined, so we started doing offers again.”
By building multiple sales channels, The Poster List was able to quickly adapt to changes occurring in the larger market. Meeting customers on relevant channels to your brand helps you build a more resilient business.
Abracadana
Mary Hilt is a co-founder and owner of Abracadana, a store selling screen-printed bandanas.
“It’s great to have multiple places to sell,” says Mary. “Sometimes I feel one of them pulls me in – like Etsy pulls me away from Shopify. Or if I’m working on updating Shopify, I won’t pay attention to Etsy. And I think that’s a good thing. You can rotate between them. But try several channels to see what works. You can’t put all your eggs in one basket, that’s for sure.”
How to Build a Multichannel Sales Strategy
Your sales channels should work together and support your core product line.
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For example, you might do most of your business on your e-commerce site, but then run quick promotions on excess inventory through Instagram Stories.
When starting your business, you likely focused on one sales channel. Expanding by exploring new sales channels can seem daunting – but it’s rarely as difficult as store owners think.
Here are five tips for managing multi-channel selling:
1. Prioritize Your Channels Based on Profitability
Effective multi-channel selling is about identifying the right channels for your business. To do this, consider:
- Where your target audience spends their time
- Which channels will have lower operating costs
- Which channels your competitors are active in
For example, selling your products on traditional marketplaces like Amazon or Etsy or eBay might be the next best step for your online business.
Once you see profitability through one sales channel, you can then prioritize other channels and move to each new channel as you find success in the previous one.
2. Create a Different Strategy for Each Sales Channel
Each sales channel you add to your business will require a different strategy to succeed. For example, you would take a different approach to attract customers to your online store compared to driving traffic to a physical retail store.
Additionally, you’ll need to adjust product descriptions and marketing messages across different sites. Your Shopify site might promote fast product shipping, but Amazon buyers are accustomed to speed, so you’ll need to find a different way to entice customers to complete their purchase.
3. Manage Inventory and Fulfill Orders
As you expand to different sales channels, you need to have proper processes in place to manage inventory and fulfill orders. Increasing the number of sales avenues increases your overall sales volume. You need to ensure you have enough stock to accommodate this increase.
Additionally, you must ensure you have the capacity to fulfill all those orders. Utilizing Shopify’s fulfillment network could be a way to lighten this burden.
Otherwise, you might consider hiring an assistant to help with order fulfillment to keep up with your business’s expansion into more sales channels.
4. Ensure Quality Customer Service Across Sales Channels
Expanding your business means you may have more customer issues to deal with, so you need to maintain your quality of customer service. You might think about hiring customer service representatives or checking out some customer service apps in the Shopify store.
Adding live chat to your Shopify site could be a manageable way to handle customer service questions and complaints as you start to expand your business. Keep the app on your smartphone or computer so you can quickly respond to anything that comes up.
5. Monitor Your Sales and Analytics
Track how many sales each channel is generating. It may take some time to build a new channel, but you should monitor your sales to ensure that the channel starts to cover its costs – and then generate additional profits.
If you discover a particular channel isn’t generating enough sales, set up a targeted marketing campaign for that channel to help boost it. Perhaps all you need is more brand awareness so that your customers can discover your additional sales channels.
Why Should Your Online Store Be the Hub of Your Sales Channels?
You can
to think of each sales channel as a key with a different head. When building your business, you might be tempted to create one type of screwdriver to open one specific sales channel. But this will take you only so far.
Do you want to build a screwdriver, or do you want to build a universal screwdriver? An e-commerce site like Shopify is the universal option, where you can remove and insert any type of bit you need to individually open each channel.
Starting with an e-commerce store allows you to establish your brand and find a solid base to develop your products and set up a control center before you accelerate your success through other sales channels.
If you’re already using another type of sales channel, like a traditional marketplace or social media, here’s why it might be beneficial for you to set up an online store too. Ease of Use
When you start, especially if you are still developing your product, it may be easier to build your business on an e-commerce site first and join different sales channels once you’re ready to scale your business.
The biggest barrier to entry in traditional marketplaces is that they require high-quality and accurate product information upfront, even if you are still developing and iterating on your product. For example, to be eligible for selling on a marketplace, you must provide detailed information about your products. This includes unique product identifiers such as SKU or ISBN numbers. Building in an isolated environment
Customers follow trends, both regarding the products they buy and the platforms they buy from. Third-party platforms are susceptible to these shifts: policies change, algorithms shift, and users move. Because you cannot control these changes, it is better not to rely heavily on one platform for making sales.
Shopify allows you to set up different entry points for your business through sales channels, but all paths lead back to your Shopify headquarters. You maintain access and ownership, meaning you can sell your products to your target customer audience on any platform or channel or marketplace they are on.
The Poster List
The Poster List records sales on its online store during and after in-person events, allowing it to increase the number of sales it can generate online as well as in-person during those holidays.
Abracadana
The founders of the Abracadana store created a separate e-commerce store from their Etsy shop as an additional sales channel. This helps them create a brand that is independent of their previous business, Maryink. “We wanted to break away from Maryink and develop a new brand that still relates to Maryink but brings the bandana image,” says Mary. “So we created a separate Shopify site, because you can do a lot more with the design, and that’s important to us.”
How to Set Up Sales Channels on Your Shopify Store
Managing sales channels through your Shopify store is a great way to keep your business simple and organized.
Shopify allows you to integrate with various sales channels. Here’s how to set up pathways for additional sales channels on Shopify.
- Go to your store’s admin dashboard. In the left navigation bar, you’ll see Sales Channels with an arrow next to it. Click on that.
- A pop-up box will appear. To search for a sales channel you’ve already added, type its name in the search bar. To add new sales channels, select a recommended app or click on “All Recommended Sales Channels.”
- If you don’t see it there, select “Shopify App Store” at the bottom of the box. Within the Shopify App Store, browse to find the sales channel you want to add. Click on it and select “Add App.”
Once
Setting up sales channels through your Shopify store puts you in a good position to achieve success in multiple ways. You will be able to develop your brand and maintain ownership of your customers and your data.
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Frequently Asked Questions about Sales Channels
What is an example of a sales channel?
Source: https://www.shopify.com/blog/sales-channel
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