Fueling Growth Through
Multichannel Selling

To grow your business, you must also expand and improve your operations. As we covered in the previous chapters of this Ultimate Guide To Scaling Your Retail Business, your growth plans will likely require the identification and adoption of new technologies, as well as an effective, centralized inventory management solution to support and enable your operations to scale. With the right tools and processes in place, you need to focus on tactical ways to consistently boost your revenue.

Why You Should Expand Into New ECommerce Sales Channels

Multichannel selling (also known as omnichannel or cross-channel selling) is a business strategy of utilizing more than one sales channel or method to offer your goods or services to customers. But more sales channels means more work and added operational complexity. So why is multichannel selling the growth strategy of choice for most modern retailers?

Lower Barrier To Entry Than Physical Expansion

Before the Internet, the only way for traditional retail companies to grow was by developing additional brick-and-mortar stores or by establishing new physical distribution channels (e.g. negotiating contracts to sell their products in Macy’s as well as Nordstrom stores). Both of these traditional growth options require significant initial financial investments and typically take multiple months or even years to become fully functional.

Today’s eCommerce sales channels leverage the speed and convenience of the Internet to allow retailers a faster, lower risk investment path into new markets. Retailers who are looking to expand their operations and penetrate new markets now have access to numerous sales channels from which they can more quickly and easily enter, test, and optimize.

Acquire New Customers

Although sustainable growth requires operational efficiencies, new customer acquisition is the key to fueling revenue growth. Because today’s digital-savvy consumers are always online, your current and potential customers expect the brands they buy from to not only offer a seamless shopping experience, but also provide multiple channels for them to purchase through. Not to mention, these constantly connected customers typically have favorite marketplaces or channels they regularly go to for their online shopping purposes. Leveraging customers’ built-in brand loyalty to marketplaces, like Amazon, can be particularly beneficial. What better way to grow your business than to actively reach these potential new customers where they’re already shopping?

Establish New Permanent Revenue Streams

The proof is in the numbers. Stitch’s data shows that small to medium-sized retailers who sell through a branded eCommerce site (like Shopify, Magento, WooCommerce, or Bigcommerce) made 38% more revenue by having a presence on a single marketplace (like Amazon, eBay, or Etsy). And by simply adding a second marketplace, online retailers can grow their revenue by an estimated 120%.

Even without utilizing branded eCommerce sites, retailers who sell on two marketplaces see 190% more in revenue than those who only sell on just one marketplace. Not to mention that on average, retailers who sell on two channels have double the revenue of retailers that sell on only a single channel.

While it’s clear from these numbers that multichannel selling is a revenue-driver for retailers, adding multiple sales channels also means adding complexity and new tasks to manage.

The Different Types of Retail Sales Channels

As we touched on briefly above, there are various types of retail channels available for businesses to sell through. Here’s a breakdown of some of the top online and offline commerce channels.

1. MARKETPLACES

Marketplaces are eCommerce sites where third-parties post information about their products and services, and allow the marketplace operator to process their sales and online transactions. Since the marketplace operator hosts, aggregates, and organizes the product information from a wide-range of sellers, they attract large numbers of online shoppers to their sites. The top online marketplaces are:

Amazon

Amazon is the largest online marketplace in the world, averaging over 188 million user visitors per month and $88.99 billion in 2014 net sales. Amazon also offers warehousing and fulfillment services through their popular FBA (Fulfillment By Amazon) program, delivering over 1 billion items worldwide in 2015.

eBay

eBay is an auction-based marketplace for C2C and B2C sellers. With an estimated 159 million active users and 25 million sellers, eBay is a top eCommerce marketplace.

Etsy

Etsy is a marketplace for unique, hand-crafted products with 22.6 active shoppers, 1.5 million active sellers, and $1.93 billion in 2014 annual gross sales. Makers, craftsmen, and antique sellers (and their buyers!) tend to gravitate towards this marketplace

Alibaba

Alibaba is the dominant online marketplace in China, offering C2C, B2C, and B2B eCommerce services. With 8.5 million annual active sellers, an estimated 279 million active buyers, and 12.7 billion annual orders they’re the leading global trade platform.

Sears Marketplace

Sears Marketplace allows merchants to advertise and/or sell their products on the Sears Holdings Corporation family of websites. They also offer warehousing and fulfillment services that are similar to Amazon FBA.

Rakuten.com

Buy.com became Rakuten.com in 2010, and now offers over 90 million products from 38,500 merchants around the world. Rakuten Ichiba’s site, following a B2B2C (business-to-business-to-consumer) business model, is the largest eCommerce site in Japan.

Jet.com

The newest online marketplace is Jet.com. Jet’s business model relies on membership fees from customers, as opposed to the seller fee model that most marketplaces operate under. Jet’s currently partnered with 700 brands and growing.

Branded ECommerce Platforms

Branded eCommerce platforms, often also referred to as shopping carts, are online platforms that enable retailers to create their own online stores. These eCommerce platforms are favored by businesses since they allow stores to have their own branding, design, and customer lists. There are generally two types of eCommerce shopping cart platforms: hosted and non-hosted.

Hosted eCommerce platforms are solutions that host and support web servers for other companies’ sites. Meaning, your company can use their platform to build your branded website, but you need to sign into your account on their site in order to make changes to your website. And you’d be paying them hosting fees to keep your website up and running. The good thing about hosted platforms is that they provide technical web support in case you run into difficulties with your site. The downside is that you typically won’t have full-access to your site’s source code and might be slightly limited in the customizations you can implement on your site. The following are top hosted eCommerce platforms:

  • Shopify - As the fastest growing eCommerce platform, Shopify hosts 200,000 active stores, earning about $12 billion in sales. There are a number of free and paid site templates available to help you quickly get your store up and running. They also offer about 900 apps to provide additional features, services, and plugins for your Shopify store.

  • Bigcommerce - Similar to Shopify, Bigcommerce has helped about 500,000 business process $8 billion in sales. They also offer a mix of free and paid web themes for businesses to choose from and app store integrations.

Self-hosted eCommerce platforms provide software solutions for businesses to run on their own hosted systems. Meaning, your business would have to procure and manage your own web server (or pay another company to host a server for you), but you would be able to use the self-hosted platform’s software to develop your website. The upside is that you have more control over your website’s code, allowing for further customization. The downside is that you’ll likely have to rely on your own technical resources in the event of any technical issues. The following are the top self-hosted eCommerce platforms:

  • Magento - Magento is the leading open source eCommerce platform, helping about 26% of eCommerce businesses manage over $50 billion in gross annual transactions. Because it’s open source, businesses have full control over their site’s codebase for ultimate back-end and front-end customization.

  • WooCommerce - As their site states, with 11.9 million downloads WooCommerce powers over 30% of all online stores. WooCommerce is part of the Automattic family and an extension of the most popular online publishing platform, Wordpress. Again, the open and self-hosted nature of this platform allows for increased development control and customization.

3. Brick-and-Mortar Stores

While many brick-and-mortar businesses have begun taking advantage of the economies of scale offered by online sales channels, today numerous eCommerce businesses are expanding into physical locations. ECommerce business growth continues to outpace the sales growth of physical stores, but about 90% of total retail sales are still generated in brick & mortar. Since traditional offline stores are still driving retail success, many online brands now attend physical shopping fairs, experiment with pop-up shops, and establish flagship retail locations in their local areas.

How To Choose The Best Sales Channels For Your Business

When looking for new, sustainable channels for growth, today’s eCommerce retailers have plenty of options to choose from - everything from well-known marketplaces and branded eCommerce sites to emerging social sales channels. It’s exciting to have all these choices for new customer acquisition and revenue growth, but it can also be overwhelming to decide which channels will be the best fit for your business. Rather than trying to be everywhere at once, you need to give some method to the multichannel madness. The following steps will help you effectively assess which channels you should begin expanding into:

1. Define Your Business Growth Needs

You can begin targeting your list of channels and marketplaces to research by identifying specific business requirements you have for any new channels your company invests in. To effectively establish your needs, you’ll need to possess a strong understanding of your products, target customers, and business operations. How much time and resources are you willing to invest in properly building out a new sales channel? What percentage increase in order volume can your current operations support? How much brand control do you require from new channels? Answering these types of questions upfront will help expedite your research process.

2. Evaluate What Each Channel Has To Offer Your Business

To find the right fit between channel, product, and business goals, you need to properly evaluate the various channels and which types of users are active on each. This is where it becomes important to know who your target customers are, what they value, and how they prefer to shop.

For example, if your customers seek out hand-crafted, unique items, a marketplace like Etsy might be the best first channel to explore. Or, if you have very aggressive revenue growth goals and a mass-appeal product line, you might be better served to invest in a vast user marketplace like Amazon.

Make sure you’re referencing your business requirements list in your assessment process, while also taking into account your target audience’s shopping habits and the amount of fees, branding freedom, and time investment each channel demands. Stitch has developed the two tables below to help you evaluate the top eCommerce sales channels:

Table 1 - Marketplaces

Active Users Fees Branding freedom Commitment
Amazon 285M active global users $39.99/month + additional selling fees (dependent on product type). If selling <40 items per month, $0.99 per item No storefront customization Month-to-month
Etsy 25M active buyers $0.20 USD listing fee for each item listed and a 3.5% fee for sales completed on Etsy Ability to connect shop to social media and upload a banner to your shop. None
eBay 65M unique visitors $19.95-$195.95/month (or discounted fees for annual subscription) Customization features None
Alibaba 350M active users Commission charged on items fulfilled Can include company profile, photos, and video
Jet.com 4.8M Commission charged on items fulfilled No storefront customization None
Storenvy 1.6M 10% commission when someone finds store through Storenvy’s Marketplace Can use custom domain for additional $5/month; customization with Design Bar feature None

Table 2 - Shopping Carts

Active Users Fees Branding freedom Commitment
Shopify 200K $9-$179/monthly Freedom to customize; Storefront Editor can help (but not mandatory). 23 free templates, 125 paid. Month-to-month with 10% discount on annual plan
Bigcommerce 85K+ $29.95-$195.95/month 100+ design themes; 16 free templates, 42 paid templates Month-to-month
Woocommerce 380K+ Free, with option to pay for more advanced capabilities Wordpress themes None
Magento 240K $15,500 annually for Magento Enterprise Edition; Community Edition is free Completely customizable, open-source software. Ability to tailor all aspects of your website. Annual for Enterprise Edition

3. Prioritize and Plan

Once you have a solid understanding of the channels available and effectively assess which options would fit best with your products and business goals, it’s time to start officially prioritizing these channels and developing strategic plans to implement them. While your prioritization should be based on potential revenue impact and implementation time and resources, diversification is also important to take into account.

Just as financial advisors would counsel you to diversify your stock portfolios in order to minimize risk and maximize return on investment, you should build an eCommerce portfolio of differing but complementary sales channels to broaden your reach and maximize sales.

How To Implement A Multichannel Selling Strategy

You’ve committed to expanding your business into new sales channels and have identified which eCommerce marketplaces or platforms you’re planning to tackle first. Now what?

Being ready to embrace an omnichannel sales strategy doesn’t mean you’re prepared to do so. The business methods and processes that may have worked for your single (or even dual) channel operation will not be sustainably manageable as your business starts to aggressively scale. There are 3 important steps you’ll have to take to make this implementation process as easy as possible:

Organize Product Listings

Consistency is king when it comes to multichannel selling. The more clear and uniform your product information is, the easier it will be to not only publish those listings across multiple new channels but also efficiently track them throughout each individual sales process. Make sure all the product names, variants, SKUs, and/or barcode IDs are all consistently represented in your systems. And don’t forget to ensure you have accurate inventory counts for each stock item (more on that later).

Automate & Integrate Your Operations

The logistical burden of managing multiple sales channels and business processes can quickly lead to operational failures, sleepless nights, and unhappy customers. These types of headaches can be avoided by automating and integrating your operational systems and processes. Leveraging technology to sync your online stores to your inventory, payment, shipping and fulfillment, and business intelligence systems will reduce the amount of manhours your employees have to put in and eliminate the potential for human-error and miscalculation.

Adopt A Multichannel Inventory Management Software Solution

One of the most critical processes to automate and integrate across all your sales channels is inventory control. Adopting an affordable and effective inventory management solution can help multichannel sellers sync and track all of their stock quantities and sales orders in one central location. For example, Stitch helps thousands of retailers transition from manual and disparate processes to automated, real-time tracking of everything from accounting, purchase orders, and inventory counts to sales orders, fulfillment, and reporting.

Things To Do Today:

  • Organize your product listings and descriptions
  • Determine your business growth goals and understand your target customers
  • Assess the sales channel landscape to determine which compliment your existing channels and reach your target audience?
  • Choose one new channel at a time to expand into
  • Implement a centralized inventory solution to track stock quantities across channels and streamline the complexities of operating multiple channels and warehouses or third party logistics provider

How Stitch Helps Tiggly Interactive Toys Manage Its Multichannel Inventory

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