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A guide to sales channel strategy.

Written by:

Megan Wenzl

Related topics:

Total Commerce

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The days of “set it and forget it” approach won’t cut it in today’s ecommerce environment.

You need to embrace Total Commerce to grow your business. Your products need to be available when and where customers want to buy. The entire sales process must be effortless.

In this guide, we’ll discuss four of the main selling channels, what they are, and the benefits and challenges of each:

  • Selling in marketplaces
  • Direct to consumer (DTC)
  • Social commerce and social interactions
  • Business to business (B2B)

Selling in marketplaces as a sales channel.

It’s no secret that customers like to start their product searches on popular marketplaces like Amazon, Etsy, and eBay to name a few. For instance, 90% of customers start their search for a product on marketplaces, according to research from Linnworks

Retailers without a marketplace presence are missing out on an opportunity to be discovered by potential customers where they are searching for products. Marketplace platforms allow customers to view a comprehensive list of products from a wide selection of retailers and categories in one place. This is a major convenience for customers. 

But visibility isn’t the only advantage to selling products on a marketplace. Here are some of the benefits of adding a marketplace to your sales channel strategy.

Benefits of selling on a marketplace

Marketplaces offer several distinct advantages to retailers. Choice is a top priority for consumers, and listing your product on a marketplace puts your offering right where customers are browsing for options.

Marketplaces also allow retailers to reach a much wider domestic and international audience that may not be possible through a company website alone. Individual brands may not be able to afford the marketing budget necessary to drive high volumes of traffic from new audiences, but a marketplace platform can.

Ready-made international audiences mean brands can test the waters in different countries with little risk. Depending on shipping and warehousing, this could be as simple as listing the product to include international shipping and payment options.

Challenges of selling on a marketplace

Keep in mind that large sales volumes can be achieved on marketplaces, but it could take months to see a positive impact on product rankings. 

Just because you have the cheapest product doesn’t mean you’ll get a top listing as a new seller. Product rankings are influenced by multiple factors so take your time to optimize your listing and focus on order fulfillment and the customer service process. Growing your presence in a marketplace requires patience and persistence for this reason.

Another factor to keep in mind with marketplace platforms is the cost structure. Marketplaces charge a variety of fees. You may have to pay for account or listing fees, warehousing costs, return fees, shipping costs, and promotions. You’ll need to be diligent about how changing marketplace costs affect your profit margins.

The biggest challenge with marketplaces is the limited customer relationship. Customer data will likely be restricted to transactional details only. You may have access to a larger pool of customers, but at the end of the day, the customer’s relationship is with the marketplace, not your brand.

Direct to Consumer.

Direct-to-consumer retailing, or DTC, offers a retailer more control over the sales process than a marketplace. For this reason, it should be at the core of any good sales channel strategy.

DTC involves selling on the retailer’s own sites or apps. The retailer deals directly with the consumer and own the customer data. There are many advantages to this type of selling. Here are some of the top benefits of selling directly to customers.

Benefits of selling direct to consumer

As mentioned above, when you sell your product on your own website or app, you have control of the customer relationship. A branded website gives legitimacy to the seller and provides a reference point for customers. Branded sites can reap the advantages of SEO efforts and brand visibility across search engines.

Direct-to-consumer retailing doesn’t have to cannibalize sales from other platforms. DTC can be used to complement marketplace sales. Consumers often discover a brand on a marketplace platform and then visit the retailer’s site directly to make a purchase. Give them a reason to stay and check out your full collection with a positive brand experience.

Challenges of selling direct to consumer

DTC offers the benefit of reduced fees in comparison to selling on a marketplace. DTC can be particularly challenging when branching into new markets or countries.

Social commerce & social interactions.

Being where your customers extend beyond marketplaces, retailer apps, and branded websites. You can also reach your customers through social media. Social media isn’t an emerging trend. It’s been around, and it’s already a part of consumer’s purchasing habits.

Benefits of selling through social commerce

Selling on social media allows you to effectively target a niche audience. Each platform comes with a wealth of data for marketers to utilize. Some platforms like Pinterest and Instagram have ready-made audiences for different verticals like beauty and fashion.

Another benefit of selling through social commerce is the ability to leverage influencers. Brands can use influencer authenticity and reputation as a powerful marketing tool. Influencer marketing has a big impact on social sales and is predicted to grow a $13.8 billion market size in 2021, according to Influencer Marketing Hub. Influencers and user-generated content (UGC) essentially introduce your product to their audience through editorial shoots and product demonstrations. 

Challenges of selling through social commerce

Like marketplaces, customers on social media prefer to stay on the social platform to make a purchase instead of going to a brand’s website. Trust plays a role in this, but most consumers are just looking for greater convenience. A seamless sales process is important but can come at the cost of not getting the customer to your branded website.

The biggest challenge of using social media for sales is the ever-evolving nature of social media. New platforms and trends like livestream shopping emerge almost daily, and it can be difficult to keep up.

Learn about the opportunity on social for fashion brands: Download the Fashion Retailer's Guide to Ecommerce.

B2B

Business to business selling, or B2B, offers retailers an additional growth opportunity. The US B2B ecommerce market is predicted to account for 17% of all B2B sales by 2023, according to Forrester. Sourcing buyers on a global scale has become easier with the rise of B2B marketplaces like Amazon Business and Alibaba. But that’s not the only advantage to selling B2B.

Benefits of selling business to business

One of the main advantages of selling wholesale is that brands can readily move large volumes of stock to business customers. Marketing costs can be lowered in these instances by focusing on specific business buyers and industries.

B2B ecommerce gives customers the flexibility to self-serve via retailer website or marketplace store. This means you can serve large and small customers at different price points.

Challenges of selling business to business

The pandemic accelerated B2B and B2C sales alike. This meant that B2B retailers had to look for new suppliers due to shipping and manufacturing issues. Unexpected demand and supply chain issues can put a strain on B2B ecommerce. Vendors must be ready to meet these challenges as they arise.

Another disadvantage to B2B selling is using marketplaces. The same challenges that come with consumer marketplaces, like high fees and lack of customer data, apply to B2B marketplaces. 

Retailers have a wide choice of channels to grow through and find new customers. The key is to accept the advantages and disadvantages of each channel and embrace an omnichannel approach that puts the customers’ needs first. This means creating a seamless shopping experience across devices and appearing in the channels that your customers want to buy from.

This requires a commitment to Total Commerce - a prerequisite for success in a competitive ecommerce landscape.

Discover how to implement total commerce in 30 minutes. Book a demo.

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