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The importance of diversifying your sales channels in eCommerce

The importance of diversifying your sales channels in eCommerce

The importance of diversifying your sales channels in eCommerce

As the COVID-19 pandemic has continuously affected society throughout this year, more businesses are now transitioning into digital stores and marketplaces to capitalise on the surge in demand for online services.

 
Retailers are impacted by the shutdown of brick-and-mortar stores, as companies such as J.Crew, Warehouse and Cath Kidston have entered administration and others have endured massive sales decreases. Online sellers are also impacted, with issues attributable to decreased courier availability, Amazon FBA shutdowns and a lack of appropriate stock management processes to handle the volume of online customers.
 
Regardless of the size, many businesses are now forced to alter their sales, marketing and distribution strategies to survive and adapt. Now more than ever, it is essential to create eCommerce processes that are flexible and scalable.
 

A diversified approach

 
One of the current issues that many businesses online are facing is a rigid eCommerce structure, often reliant on a singular or few select channels to sell and distribute goods and services.
 
The case of Amazon FBA is perhaps the most prominent example of the impact of reliance on a single channel. FBA shipments for non-essential products were closed at the end of March in most territories globally, which left many sellers without an alternative solution. Warehouses stopped accepting or shipping new orders for most sellers, while vendors were also unable to access and remove any stock for independent fulfilment. For non-essential products, only sellers offering Fulfilment-By-Merchant (FBM) have been able to continue operations without being affected by closures to FBA.
 
Initially, it was stated that closure would remain until early April. This plan was altered by ongoing developments with COVID-19, and FBA has only started lifting restrictions through an invite-only process launching in the US in May.
 
Amazon has also revealed a 26% increase in sales totalling $75.5 billion for Q1, demonstrating that the company’s pivot was successful in creating an effective plan to thrive during the pandemic. However, this has stranded many sellers reliant on the platform without a viable income, as well as no method of obtaining their existing stock that was stored in Amazon warehouses.
 
The developments surrounding Amazon exemplify the necessity to create hybrid marketplace systems, such as FBA and FMB, expand sales channels and opt for using a flexible fulfilment solutions provider.
 

The benefits of expanding eCommerce channels

 
Scaling channels online requires an understanding of how target consumers shop. Online shopping pattern data reveals that cross-shop customers are worth 30% more in lifetime value. Therefore, to better understand what a customer wants, it is essential to analyse their current pain points and expectations. By gaining an in-depth understanding into the factors that contribute to achieving a conversion, sellers are able to assess which eCommerce platforms can be used to create more opportunities for boosting conversion rates, customer loyalty and increasing brand awareness.
 
In addition to tracking and optimising the best eCommerce channels, a diversified approach enables establishing independent processes that are not reliant on a marketplace or standard service providers. Controlling and automating the various supply chain processes can help lower costs, target specific channels based on profitability and provide better analytics.
 
Diversifying channels also spans into marketing practices, as controlling the output of content, promotional and marketing activities provides more options for driving additional demand through highly targeted campaigns.
 
The data reveals that retailers which implement cross-channel marketing plans have yielded customer retention increases by 91%. Targeting multiple customer subsets through customer personas associated with each channel demographic boosts conversion rates and gathers data that can provide a more in-depth understanding of customers.
 
Approximately 50% of website shoppers are more likely to enjoy the experience compared to a marketplace, while 87% of customers want a more seamless shopping and customer service experience. Research also shows that on average, customers will visit a website 9.5 times before a conversion is made. A website is highly beneficial for connecting with a customer, addressing queries ¬¬and cross-promoting other products or services.
 
Automation is also particularly important when scaling as it enables connecting systems, maintaining customer satisfaction and the ability to resolve queries or problems promptly. Orders can be processed promptly to multiple marketplaces using one platform without the necessity for human input during each stage of the order process.
 
This applies to each step in the supply chain. During our audits, we have discovered that as much as 80% of customer service queries are “where is my order?”.
 

How to diversify eCommerce channels

 
As businesses scale and grow, using automated systems to manage supply chain processes becomes increasingly important: marketplaces such as Amazon which use their own fulfilment, sales and marketing systems can be beneficial for sellers, however, expanding channel offerings can be difficult as they are often not cross-compatible with other channels.
 
Merging sales, marketing and fulfilment channels into one system using third-party providers is the best and easiest way to gain more control and automation. Software systems, such as Linnworks, connect and automate the different parts of the selling process making it the ideal solution for reducing costs, time and tracking performance.
 
Whether you want to expand existing offerings or improve the performance of existing products, don’t hesitate to get in touch with Activ8, Linnworks or Parcelhub to see what solutions are best for you.
 

To learn more about mitigating risk by diversifying eCommerce strategy, make sure to check out this free webinar from April 30, 2020.

Activ8

At Activ8, we pride ourselves in providing the specialism and resources needed to help you succeed. Our goal is to provide solutions tailored to all business needs, including strategy, operations, optimisation, analytics, accounting and fulfilment. Our target is to always provide a bespoke service, from factory floor to customer door.

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