Single-Channel Vs Multi-Channel: The Natural Evolution of an eCommerce Business

Single-Channel Vs Multi-Channel: The Natural Evolution of an eCommerce Business

By at - 19 Minutes

In this post, I will discuss:

  • The difference between multi-channel & single-channel.
  • Multi-Channel Retail Example: Rebecca Minkoff.
  • Single-Channel vs. multi-channel – pros & cons.
  • Multi-channel selling – advantages & disadvantages
  • Single-channel selling – advantages & disadvantages
  • The importance of CRM for multi-channel sellers.
  • Multi-channel or single-channel – how to decide?
  • Multi-channel stock synchronizing.  
  • Inventory Location.  

Photo by Caleb Jones on Unsplash

The story is told over and over, like an urban legend. He was working a 9 to 5 job he hated. He heard of a friend who started selling on eBay and started selling as a ‘hobby’ or ‘side-gig’. However, after going from making a few extra dollars a month to making a few hundred extra dollars to making twice his regular salary, he knew it was time to trade in his cubicle for his coffee table, his uncomfortable office chair for his couch. eCommerce had given him the independence he had always dreamt of.

There was only one problem: He was still single-channel, meaning he was only selling on one marketplace, eBay that is. What about:

  • Amazon?
  • Etsy?
  • Bonanza?
  • Alibaba?
  • Jet?
  • Wish?
  • FlipKart?
  • JD?

The possibilities were endless.

And then he thought of how exposed he was being single-channel:

  • What if his eBay account was suspended? Then what would he do ?
  • Or a host of other bumps in the road which single-channel sellers could encounter.
  • What if eBay changed their seller rules which defacto made his eCommerce business unprofitable?  

On the other hand, multiple channels could:

  • Help him diversify his customer base and exposure to risk.
  • Help him grow his business and brand.

And so he came to the realization that it was a mistake to put all his eggs in one basket and decided that he owed it to himself to look into multi-channel. That’show the journey began, the journey towards multi-channel.

That journey is this blog post.

Photo by Jakob Owens on Unsplash

What is the difference between multichannel and single-channel ?

I am sure that you have a general idea of the differences, but let’s put it into clear definitions anyway:

When someone refers to a single-channel seller, they mean to say, a unified eCommerce buying experience both in terms of sales and marketing. A good example of this is a seller who sells exclusively on Amazon and therefore exclusively targets buyers on Amazon.

A basic single-channel approach would be: this is one of the largest marketplaces and this is where my customer base is. It is for that reason that I should continue to focus my energy on building my business here and expanding my customer base here. Expanding beyond what is tried and true is a waste of my time and effort.

Multi-Channel sellers, on the other hand, do not have a singular focus. Instead, they encourage a presence on multiple marketplaces – the key here is selling where your customers are, not where you want them to be ! Multi-channel sellers not only have a presence on these marketplaces, but they allow for direct, on-site sales. This is an important point – you are not looking to redirect traffic back to your ‘home marketplace’ or website. ou want to treat each marketplace ‘equally’ and allow your products to sell and interact organically with ‘local’ shoppers.

A basic multi-channel approach would be to try a host of new marketplaces without having preconceptions and then, based on which marketplaces prove most lucrative, you decide where to focus your efforts. A multi-channel seller is open to new opportunities. They are like explorers or vikings who know there are gold and treasure beyond the great sea and are determined to set sail and claim it.

Photo by Jonathan Farber on Unsplash

Multi-Channel Retail Example: Rebecca Minkoff

New York-based Rebecca Minkoff, whose story originally appeared on Clickz, is a great example of a big name brand who has realized the potential of multi-channel selling. Obviously, most eCommerce sellers do not have brick and mortar locations, but this is still a great example to learn from. Minkoff decided to implement multi-channel buying for her shoppers and within 6 months saw purchases of ready-to-wear (or in French Pret-a-porter) products increase six or seven fold previous levels.

Her strategy was built for what she dubs the ‘digital native woman’ who uses her phone upwards of 150 times a day. The strategy included combining:

  • Interactive fitting rooms which saves and sends what a buyer tries on for a later purchase directly to their phone.
  • Buyers are encouraged to pull out their mobile devices and check out the app or the website, look for product reviews or even order a product independently if it is out of stock.

Connecting mobile with online retail, as well as bricks and mortar, allowed Rebecca Minkoff to create an all-encompassing shopping ecosystem which ultimately meets the shopper wherever they choose to be met and has increased conversions in the process. The same approach can be taken by eCommerce businesses, helping them achieve similar results.

Have a look at this video which further explores the brand’s multi-channel shift:

The pros and cons  – Single-channel vs. multi-channel

When trying to make such an important decision as this, it is always important to weigh up the pros and cons of each option. Here are the key things to consider when deliberating between single-channel vs multi-channel:

The advantages and disadvantages of multi-channel selling

Advantages:

  1. Being where your shoppers are – 66% of buyers who make purchases using eCommerce marketplaces shop on more than one site (source: Wharton).
    As a seller, you should be emulating shopper trends and making your products available on more than one marketplace. When a buyer sees your presence on all the sites they use, if he or she is on the fence about your product, your mere presence may very well tip the boat in favor of conversion.
    As a seller, you should be emulating shopper trends and making your products available on more than one marketplace. When a buyer sees your presence on all the sites they use, if he or she is on the fence about your product, your mere presence may very well tip the boat in favor of conversion.
  2. New customers – Just like not all people who shop at Walmart shop at Sears, many people who shop on Amazon never ‘step foot’ on eBay. By putting your products on different marketplaces, you are exposing yourself to new markets and new customers with exponential potential.
  3. Increased data Analytics – When you sell on more than one channel, you have a more varied customer base from whom to collect data and analytics. You would, of course, need to use a tool such as a CRM for example (more on this in a bit).
  4. Targeted selling Some products sell better on a targeted marketplace. Think of how a painting would sell on eBay versus how it would sell on Etsy. Etsy attracts art lovers and paintings would, therefore, be better positioned to sell there, but what if you sold shoes too? Maybe Zappos would be more appropriate. Multi-channel empowers you to target customers.
  5. Global market share – There is a lower chance that your product will be copied or that a ‘look-alike’ will be sold in ‘your’ marketplace.

Disadvantages:

  1. Spreading yourself thin – Many sellers are reluctant of trying multi-channel as they fear spreading themselves thin in terms of time and resources (this is a serious concern).
  2. Inventory level complications – Yes, having your products on multiple channels seriously complicates inventory level synchronization. No seller wants to gain tons of new clients only to find out products are out of stock.
  3. Keeping up with quantities – Yes, this is every seller’s dream. Having so many orders that demand outpaces supply, but with all these new clients, what if it really does? If you produce your own products or source them from overseas, this should be a serious consideration.
  4. Customer service – When having multiple stores on a variety of marketplaces, keeping customer service up to speed can be a huge challenge. Especially since providing good customer service is what sets very successful eCommerce businesses apart from the rest. This challenge can actually be overcome by using an eCommerce CRM (more on this in a bit).

A chimp contemplates single-channel vs multi-channel

 Photo by Andre Mouton on Unsplash

The advantages and disadvantages of Single-channel selling

Advantages:

  1. Being focused – Selling on a single channel allows you to focus on building and running your business. You are able to focus on growth and expansion within your ecosystem and discover every nook and cranny of the marketplace. You can become a superstar within your realm of choice.
  2. Building a loyal customer base – When selling on a single channel, you have already developed a loyal customer base who knows your product and brand. They always come back for more as they know who you are, what your products are worth and, of course, they know you always deliver (pun intended).  
  3. Simplicity – Selling on a single platform keeps life simple. You can easily track inventory levels, deal with shipping, credits, customer service, etc.

Disadvantages:

  1. Risky Single-channel selling is like gambling with your business. What if your marketplace decides to ban you for the smallest ‘infringement’ or if you get irreversibly undercut by a competitor or made obsolete by some stupid new policy. That is it – game over for you!

Photo by Michał Parzuchowski on Unsplash

  1. Reduced expansion – All marketplaces have their ‘glass ceiling’ so to speak. More often than not, you have been involved in your marketplace for months or even years and have basically exhausted all your options. There is a good chance that you have already ‘peaked’ in this market or missed your chance of a major growth spurt.
  2. Reduced brand exposure – Going hand in hand with reduced sales is naturally reduced brand exposure. As I mentioned above, most buyers shop around on multiple sites, so when they are only exposed to your brand and products on one marketplace, this seriously reduces brand awareness, which ultimately harms conversions and your bottomline.

The importance of CRM for multichannel sellers

As promised, I will now delve into the value a CRM or a Customer Relationship Management tool can provide for multi-channel sellers. One CRM which is suitable for multi-channel eCommerce sellers is Subivi.

Here are some of the key advantages of using a CRM like Subivi:

  1. Increase sales – Using automated marketing tools which recommend compatible items to buyers (otherwise known as cross-selling, for example, marketing a phone protector to someone who just bought a phone case).
  2. Automated feedback requests – Which allow you to prompt buyers for post-purchase feedback.
  3. Collect and analyze consumer data and analytics across all platforms – When you are selling on multiple platforms, collecting and analyzing data can be tough, but when you have a CRM in the picture, it will aggregate all the info for you so that you can gain actionable insights which will influence your bottom line. This may include data based on:
    • Gender
    • Geographical region
    • Purchase type and cross-selling opportunities
    • Seasonal buying trends.
    • Improved customer service – CRMs are designed to enhance customer service and customer experience. They help make sure that every customer concern is addressed and all customers are well informed about their products.
  4. Keeping it simple – A good CRM can make selling multi-channel as simple, if not simpler, as selling on a single-channel. You don’t even need to log on to your seller’s account to handle customer support issues and resolve tickets.
  5. Expansion – A CRM can help you understand your target audience in new marketplaces and help set you up to succeed when navigating uncharted territories.
  6. Building a loyal customer base – Providing killer customer service is key to building a loyal customer base and following. Using a CRM will make it easier and more convenient to solve consumer concerns, answer queries, say thank you and keep customers in the know about shipping and arrival times.
  7. Save time – As a multi-channel seller, you will have even less time than you do now, so a CRM will help make you be more efficient by carrying some of the burden.

How to decide if your eCommerce business should be multi-channel or single-channel?

There is no right or wrong answer, though I am personally biased towards multi-channel selling. Ask yourself the following questions in order to determine which option is right for you:

  • Do I want to expand my business or am I satisfied with where I currently am?
  • Do I feel comfortable betting on one horse or would diversification give me more peace of mind?
  • Do I currently have products which may fare better on a more targeted marketplace?
  • Can I currently handle the extra workload, pressure and supply demands?
  • Can I maybe choose one additional marketplace to expand to instead of inundating myself with 2,3, 4 or even 5 ?
  • What are my goals as an eCommerce seller? Am I just looking to have extra passive income or do I want to build a long term sustainable business model?
  • What do I stand to lose by treading water (i.e. if I remain a single-channel seller – what am I losing out on)?
  • What is the risk factor vs. what do I potentially stand to gain from such a move?

Write your answers in a chart old school style, with single-channel on the one hand and multi-channel on the other hand. See which option tallies the most benefits, whatever the result, only do what you feel comfortable with. And remember, just because you get your feet wet in a pool does not mean you have to dive in head first, especially if you do not like the water temperature.

Photo by Mario Gogh on Unsplash

A word about multi-channel stock synchronizing

If you do come to the conclusion that multi-channel retail is for you, then one thing you should also be considering is synchronizing your stock across multiple sales channels. As I mentioned before, this is crucial so that you don’t risk overstocking or, on the other end of the spectrum, risk ‘understocking’. Stock synchronization updates your stock levels on all selling channels in real time. So when one item is sold on eBay, the in stock item count is automatically updated on Amazon and Bonanza for example.

Proper inventory management translates into profitability

I came to this conclusion as:

  1. It allows you to maximize sales potential by letting you show all your stock on all your channels.
  2. You can deliver products that are in stock quicker and therefore have happier clients who will translate into additional business down the road.
  3. You can source products cheaper. Products sourced under duress will almost always be at the higher end of the spectrum since you are pressured to fill orders and don’t have the leisure to negotiate. Some platforms you can source items on include:
    1. Sourcify
    2. Source Mogul

Inventory Location

Keep your friends close and your inventory closer, to your customer that is. Now that you are selling on multiple channels, you are likely to have more clients in a variety of locations. If you are not dropshipping, then storing merchandise has a cost for every day it sits on the shelf. Using a CRM can help you map out your customers geographically and you can then choose to have a storage facility in close proximity of your largest consumer hot spots. If most of your clients are in LA for example, consider renting a storage space nearby and saving yourself money on storage and expedited shipping.

Photo by Steve Johnson on Unsplash

Summing it up

Making the decision if multi-channel is right for you or not can be very stressful and confusing. Consider the advantages and disadvantages I presented here, answer the above questions I wrote out for you and I am sure you will be able to reach an intelligible decision. You may also need to invest in software such as CRM – it may sometimes seem overwhelming in terms of the quantity of ‘integrations’ you may need in order to expand your business, but as they say, it takes money to make money.

Please let me know about your experiences going multi-channel – what was your # 1 challenge?

If you are still single-channel – what is your #1 fear or concern when considering going multi-channel?

Nadav Roiter

Nadav Roiter is a published writer and a Jerusalem Post freelance journalist. Formerly part of the CrazyLister content team, he is now the Marketing Manager for Subivi eCommerce CRM which has developed a customer support tool uniquely built to help eCommerce sellers offer stellar customer support while simultaneously maximizing profits.
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