Why E-Commerce Retailers Need to Think Multi-Channel
Skubana - Guest Post
E-commerce channels like Amazon and eBay allow retailers of all sizes to reach massive international audiences. All an e-commerce seller needs to do in most cases is create an account and upload products, and they will be able to sell under the umbrella of some of the most respected brands on earth.
While sales platforms can serve a valuable foothold into the world of e-commerce, relying on single channels can be dangerous.
Amazon is undoubtedly one of the largest retailers in the UK with 2016 sales of £6.3 billion, but committing to the channel can be a mistake. Amazon's strict quality guidelines mean that sellers, even accounts worth millions, are often suspended, and sometimes by mistake. For example, our own Chad Rubin of Think Crucial was recently suspended, and then quickly reinstated just 30 hours later.
Why Go Multi-Channel?
Platform loyalty allows you to simplify your inventory and distribution process, but it puts your business at risk. With all your sales on one platform, suspensions or account issues will be costly. If you only sell on Amazon, an account suspension could end your business.
You can protect yourself from this by diversifying your income and selling on multiple channels. Multi- or omni-channel sales is increasingly popular as e-commerce retailers realize that swapping brand loyalty out for pragmatism protects their businesses.
Branching out to different channels also allows you to reach new audiences and sell items that wouldn’t always sell on your other platforms. While Amazon caters to the largest audience, others like Tesco allow you to expand sales with a new customer base.
Getting Started: The Top Four Channels
There are dozens of e-commerce marketplaces you could choose to sell on, but it's important to focus your attention on those that are most likely to drive sales. Part of this involves reviewing platform consumers and comparing them to your own audience, and part of it means choosing the best and largest platforms that can offer the most for your store.
Amazon is one of the largest marketplaces in the world and the platform supports over 2 million third-party sellers. It is without a doubt the best platform to be on, especially for second-hand retailers and private-label brands (versus those selling mass-market products).
However, Amazon has a notoriously strict seller quality policy and if your account drops below Amazon performance specifications, they will suspend your selling privileges.
Selling on Amazon means carefully organising your inventory and controlling supply and logistics to ensure that orders can be delivered on time, every time.
- Organising your inventory using SKUs for internal management.
- Optimising sourcing and supplier networks to ensure that you can correctly calculate pipeline.
- Planning logistics to ensure that you can process and deliver items quickly enough.
- Planning stock-levels around yearly sales and holidays to meet demand (Amazon penalizes your search ranking in case of a stock-out).
- Using third-party tools to improve your inventory management. Amazon’s seller central alone is not enough for multi-channel.
- Paying attention to stock and cutting underperforming or negatively reviewed options to improve account health.
If you cannot meet Amazon's strict shipping policies through Fulfilled by Merchant, you should consider Fulfilled By Amazon. This service costs £1.72 per sold unit plus a monthly storage fee of £0.40 per cubic feet of space (most items cost £0.06 or less per month). Amazon then handles shipping and distribution, allowing you to offer free 2-day shipping and other perks on your account.
Amazon places value on offering high quality products, fast shipping, and fast customer service. These should be your focus when selling on Amazon.
With a 2016 revenue of £1.2 billion in operating profit, Tesco is one of the largest retailers in the UK and the largest supermarket with nearly 30% of the total market share. While not largely known, Tesco has operated a seller marketplace since 2012, and currently maintains a few hundred third-party sellers.
Tesco is an invite-only marketplace, but you can express interest in joining by emailing email@example.com outlining your business and sales on other platforms.
Tesco supports a wide variety of categories, including baby & toddler, home & garden, sports & leisure, toys, health & beauty, consumer electronics, pet care, DIY & car, gaming, and many more.
Tesco allows partners to maintain their own distribution center, so you will have to manage shipments and fulfilment for all orders.
- Make sure you have EAN and UPC for every product.
- Integrate Click & Collect if you can to save shipping costs for buyers.
- If you sell in multiple currencies, Tesco orders must be listed and sold in GBP.
- Price products to include shipping, because Click & Collect is typically free.
Tesco is harder to get into than many other e-commerce platforms, but it does offer a lot of advantages. Tesco sellers are covered under the Tesco Partner Guarantee, have fewer restrictions, and deal with less in terms of seller requirements.
You will have to operate a large brand or e-commerce store to qualify for the site.
eBay is one of the most well-known e-commerce marketplaces and at one point in time, was the largest in the world.
As one of the largest B2B and B2C marketplaces on the planet, eBay pushes approximately $20 billion (£15.9billion) in product sales each quarter. While largely known for its auction function, eBay offers a "Buy it Now" feature much like traditional sales platforms.
eBay has a unique selling style wherein buyers bid for an item, which makes the site ideal for generic products, second-hand, and damaged or otherwise reduced-value goods.
eBay can be valuable for selling competitively priced goods, but with more than 25 million sellers on the platform, your prices have to be incredibly competitive to win.
- List daily to spread inventory out over time to increase visibility.
- Accept returns. It qualifies you for top seller benefits, including 20% discount on postage. Plus, if the seller reports the item as not-as-described, eBay will force you to accept the return anyway.
- Enrol in eBay's Global Shipping Program to access international customers if you don't use third-party logistics.
- Use automation to end and re-list old items to maintain your search SEO.
- Organize low-performing stock from other platforms and auction it off to boost your eBay account ratings and reduce the demand on your own warehousing.
- Create minimum sale rates to manage profitability. eBay margins fluctuate and understanding minimum and maximum costs allow you to better adjust your product costs to meet market demand, or to integrate automatic repricing software.
- Manage your inventory, if you sell items you don't have, eBay can freeze all your incoming payments.
eBay is one of the largest third party marketplaces in the world and it can offer a lot of value, but it is important to evaluate your products, customer demographic, and potential sales before integrating it.
Your Own Website
Building and selling on your own website carries multiple pros and cons. It could be a profitable venture, or a waste of time and money.
Selling on your own website gives you control over shipping policies, product management, sales, and removes all fee. It also gives you a direct line to your audience and customers--you control the sales channel and cannot be booted off by other sellers.
However, selling exclusively on your own website means you won’t get access to the audience of other channels, marketplaces, and brands. Selling on Amazon exposes you to all consumers who shop for your type of products on Amazon, plus operating your own website means taking on costs of web design, development, tech support, customer service, and more importantly, marketing.
If your brand is large enough to make a private website profitable, and you have the resources to manage marketing, a private website is a good move to create customer loyalty.
This channel is most ideal if you sell private label or generic products that you can promote as your own, because it allows you to trade on the reputation of a brand, rather than on a mass-market producer.
- Integrate strong cross-channel inventory management to track sales from your own-site. Sales will likely be lower at first, which means that it can be easier to miss sales if you have to log onto the site to check.
- Use a strong internal SKU system to allow inventory sorting and management.
- Use a third-party logistics (3PL) partner if you don't have the resources to handle large-scale shipping and distribution, don't have a warehouse, or want to offer international shipping. 3PL can help you to reduce shipping costs, improve shipping speed, and therefore improve customer satisfaction which will help your site.
Selling on your own website may seem easier to manage than seller marketplaces, but it requires stricter self-regulation, because you are responsible for maintaining the quality of sales, shipping speed, and customer service. If you let any of them drop, you will lose customers and money on the site.
Challenge: Multi-channel Inventory
While multi-channel e-commerce allows you to protect your income by diversifying sales, it also comes with drawbacks. Multi-channel inventory is significantly more complex, simply because you must track sales across every channel and track your real inventory based on total sales.
For example, imagine you’re selling on Amazon and eBay, using the same stock, and have 10 items. You sell 8 on Amazon, and 3 on eBay before you can update your total stock to reflect additional sales. You will end up overselling, with unhappy customers, and having to either go out-of-stock or raise prices to deter additional sales.
Tip: Sellics has found that going out-of-stock is a better strategy than a price hike on Amazon.
Options for managing multi-channel inventory
Separate Stock - Separate stock allows you to divide your stock based on expected sales, upload different stock levels to each platform, and keep each platform separate. This is time consuming, may reduce sales on one channel, and may still result in a stock out event.
Real-Time Inventory Management – Real-time inventory management solutions are tools like Skubana, which updates total inventory across all channels in real time. This allows you to pull stock from a single warehouse without risking stock-out events, because when you sell on one platform, your inventory management program updates your stock on the other. It also sends you alerts when stock is running low, so you can order more before running out.
Challenge: Use Cross-Channel Data Analytics to Create a Multi-Channel Strategy
Cross-channel data allows you to track sales, returns, income, and profitability per channel, and you can use this data to make smart inventory decisions.
For example, many platforms have their own audiences, which means that product sales can vary a great deal across channels. If you notice that one item is selling very well on Amazon but not on other channels, you can move a large portion of that stock to Amazon FBA to reduce the total demand on your warehouse and speed up shipping to improve your Amazon account health. Or, if you notice that some products are mostly only selling on your own site, you can work to prioritize marketing efforts for those items.
Multi-channel data also allows you to track peak sales periods, so that you can review your data, and make inventory stock plans for the year. If you know that certain items sell more around holidays, you can plan to stock more of those items during that time.
Multi-channel sales require more time, dedication, and effort than single platforms, and this can be difficult to achieve alone. 'Power Sellers' make multi-channel effective by using tools to automate their workload, aggregate their data, and save time on regular tasks. Tools range from automated repricing to customer service management to inventory management and they can help you to take your e-commerce business to the next level.
- Figure out your pain points. What are you having the most trouble fulfilling?
- Find a solution. Whether that's third-party logistics, automated customer service, or a listing tool is up to you.
- Maximise the quality and value of the tool by managing it and using human review to maintain quality.
Quality tools will cost money, although many offer free trials and demonstrations, but in the end they will save you money, boost revenue, and help you to achieve professional results on a lower budget.
Going multi-channel will bulletproof your business from being too susceptible to account deletions and suspensions, and will solidify your brand across multiple platforms. It can also diversify your income, so that you earn revenue from more sources, and potentially increase your sales volume. However, integrating multi-channel means creating the infrastructure and management to handle inventory, customer service, researching channels, and rolling out slowly to reduce costs.
This is a guest post by the Skubana team. Skubana is an all-in-one ERP system and operations platform designed for high volume sellers to run and automate their business. By unifying point solutions in one place, sellers can now diagnose what used to take weeks in seconds. It integrates with most e-commerce marketplaces, 3PLs, and warehouses, provides profitability and multi-channel inventory management, and compiles all your marketplaces on a single convenient dashboard. Reach them at firstname.lastname@example.org with any questions, or sign up for a 14-day free trial.
Updated: 30th March 2017
For more hints and tips about selling smarter on eBay, take a look at our other articles and sign up to our newsletter to receive ListSmart’s latest news and articles straight to your inbox.