The 5 Essential Sales Channels for Any Consumer Product Company
In order to run a business that is stable, healthy, and growing, diversification is more important than ever. Just like a stock portfolio, investing in or relying on one thing too much is both limiting and risky. Yet, many businesses rely on just one or two sales channels for all of their revenue.
To be healthy, you must develop several sales channels that drive revenue. For ecommerce businesses, there are essentially five sales channels.
In this article, we’re going to show you the five essential sales channels every ecommerce business should be using, and exactly how they should be used.
Why should you have more than one sales channel?
We have discussed diversifying your marketing strategy, but there are other areas of business that should be diversified as well. In any business (especially ecommerce, direct to consumer, or product business), your sales channels should be at the top of your diversification list. Time after time, we have seen that having diversified business channels make a huge difference when it came to surviving disruption.
Not every sales channel will be profitable from day one. That is actually a common misconception; instead, you should expect to think of some channels as an investment. Although you won’t see an immediate profit, having them in place is essential if you want to last no matter what the economic environment.
You’ll also want to keep in mind that every channel affects another, so it’s important to understand the connections between them each in order to manage your strategy. There is also an ideal order that you should follow when investing in and launching these channels. That’s why we’re here to share our experience.
5 Sale Channels Essential for Every Consumer Product Company
1. Direct to Consumer (Ecommerce)
Direct-to-Consumer, also known as DTC or ecommerce, is a term thrown around a lot. True DTC/ecommerce is a channel where you sell directly to customers with no middleman. That means ecommerce is not the same thing as your Amazon store. In order to do true ecommerce, you must have a website that you own.
This website could be hosted on Shopify, WooCommerce, Magento, or any other ecommerce platform. For brands just starting out, we recommend Shopify. For established brands looking to upgrade, Shopify Plus is a great option.
(Note: We are a certified Shopify partner and very experienced in migrating sites for brands. Please contact us if you are looking for assistance with this!)
If you are a new business starting from scratch, ecommerce is the place to start. If you’re currently selling elsewhere, building an ecommerce store needs to be the next thing you do. And if you already have an ecommerce store, now is the time to make it as strong as possible.
Advantages of an Ecommerce Channel:
- Agile / Quick: Ecommerce stores are relatively quick to create or adjust, especially considering the capabilities of modern ecommerce platforms like Shopify.
- Owned Channel: With an ecommerce store, you own the site as well as the customer information. That means this channel is truly an asset to your business.
- Freedom to Adjust: Since you own the site, you will have the flexibility to change things about your site or your strategy as you want.
- Customer Acquisition: As an ecommerce channel, you can quickly acquire new customers and newsletter subscribers, especially if you are running paid marketing to your site.
- Tell Your Brand Story: Communicating your brand’s story through every aspect of the customer journey is crucial for building a relationship with your customers. Owning the ecommerce channel means you have the ability to do this in the fullest capacity.
In order to get started with an ecommerce channel, you will need to plan for the following:
- Have a healthy business strategy and a healthy product line strategy in place
- Know your brand well and how to communicate your story
- Create a seamless experience on your website
- Execute an effective digital marketing strategy
- Plan to optimize your site
- Create an email marketing strategy that works to increase customer lifetime value
Ready to get started? Here are a few next steps based on your current situation:
- If you run a wholesale business or are on Amazon without ecommerce: Contact us and our team can help direct you on the best path to get ecommerce started. We have done this for many brands and therefore understand the complexities involved with a smooth transition.
- If you have an ecommerce store: Look for ways to strengthen it. Consider a move to Shopify Plus. Develop an email marketing program to truly engage with your current customers. Run more effective marketing. Optimize your current site to see increased conversions.
- If you are brand new and just getting started: Start with an ecommerce store on Shopify. Launch digital marketing campaigns to get traffic to your store. Be sure to start an email marketing strategy (we recommend using Klaviyo). Pick up a copy of one of our growth guides or schedule a coaching call with us. We’d love to help!
As mentioned above, selling your products on a marketplace such as Amazon or Walmart.com is not the same as “doing ecommerce” or DTC. You may own the product listings, but you are still selling on someone else’s land. While there are benefits to this, you need to be aware of the possibility that Amazon (or other marketplaces) could shut you down, make knock-offs of your products, or any other number of things. For example, at the beginning of the COVID-19 pandemic, many brands suffered because Amazon stopped shipping certain products so they could focus on essentials. This was a reality check for these brands, making them realize their primary sales channel was not an asset they could control.
There are two main benefits to selling on a marketplace:
- Exposure: Marketplaces are a great discovery tool. They provide exposure and brand awareness for a lot of new customers you might not capture otherwise.
- Cash: As many brands have experienced, there is revenue to be made on Amazon and other marketplaces.
The bottom line is that marketplaces are not bad, but you are not a healthy business if you are only operating on Amazon. You won’t be able to build a customer list there and you won’t be able to develop a true brand-based business there— both of which are assets to a healthy business.
If you’re currently only using a marketplace, start an ecommerce channel and take steps to strengthen it as soon as possible. The goal is to get to the place where your ecommerce channel is stronger than Amazon.
If you’re looking to get started on a marketplace, here are the steps to take:
- Understand the true goal of using a marketplace and how it fits into the overall business strategy. Identify the pros and cons and how the two channels work together.
- Know that managing a marketplace requires a different skillset and likely a team to manage it, handle its marketing, and provide customer service.
- Prepare for close management of customer reviews and your standing on the platform. Customer reviews will make or break your success and need to be watched carefully.
- Determine a strategy for acquiring a direct relationship with the customer. This will have to be done off the platform.
- Develop a product line strategy. Don’t put all of your products on the marketplace, otherwise, there won’t be a lot of reason for Amazon Prime-type customers to go check out your ecommerce store. We usually suggest that the ecommerce channel contains everything you sell and Amazon only has the flagship projects.
- Start with Amazon, as it’s the largest and most successful marketplace by far. Walmart is much smaller, but likely the next best option.
3. Affiliate Sales
Affiliate sales are sales through partner relationships, which could be other companies, marketers, or influencers. These partners receive a commission for selling your products to their audience. Giving partners an opportunity to be a voice for your products is a great way to gain traction with your brand.
That leads to a couple of main benefits of an affiliate sales channel:
- Gaining trust: We often talk about how your prospective audience will trust what others say about you much more than what you say about you. The partners or influencers you choose will already have a strong relationship with their followers, so they are likely to trust what they have to say about your brand.
- Exposure: Affiliate sales will bring awareness to massive new audiences, and that will provide even more exposure over time. The interesting thing about affiliates is that they can really strengthen niche audiences, depending on the affiliates you choose.
While these benefits sound awesome, keep in mind that you will make less on these sales since you are paying the affiliates commission. However, investing in order to gain traction is the only way you will be able to gain momentum.
Here are a few steps to get started with an affiliate channel:
- Launch this channel only after you have an ecommerce store with a refined product line.
- You will need a real ecommerce store in order to track sales and pay commission.
- Staff your affiliate program with an employee who can manage the affiliates and your relationships with them.
- Identify influencers. These are people in your space who love your product and also have a large following. Contact them and offer them a commission for being an ambassador, along with a discount and other VIP access to your product. If you’re looking for an example, GrooveLife does a great job of this.
- Marketers / Traditional Affiliates: You could also use affiliate networks like Commission Junction. However, be careful, as this can be risky. If just anyone is marketing your product, it can have a negative impact on your brand. We recommend connecting directly and choosing specific partners to market your product.
- Other brands: Another option is partnering with brands that share your audience and cross-promoting each other’s products. You could also pay them a commission on the sales of your product to their audience and have them send emails to their list on your behalf.
Wholesale can be a bear to manage, so we recommend waiting until your company is a mature organization to tackle it.
When you do, you’ll see a couple of major benefits:
- Large purchase orders which provide significant cash
- Legitimacy for your brand (seeing your brand in stores increases awareness and credibility with customers)
Despite the benefits, it’s important to be aware that wholesale comes with risks. The bigger your wholesale channel gets, the more leverage and influence other companies have over yours. That is why it’s so important to have a strong ecommerce channel in place before you move to wholesale. You’ll also make about half as much through wholesale as you would on your ecommerce store, but you’ll be paid in large chunks.
If you’re operating a wholesale business but don’t have an ecommerce store, you need to get that started as soon as possible. We help many large retailers do this, so be sure to contact us if you could use coaching or services to make your ecommerce store a reality.
If you aren’t currently using wholesale, here are the steps we recommend you follow:
- Start your ecommerce site first and reach a point of stable growth.
- Launch a program where wholesalers and retailers can apply. It’s helpful to have a form on your site where retailers can apply to carry your product.
- Hire or designate someone to manage relationships with retailers.
- Start with a lot of small “mom and pop” retailers. There is less risk involved with that.
- Launch a retail website for orders (Shopify Plus has good options for this that allows wholesale or retailers to log in and place retail orders for you to ship in bulk.)
- Eventually, graduate to big accounts. Again, don’t go after these first. You will need a manager for this and likely a 3PL.
After you have done all of the above, we like to mention in-person retail as an optional channel. Many ecommerce natives will never think of this, but for some businesses, it is worth considering.
A few benefits of an in-persons store include:
- Opportunity to connect to customers
- Increased brand credibility and legitimacy
- More chances for customers and/or street traffic to browse
- In-store pickup options
- Fast local delivery
We’re seeing these benefits holding more true than ever despite a massive shift in consumer shopping online in 2020 and 2021. In-store pickup and fast local delivery have been very valuable for physical stores and these options are not going away anytime soon.
Another way to think about an offline channel is that if you’re running a business, you need a location. Even if you only use ecommerce, your “location” is a warehouse. Why not make that location open to the public as a retail store? Why not make your fulfillment a browsable store that can allow for pick-up options as well? This is an opportunity that will be growing over time, and now is the time to start thinking about it.
Where Should You Start Diversifying?
With so many opportunities, how do you prioritize which channel to tackle next?
If you’re not doing ecommerce, you definitely need to start there. Every channel is connected, and your ecommerce store needs to act as a healthy, stable foundation for each one. In order for each channel to work together successfully, you will need a holistic, healthy strategy created by people experienced in this space.
If you’re looking for a team to guide you in this process, click below to contact us and tell us more about your business!