What Is Multichannel Retailing? Is It Right for You? [2022]

Multichannel retailing can increase sales, but is it the right option for your business? We’ll tell you all you need to know to make the right call.

As a small or medium business owner, you may have heard that multichannel retailing is a good way to score some new sales. Multichannel retailing can be helpful, but what exactly does it mean, and is it as powerful a tool to grow your revenue as people make it out to be?

Multichannel retailing is simply the process of selling products or services across multiple channels, either online or offline. Deciding whether or not to branch out into multichannel retailing can be tricky. As a fellow business owner, I know the challenges you're facing, and I'm here to make some of them easier to deal with. 

In this article, I’ll tell you everything you need to know about multichannel retailing and help you decide if it’s a good idea to incorporate it into your business model.

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What Is Multichannel Retailing?

Multichannel retailing describes the practice of making your products available for purchase on several different sales channels, whether online or offline. To put it simply, it means that you're selling things across several platforms instead of focusing on just one sales channel.

These channels generally include physical stores, online stores, third-party online marketplaces (e.g. Amazon, eBay), and mobile apps. Additionally, you could run social media and email marketing campaigns that link directly to your online channels. This is sometimes referred to as multichannel marketing. 

Essentially, multichannel retailing allows you to reach a wider target audience and tap into well-established customer bases in sales channels that you weren’t previously using. One of the key advantages is that you expand your online reach and get a chance to grow your revenue.

Multichannel retailing is considered to be a solid sales strategy. Over the last couple of years, the sales revenue generated by multichannel online retailers has grown significantly, and that trend is not expected to slow down anytime soon.

The Advantages of Multichannel Retailing

While the thought of expanding into multichannel retailing may seem daunting at first, many retailers swear by the strategy for various reasons. Let’s take a look at some of the benefits of multichannel retailing, and then compare it against single-channel retailing. 

Wider Customer Reach

As a multichannel retailer, you give your business the opportunity to reach customers that it previously couldn’t. 

By being present on more channels, your products will be visible to far more potential customers than they were before. Some of these shoppers may like what they see and seek out your other products and possibly visit your website. Once they’re there, you can lock them in as a customer with your unique sales pitch.

Even if they stick to their previous sales channel, you still might make a sale just by being in the right place at the right time. Having a stronger presence across multiple sales channels also means that your product comes up more often in Google searches. 

Established Marketplaces

Multichannel retailing allows you to leverage the power of online marketplaces and advertising platforms and tap into their existing customer base. 

Many customers may not immediately trust independent online stores. However, they often don’t have the same reservations when buying products sold by third-party sellers on major online marketplaces. A survey from DigitalCommerce360 found that 65% of consumers said they felt comfortable buying from third-party sellers that they had never heard of before on major marketplaces.

Harnessing this trust that users have in major marketplaces to introduce them to your product will help familiarize them with your brand, and make them more likely to buy directly from your online store in the future.

Better Brand Recognition

Consumers tend to shop through many different channels, which is why it’s a good idea for your brand to appear in more than one place. Whether or not the consumers are specifically seeking out your products, they may notice your brand while they’re shopping.

A marketing principle called “The Rule of 7” suggests that before a customer feels the urge to look into a product being advertised to them, they need to see or hear it at least seven times. 

This marketing wisdom can be applied to making your products visible to customers as often as possible. As a result, you maximize the chance of people purchasing from you when they do need products like yours at some point in the future.

Improved Customer Data

Operating on multiple sales channels will give you access to a lot more customer data than operating on a single channel

There’s a lot you can learn a lot about the behavior of the customers of each of your different channels by gathering sales information across them. You may find, for example, that you have certain products that do better on certain sales channels, while others do better on a different one.  

You can then use this data to make strategic decisions for your business going forward. For example, you could run advertising and marketing campaigns that are tailored to a specific sales channel or product line, maximizing sales on that platform.

The Challenges of Multichannel Retailing

There’s no doubt multichannel retailing can be a helpful strategy to boost the overall sales revenue and profitability of your business. However, it doesn’t come without its challenges, especially when you’re just getting started. 

In this section, we'll go over a few factors worth considering before incorporating this approach into your business. 

Inventory and Logistics

One of the bigger challenges of multichannel retailing is managing your inventory across all the different channels. Internal systems may struggle to sync and consolidate data from your various sales channels into a single place, and this could end up causing an inventory management nightmare. 

While selling on multiple channels allows you to expand the number of customers you’re able to reach, you’ll need to explore options that offer you good oversight and control of your multi-channel inventory management.

Without a good system in place, your business may find itself buying too much or too little stock in a given timeframe, potentially causing your customer experience to take a hit. As an example, you may have to turn away or refund a customer on a product they believed was in stock because the sales channel they used falsely indicated that it was.

Pricing

Similar to how you need to make sure your inventory and order management across the various sales channels you operate on are aligned with each other, you also need to be aware of any price differences between them. 

Different pricing across channels isn’t necessarily a problem. In fact, this can be a good strategy – as long as your products on your own online or physical stores are priced cheaper than on third-party platforms. This way, your business gets the increased exposure from these channels while incentivizing customers to buy directly from your website instead, which could save you some money on fees and commissions.

You can use a product information management (PIM) system that can help you oversee and manage your product data (price, images, descriptions) across all your channels easily from one place. These are generally run by third-party companies, however, so will likely cost you extra.

Setup Investment and Running Costs

Getting set up with multichannel retailing can come with significant upfront costs, especially if you plan on setting up a lot of different sales channels. 

You’ll need to keep in mind that each channel will have its own setup costs and regular expenses. You may even need dedicated employees to run each channel, depending on your sales volume. 

A safe approach could be to start out with just a couple of new sales channels and get a feel for the time and money required to run them. Once you’re comfortable with your new strategy, you can add in more channels. 

Picking the Right Channels

While casting a wider net is likely to benefit your business overall, it’s important to choose your channels carefully. You'll also have to choose which products to sell on which platform. 

Diversification is generally a good thing. However, if you launch a product on a channel that is either already oversaturated with competitors or simply doesn’t have a lot of people seeking that particular product, you're not likely to turn a big profit.

How to Get Started with Multichannel Retailing

Getting your business started selling on multiple sales channels can be done in a few simple steps. It’s a fairly straightforward process. 

Choose Which Channels to Use

Expanding your business into new sales channels is a good way to reach an entirely new customer base. Depending on the sales channels you’re currently using, there are various options that you could consider.

Here are a few channels that are worth exploring:

  • Physical store – Many consumers appreciate being able to shop at a physical location. If your business doesn’t have its own brick-and-mortar store, you could consider selling your products at local markets or trade fairs, opening a temporary pop-up store, or having a third-party boutique store list your items.
  • Social media – Social media platforms like Facebook and Instagram allow you to sell products and services right from your business page. Of course, they’re also a great way to reach customers with advertising and marketing campaigns.
  • Online marketplaces – Well-established online marketplaces like Amazon, Etsy, eBay, and Facebook Marketplace are great because they’re easy to get started with and allow you to leverage an existing user base.

Get Your New Channels Set Up

Once you’ve decided which new sales channels you want to try, your next step is to open your accounts and get them set up. After that, your job will be to import and sync up all your product and store information from your other platforms. 

Make sure your new channels can be easily managed and kept in sync with your existing systems and channels – in particular, your inventory and order management systems. This is particularly important to get right before launching your new channels.

Finally, you’ll need to make sure you can easily accept payments on each channel. Pay.com lets you accept credit cards, debit cards, digital wallets, and a variety of other payment methods. It’s incredibly easy to set up – click here to find out more.

Choose Which Products to Sell

You may not immediately want to list every single one of the products you currently sell on multiple channels. An easy way to get started could be to identify the products in your catalog that tend to consistently sell well and aim to get those listed on some new channels.

Once you’re familiar with each platform, listing more products will be fairly straightforward. 

The Bottom Line: Is Multichannel Retailing Right for You?

In today’s retail landscape, it’s becoming increasingly important for businesses to maintain a presence on as many separate sales channels as they can. This is a trend that shows no signs of slowing, as people use an ever-increasing number of platforms to do their shopping. 

Before you take the next step for your business, it’s worth carefully weighing your options and assessing which channels may be the most promising for you. The number of sales channels out there has surged in recent years and not all will necessarily suit your business needs.

Once you find a set of channels that work for you, multichannel retailing can give your business a huge boost.

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FAQs

How can I sell products online without a website?

You can sell on social media or through online marketplaces like Amazon, eBay, or Walmart. Pay.com also lets you accept payments by sending customers direct Pay Links via email or text message, or having them pay over the phone after having seen an advertisement for your product.

What are the best channels for selling products online?

The answer to this question depends on the types of products you sell and the customers that usually buy them. However, the most common online channels that many businesses have success with are through their own online store, online marketplaces like Amazon or eBay, and marketplaces on social media platforms like Facebook or Instagram.

What's the difference between omnichannel and multichannel retailing?

Multichannel and omnichannel retailing are two terms that are often confused with one another. Omnichannel retailing is a strategy where –  unlike a traditional multichannel retailing strategy – sales channels are closely linked to each other, operating with a single shared inventory and returns process.  For example, in a typical multichannel retailing strategy, a customer wanting to return an item they purchased online will need to follow the online return and refund policy and won’t be able to return the item at the physical storefront. However, an omnichannel retailing strategy makes this possible and makes for a more seamless customer experience.

What is an example of multichannel retailing?

An example of multichannel retailing could be a small scented candle business that primarily sells its candles through its own online storefront.  However, this small business also takes advantage of other sales channels by listing its candles on Amazon Marketplace, at a local boutique craft store, and by selling them at a pop-up shop at a local craft fair every few weeks.

Meet the author

Monica J White

Monica is a journalist with a lifelong interest in technology. She first started writing over ten years ago and has made a career out of it, with a special focus on fintech. She enjoys the challenge of explaining complex topics to a broader audience.

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