What are the benefits of a multichannel distribution system?

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selling across multiple channels

In today’s retail landscape, you will notice that many e-commerce businesses do not limit themselves to just one selling platform. More online stores are selling across multiple channels to reach more customers and drive further sales.

Large retailers often have a brick and mortar store, an online store, and sell across online marketplaces such as Amazon and eBay. The past year has also seen the rise of social commerce, with more brands selling on social media platforms such as Facebook, Instagram and TikTok.

Although more retailers are opting for a multi-channel distribution system, it can be challenging for businesses to create a multi-channel strategy that is low on cost and maximises profit.

This article covers what a multi-channel distribution system entails, the challenges involved in a multi-channel distribution system, and implementing a successful strategy.

What is a multi-channel distribution system?

A multi-channel distribution system is a strategy where retailers sell across multiple platforms such as a physical store, social media and online marketplaces to widen their customer reach and generate further sales.

Importance of multi-channel distribution systems in e-commerce

When e-commerce businesses launch their online store, it is relatively simple to merge into new channels such as social media and online marketplaces and is an excellent way to diversify your customers.

Research shows that selling multi-channel is the future, with 56% of consumers stating that they are more likely to purchase from e-commerce businesses that create a seamless omnichannel shopping experience.

Further benefits of establishing a multi-channel shopping experience:

Widen your reach

Naturally, when you sell your products across multiple channels, you place your brand in front of new eyes, reaching a wider audience. Selling cross-channel is a practical way of diversifying your customers, helping you reach new demographics using channels such as social media.

Always available

Brick and mortar stores that expand across multiple channels make their business available 24/7, with customers have constant access to your brand. Continuous availability creates further opportunities for customers to buy your products, no longer restricted by store opening hours.

Increase revenue

Spreading your business across multiple platforms will ultimately lead to an increase in sales, helping to improve your bottom line. The new growth in sales will likely cover any costs in setting up your new sales channels.

That being said, businesses must have the right tools and resources available to maximise profit when implementing a multi-channel distribution system.

What are the challenges of a multi-channel distribution system?

Whilst selling cross-channel may seem like a no-brainer, it’s vital to consider the additional resources required as a result and the more complex internal operations.

Here are some of the most significant challenges of selling cross-channel:

Higher inventory costs

Increased sales can have a significant impact when it comes to inventory management. Businesses must ensure that there is complete inventory visibility to ensure that in-demand items are kept in stock, and there is sufficient warehouse space to store the increased number of goods.

Channel integration

Unless all your sales channels are integrated into the same inventory management software, it can be challenging to gain real-time updates on inventory levels. This issue could lead to out of stock items and backorders, which could lead to frustrated customers.

Internal operations

With increasing sales, it’s vital to ensure that all your internal processes are slick and organised to avoid delays to shipments to customers. Businesses must maximise their order fulfilment, supply chain management and logistics operations to avoid creating a negative customer experience.

How to create a successful multi-channel sales strategy

Whilst there are challenges in creating a multi-channel distribution system, businesses can be successful if they bear in mind the following:

Pick the right sales channels

Just because there is the opportunity to sell across multiple platforms doesn’t necessarily mean that each one is right for your business. Brands must consider who their customers are, how they like to shop and where they are located online when assessing the right sales channels.

Think about the products you sell and which platform would be best placed. For example, clothing and beauty brands tend to target younger audiences on Instagram and TikTok. If your brands sell everyday essentials, it could be more profitable to focus on the likes of Amazon and eBay.

Organised omnichannel data

E-commerce businesses must ensure that all data is synced when implementing an omnichannel sales strategy to get a clear picture of sales and inventory figures. Outsourcing your order fulfilment to a third-party logistics (3PL) company that offers platform integration will help you maintain single-source data to thoroughly overview all aspects of the fulfilment process.

Optimise your order fulfilment

It’s vital to have a fast and reliable order fulfilment process when going multi-channel and keep up with the increasing order numbers. 3PL companies are accustomed to dealing with high order volumes and can ensure that the quality and accuracy of orders picked, packed and shipped to customers remain on point at all times.

If your business has recently implemented a multi-channel sales strategy and is struggling to keep up with orders, it could be time to give Pointbid a call. Find out more about our dependable e-fulfilment services by giving us a call on 0121 326 7368.

 

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