The Channel Coverage Lever of eCommerce Growth - Volo Commerce

The Channel Coverage Lever of eCommerce Growth

Tuesday March 1, 2022 | Posted at 10:28 am | By Paul Dicken
March 1, 2022 @ 10:28 am

When we think about growing sales and efficiencies on ecommerce marketplaces and webstores, we use the 10 levers of the Volo Levers framework as a checklist for success. 5 of the levers are sales-focused and 5 are efficiency-focused. We’ve already covered listing quality and inventory breadth on the sales side, and in this post we stay with sales and talk about your channel coverage across webstores and marketplaces, including the major ones in the UK, namely Amazon, eBay and OnBuy.

If you’re active on one online channel – it could be your webstore(s), or maybe Amazon or eBay – then you’ve every right to consider yourself to be an expert on it. You know how it works and how to be successful on it. You’re probably also aware of what might happen if there’s a problem and how quickly your single revenue stream can go pear-shaped, or dam-shaped to extend the metaphor. To avoid this unpleasant scenario, you could look at making the same stock available on a second channel. Then you’re spreading your risk between the two channels and getting a bit of balance in the business. That sounds easy, but this second channel might not be another webstore, it might be different. It might have different rules and work in a different way. You have to start from scratch to learn it, which takes time, money and sweat, all of which you could be devoting to your single channel.

There are hundreds and hundreds of channels to choose from across other regions and countries, each of which comes with its own effort and reward, depending on your business and the products you sell. There are webstore platforms, global multi-category marketplaces, regional or national marketplaces, vertical marketplaces, price comparison sites, daily deal sites, flash sale sites, aggregators and B2B marketplaces or exchanges. The list is long, and that’s just online, which doesn’t take into account physical channels like stores or telephone order/mail order, aka MOTO. There are opportunities in all of them, and of course costs and risks inherent in them too. What’s the right balance, the right channel coverage?

Hope is not a strategy for your channels, you can’t rely on being lucky. You need to strategically spread your risk across channels, but also within channels. You could have multiple seller IDs in the same channel, with each ID selling different – but perhaps complementary – sets of products. Do the research into each channel – or seek out channel experts – to find out what’s right for you: how each channel works, how its categories are structured, what its policies are, how its pricing works, how it operates, its requirements for joining, its terms and conditions, how much market share it has in the areas of your interest, its attitude to sellers, its current seller base, its ethos and so on. As we said, if you can’t get the answers yourself, ask someone who already has them, or can get them for you.

Once you’ve decided a second or third channel is worth investing in, the next thing to figure out is how it will work with your existing channel. You’ll now have 2 or more places to go for all the stages of your business process. How will you manage your inventory? How will your listings work? How will you monitor what you’ve sold where, and show the right stock levels across your channels? How will you make sure you don’t oversell anywhere? How will you manage customer service? If you’re not careful, you might find that doubling your channels simply doubles the amount of work you have to do, unless you can get some economies of scale or scope going.

ecommerce growth chart

For many Volo customers, it’s the addition of a second channel that leads to a call or email in our direction. It’s now too much for the company to rely on the mainly manual processes that have served them well so far. They’ve been doing everything directly on the marketplace or webstore, but now they want to avoid duplicating their effort and also they want to easily compare and contrast performance on each channel. Importantly, the opportunities of selling stock on a second channel far outweigh the costs of enlisting some outside expertise in the form of technology and know-how. Companies find that trying to save money by taking a DIY approach means they can’t grow their sales and profits as quickly and steadily as they would like. The pain of change is less than the pain of staying the same, and it’s the kind of change that scales for the long term.

Let’s look at a few specific areas where channel coverage impacts us.

First, managing stock. We don’t recommend keeping a separate inventory for each channel, because then you can’t capitalise on the unifying and streamlining advantages of being a multichannel seller. We suggest you use a single inventory pool from which all your channels are updated. Volo’s Channel Profile function, for example, allows you to push all your stock updates out across your channels automatically. In this way you can sell items on different channels, show the right stock levels everywhere and replenish your orders and stock availability to get the balance right between overselling and underselling, or between having too little stock and having too much.

Second, understanding channel-specific search. We’ve already talked about doing the homework on each channel to get your coverage right. It’s obviously key that you understand how the search capability works on each channel. Look at how search enquiries are returned to potential buyers, how buyers can filter or narrow down their searches, what information is presented and how it’s structured. This will impact how you structure the information – the listing data – on your products. The better you structure your data to the way the channel works and the way its customers search, the better the chance of your product being found and then bought. Again, it’s a question of effort versus reward. Of course, choose the channel or channels where you think you’ll get the best return on your investment.

Third, being resilient. Resilience is a big word for us, and if there’s one aspect your business has had to excel in over the last couple of years, it’s resilience. In the UK, apart from your webstore there are three main channels, each of which can drive significant revenue for your business: Amazon, eBay and OnBuy, plus large category-focused marketplaces like Etsy. You should diversify the channels you’re on to spread your risk. It’s better to have three channels providing you with about a third of your business each than two, one of which brings you 70%, for example, or, worse still, one channel than brings you 100% This way, you’re better insured against a major incident beyond your control taking out the main source of your income.

Fourth, structuring and optimising your data. Data really is king, queen and the whole royal family. The better your data on your products is organised, the better your business performs. We all know that information is power, especially well organised, accurate information. You should use rules to structure your data in bulk. This streamlined approach will give you major productivity gains over dealing individually with the data on each product item.

Fifth, optimising your customer communications. Make sure you pool your customer communications across your channels into one central place, since it’s easier to manage and a more productive use of your customer service staff time in the long run. Furthermore, add information – both imagery and text – to your product detail to reduce questions from your customers. Storing pre-written responses to standard and frequently asked questions will buy your staff valuable time every time. This is the gift that keeps on giving over hundreds and thousands of individual communications.

Sixth, and finally, building your brand. You should use your channels as an opportunity to build your brand online. You’re probably already remarketing to those customers who have bought from you via your webstore. In addition, where marketplace rules allow you can use those marketplaces as additional direct acquisition channels. Once someone buys from you, you can send them an offer in the package, if you’re allowed, to return directly to your webstore. You can capture their data, keep them abreast of your special offers and turn them into repeat direct buyers.

When you get your channel coverage right, you can build your ecommerce business quickly and spread your risk across the different places where you sell. Tom Green of vehicle parts & accessories merchant The Green Spark Plug Company uses the Volo platform to get his channel coverage right and saw his revenues increase ten-fold in three years: “These days, in addition to our websites, we’re on eBay and Amazon in all countries. I have a dozen staff in the business, including me. We also have 120,000 listings and 40,000 products on offer. It’s hard to single out one thing about the platform because it does so much. We can list many thousands of items easily and quickly, which is really important in our business with there being so many variations. I really like the fact that we can centrally control the stock, automate our purchase orders to suppliers, deal with customer service queries in one place, that kind of thing.

To talk with us about channel coverage and the other growth and efficiency levers in your own business, please send us a note here

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