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What is Channel Diversification and Why Does it Matter?

Channel Diversification

Selling has changed over the years. The modern era demands something different from online retailers. Customers have become more self-reliant. They do their research. They don’t like super-sales content or speaking with a rep until they’re further along in their buying journey.

Most of these changes can be linked to new technology. The digital world lets customers simultaneously interact with various brands, marketplaces, and sellers. Ecommerce businesses have had to adapt, and many have done so through channel diversification.

Channel diversification gives your brand more opportunity to be in front of customers, giving them more options to buy. The strategy has caught on, as multichannel sellers are growing at crazy rates. Experts predict that multichannel ecommerce will reach over $400 billion in sales by the end of 2021.

We want to help your online business succeed in this new era of sales. That’s why we’ve put together this guide to channel diversification. You’ll learn all of the benefits and get tips to start implementing this strategy today.

What is Channel Diversification in ecommerce? 

Channel diversification is the practice of listing your products, goods, or services on various platforms to maximize reach. Channels are different digital spaces where customers can engage with and buy from your brand. Common ecommerce channels include:

  • Store websites
  • Amazon
  • eBay
  • Walmart
  • Social media
  • Other marketplaces

Customers are at the heart of channel diversification. Over 80% of modern buyers do their research before buying. They learn about the product, compare prices, and look at alternatives. One survey showed that nearly half of these customers begin their research on Amazon, though 35% still use Google as their starting point.

Relying on a single channel – and online store- limits your company’s ability to grow. Amazon makes up 49% of US ecommerce sales. That’s a massive audience that brands otherwise miss out on.

Expanding Amazon’s reach can make it difficult to consider any additional challenges. Why not just limit your sales to the marketplace with the biggest audience?

This line of thinking limits growth potential, however. As great as Amazon is, other channels exist for a good reason. Selling on Amazon can be complicated and costly. They know sellers value their audience. They aren’t going to give that away for free. That’s why they can charge a premium to online sellers.

Some shoppers prefer looking beyond Amazon for products. Expanding beyond Amazon allows you to meet customers where they are. When visiting a company’s website, many enjoy the personal connection to a brand. Others browse social media for deals. Instagram and Facebook now allow companies to sell directly on their profiles, limiting shoppers’ pages to click through before making a purchase.

Each of these functions as different channels to engage, delight, and, ultimately, convert your customers. Limiting yourself to just one makes it difficult to maximize your reach, which is why 52% of online stores have started utilizing multiple channels to optimize their sales.

Key Benefits of Channel Diversification

The need for channel diversification is clear, but sellers don’t need to take on this strategy as an obligation. Adopting this strategy can bring clear advantages that help your businesses succeed long-term.

First, companies have a greater chance of scaling when they spread their products across multiple channels. It’s not like you have to minimize your success on your existing channels to get the others to work. The most successful brands create great customer experiences across all their channels, working hard to drive sales on each marketplace. When done well, this will only bring in more sales without taking away from existing ones.

Second, channel diversification allows your company to mitigate risks. You’ve heard the old saying about not putting your eggs in one basket, right? It’s a cliché, but it has stayed relevant for a long because it continues to ring true. Think about all the major internet supersites that have fallen out of the mainstream over time. Who is to say that won’t happen with one of these marketplaces? Spreading your product and income across multiple channels helps you not rely too heavily on any of them, even if specific channels produce more sales than others.

Lastly, diversifying your channel allows you to reach new audiences. Your product appears in front of more customers. Shoppers who browse on various channels have multiple opportunities to engage with your brand, making them more aware of your presence and adding options to build their trust and convert them.

Channel Diversification Best Practices

Diversification doesn’t come easily. Operating a single ecommerce channel is hard enough; adding others can feel intimidating, but these efforts lead to great returns if done correctly. We’ll highlight some best practices below.

Find the Right Channels for Your Business

Channel diversification can make sellers feel they must maximize their efforts in every marketplace. But not all channels are created equal, and you don’t want to be spread too thin.

Considering your product, brand, and target audience will help you pick the proper channels. Sellers who operate in craft items may succeed more on a site like Etsy than trying to sell through Walmart. Sellers with unique products to a hyper-focused audience may consider niche marketplaces like Bonanza or Fruugo, while other brands won’t find much success on those platforms.

There is no one-size-fits-all method. Each company will have to build its path based on its mission, product, brand, and target audience. In time, you’ll see what works and what doesn’t. Whatever succeeds, do more of it. Whatever flops, throw out.

Optimize for Mobile

Mobile shopping is becoming a huge part of ecommerce. It now accounts for 45% of online sales. Additionally, customers are 62% less likely to return to stores with a negative mobile experience. Whatever channel you use must be optimized for mobile for ongoing success.

Platforms like Shopify make it easy to adjust your design for mobile users. Big marketplaces will also have some optimization built into their sites, but for a great mobile experience, be sure to do the following:

  • Prioritize visible content
  • Have clear, easy-to-find calls to action
  • Make your text easy to read
  • Keep pop-ups and ads to a minimum

Maintain Consistency Across Channels

Channel diversification does not mean you have to change up your brand for every channel. In fact, 90% of consumers want consistent interaction with your brand no matter where they engage with you.

This means you can (and should) reuse product photos, similar messaging, and general aesthetics across every channel. People who come across your product on Amazon, Walmart, or your website should know that it comes from your brand.

Equip Your Company with the Right Tools

Managing multiple channels can be a logistical nightmare for online businesses without the right tools. In each marketplace, sellers have to monitor sales, adjust inventory, list products, manage listings, and handle situations that pop up.

This work can technically be done through manual work on spreadsheets and documents. However, the effort required makes it hard to see the value of channel diversification. You or your employees can easily get frustrated at the process instead of enjoying its benefits.

Software platforms have sought ways to streamline these processes for sellers with multichannel management solutions. Equipping your team with these tools will make it much easier to reap the rewards of your channel diversification strategy without all the associated headaches.

How StoreAutomator Makes Channel Diversification Simple

StoreAutomator works with companies to optimize their channel diversification. Our user-friendly management platform makes it simple to

  • Create your listings
  • Adjust your SKUs to market the same product through multiple channels
  • Access your product data in one location
  • Create and customize data templates for each marketplace
  • Manage inventory for all channels

Channel diversification can be a great gift to your business. We want to help you discover its benefits without adding extra work. If you’d like to see how StoreAutomator can help you seamlessly optimize all of your channels, check out a free demo of the product.