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For Amazon sellers, it can be easy to forget that there are other ecommerce channels besides Amazon. The global ecommerce market is expected to grow to $16.2 trillion (that’s trillion with a -t!) by 2027. While Amazon will certainly have a hefty slice of that pie, plenty of other channels will be involved. Walmart, Shopify, and others have separate market segments looking for the products Amazon sellers offer. A multi-channel ecommerce strategy is the key to meeting that demand.
But expanding into a new channel is a big undertaking and one that needs to be carefully thought through. Let’s take a look at some of the pros and cons associated with going multi-channel.
The Pros
More $$$!
No need to beat around the bush — most Amazon sellers play around with multi-channel ecommerce in order to raise the bottom line. When executed correctly, expanding your Amazon brand to Walmart, Shopify, or other channels can give you access to new markets and a diversified revenue stream.
Greater Market Share
A direct antecedent to making more money is gaining more market share. The more platforms your brand lives on, the more it looms large in the eyes of your potential customers, the more people see your products, and the more sales you make.
Being in front of more eyeballs alone can increase your business’s performance. Ever since the advent of modern psychology, marketers and business owners have capitalized on the mere-exposure effect to drive sales. If a potential customer sees your product on Walmart but isn’t ready to buy, they might choose you over a competitor when they see the same product on Amazon later on.
Business Resiliency
The longer your business is present on a platform, the stronger your position on that platform is.
Amazon rewards sellers with a big review moat, who have sold a lot of items, and even those who have just been around for a long time. Other ecommerce platforms do the same. By getting on an ecommerce platform now, you’ll be gaining an advantage over all the competitors to come after you.
And of course, there’s the obvious: multi-channel ecommerce means your brand is exposed to multiple audiences. If one audience suddenly decides it doesn’t want your products anymore, there’s always the other audience on your other channel. During tight times, this additional market exposure can be what you need to make it through.
More $$$ (Again)
If you’re successfully piloting your business through the murky waters of multi-channel ecommerce, you’ll not only be raising your bottom line; you’ll be raising your business’s valuation.
Potential buyers (like D1 Brands) are interested in Amazon brands that have exposure in other channels. Higher total sales make buying the brand more attractive, but so too does the success of a brand on another channel. In effect, it proves that there is rock-solid demand for that brand’s products and that the business isn’t just coasting on a trend or limping along. Buyers looking to acquire healthy brands are willing to pay for them commensurately.
An important caveat, however: When it comes to multi-channel exposure, there’s a fine line to tread. It’s rare that any business can successfully sell on any and all channels. Businesses that go after every ecommerce channel at once carry excessive risk that not only makes it more difficult to turn a profit in the long run, but also turns off potential buyers.
For buyers specializing in Amazon brands, it can also be a red flag if the business is excessively exposed to another channel. There’s a significant difference between dedicating 10 percent of one’s business to Walmart, say, rather than 40 percent. If something happens and that channel blows up, excessive exposure can mean the end for a brand.
The Cons
That $$$? It Isn’t Guaranteed.
You’re an entrepreneur, so you’re used to taking risks. There’s a ton of work involved in launching a multi-channel ecommerce strategy (more on that below). Slipping up on that work is a surefire way to tank your new initiative, but that’s not even the worst part — you could do everything right and still fail to turn a profit.
As little as we like to admit it, luck and happenstance play a part in ecommerce success. Global events change which products are in demand and which aren’t, your resident expert decides to transition out of the business, factors you couldn’t have known about during your initial analysis come into play — things happen. That’s why you can and should make every effort possible to ensure that the factors you do know about and can control are accounted for to the best of your ability.
Requires a Dedicated Team
You might be able to run a limited supply of products across multiple channels by yourself, but it’s highly unlikely. For business owners that are in a position to begin exploring multi-channel ecommerce in the first place, it’s almost a certainty that you’ll need additional team members with the expertise or ability to learn how your new channel functions.
No More Support From Amazon
Living in the Amazon world, it can be easy for sellers to forget how much of a pain fulfillment really is.
Nailing fulfillment often requires dedicated software, additional calculations to determine margins, more strategy around pricing and shipping fees, the hassle of finding shipping coverage for a wide range of customer locations, the need to deal with returns or lost shipments, and more. Amazon handles all of that for you.
On any new channel, you and your team will need to learn how the individual aspects of your ecommerce strategy function on that channel. Inventory management, optimizing your product listings, pricing strategy — all of these will be different on the new platform, but you will have at least some experience in them. It may very well be the first time you’re handling fulfillment on your own.
Some Business Buyers Won’t Be Able to Handle It
If you’re planning on selling your business to one of the various buyer organizations in the Amazon ecosystem, be prepared to hear a lot of promises.
It could be the case that after some years of hard work, you’ve really mastered your multi-channel ecommerce business and have a presence on Amazon, Walmart, and other major ecommerce marketplaces. Maybe now you’re ready to sell your business, spend more time on the beach, and less in the office.
Some buyers will claim they can cover operations regardless of the channel, but this should be a red flag. It took you years to build competency in those channels; who’s to say your potential buyer has the same capability?
You might say, who cares? Once I sell, that’s their problem. For one, many Amazon business owners care about what happens to their business after the sale, or they have an earnout clause. But more importantly, being excessively exposed to other channels can put your deal in jeopardy.
Buyers with eyes bigger than their stomachs are likely buying other brands with multi-channel exposure. If those brands’ supply chains start to get excessively complicated across channels, if inventory forecasting for each channel proves to be too hard, or if anything at all starts to go wrong, that buyer might realize their mistake and cancel their letter of intent.
Fortunately, Amazon business owners can avoid this issue by thoroughly vetting their potential buyers and by keeping their multi-channel exposure to a manageable degree. This isn’t to say that having a well-oiled business that operates across channels flawlessly is a bad thing; rather, the process of evaluating potential buyers changes once you get to this level.
If it's the first time you've thought about the buyer evaluation process, or if you want more insight into that process, we've written a blog on that very subject. Check out How to Sell Your Amazon Business: Insight from an Aggregator to learn more about what selling an Amazon business looks like from the other end of the table.
What to Keep in Mind
Clearly, there are a lot of factors to consider before making the decision to launch a multi-channel ecommerce strategy.
A lot of Amazon business owners look at multi-channel ecommerce as a way to improve their business and make more sales—it certainly can be, but only when approached carefully and strategically. If your Amazon business isn’t performing too well, it can be tempting to imagine that going multi-channel will net you the larger customer base that you need to succeed. In reality, you’ll have only multiplied your challenges.
The number one thing to have in place before going multi-channel is an optimized Amazon channel. If your brand isn’t performing on Amazon, then you’re not ready for a new channel. This begs the question: How do you improve your brand performance on Amazon? Luckily, we’ve written a blog on that very topic, that we call Troubleshooting Declines in Your FBA Business Performance.
Read through it and apply the guidance within. Once your brand is in a stronger position, then it may be time to go multi-channel.