Multi-Channel Retailing: More Channels, More Challenges

This post is by Katherine Khoo, Managing Director at ecommerce and inventory platform iPages.

This is the year of multi-channel retailing. With over half of all product searches in the US and UK starting on Amazon, it’s no wonder that retailers are swiftly changing their strategies to include multiple sales platforms.

Most of us will be tempted to think of simply selling through marketplaces (Amazon/eBay) when we think about multi-channel. However, there are far more ways to get our product into the hands of consumers. There’s Amazon Vendor, for example, and also social shopping on Facebook and Instagram, and voice search with Amazon Echo and Google Home.

One in four households now own a voice-controlled assistant, and Instagram shopping is a buzzing new channel with massive potential. So what does this mean for multi-channel retailing in the year ahead? And what are the challenges of selling on these diverse new channels, which are growing so dramatically?

What is multi-channel retailing?

Multi-channel retailing is simply an online selling strategy that goes beyond selling on your own website and targets customers on various other platforms.

This began by simply marketing on other channels, like shopping comparison engines, and has since grown into selling directly to customers through marketplaces, social media apps, smart devices and many other platforms.

What challenges are we seeing in multi-channel retailing?

As the available selling channels extend well beyond the tried-and-tested marketplace formula, we are seeing more challenges around the nitty-gritty of running a multi-channel operation.

The core issues are typically:

  1. Inventory and order synchronization
  2. Product data accuracy
  3. Cross-channel strategy considerations

Inventory and order synchronization

Inventory synchronization is vital to multi-channel selling success. It is estimated that $1.1 trillion in yearly revenue is lost due to overstock or out-of-stock issues.

43% of retailers still rely on pen and paper or spreadsheets for manual inventory tracking, and only 32% of sellers use inventory management software. It seems that businesses have not yet overcome the challenges of managing stock effectively.

Multi-channel retail increases the complexity of your operations. When looking to increase your reach through additional channels, it becomes increasingly important to use accurate and reliable inventory and order management software.

At the end of the day, it is your stock which determines the success of your business. Through accurately tracking your stock locations, stock turnover times, slow moving SKUs and seasonal changes, you can better forecast demand and meet your customers needs. All this leads to higher turnover and profits and (hopefully!) lower returns and losses.

Tip: Invest in accurate multi-channel order and inventory management software to help you reduce stock-related errors and increase your profitability.

Product data accuracy

Product data isn’t immediately obvious as a challenge when moving your products into a multi-channel space. However, different platforms may require you to reformat or even rewrite your product data.

Even if it’s not required by the platform, it may still be beneficial to tailor your product data to each sales channel. This can help you stand out from competitors, and attract buyers based on the search terms that are most popular on that specific channel.

Product data accuracy is also key when looking to expand into international channels such as other Amazon marketplaces. We can all tell when a description is not written by a native speaker, and this can affect your level of trust in a product. It’s worth investing in accurate, well-written listing translations.

Having a central repository for all your product details can save you time when listing (or using listing software) on multiple channels. If you’re looking to expand into other channels, this will prove invaluable and vastly decrease your setup time.

Tip: Have a central repository for your product listing data and ensure that it is accurate, well-written and in the language of the consumer.

Cross-channel strategy considerations

Every channel can seem appealing at first, but it’s worth spending some time considering your multi-channel strategy to ensure it’s aligned with your business goals.

It is only worth being present on channels where your target customers are. If you are a privately-owned brand, with a strategy to grow through wholesale, Amazon Vendor Central is a viable channel. Third-party sellers may be more interested in optimizing their Amazon Seller (marketplace) channel and being in prime position to capture the voice-search market.

Woman shopping on smart speaker
Voice shopping could be worth $40 billion by 2022

With any channel expansion, the key question to consider is if you’re increasing or decreasing your profitability in the long run. If you list your product on a marketplace which draws buyers away from another channel with lower fees, this will harm your profitability. It may be viable in the short-term but needs to be clearly thought out.

So, spend some time creating a simple strategy document and understanding your profitability per channel. This will prove invaluable for the year ahead.

Tip: Create a multi-channel strategy including your profit margins by channel to help you prioritize effectively.

Upcoming sales channels to consider

Which channels are the ones to watch? Here we’ll look at:

  1. Voice search
  2. Instagram shopping
  3. WhatsApp shopping

Voice search

People are spending more time using their smart speakers, and purchases made through them could reach $40 billion by 2022. The nature of voice technology means that consumers (think busy parents!) are mainly using voice shopping to make single purchases of low-value consumer goods, like groceries.

Among voice-enabled assistants, Amazon’s Echo commands the largest share of the market, outselling Google Home four to one. When shoppers use Alexa to search for an unbranded item that they haven’t previously purchased, Alexa’s first recommendation is the Amazon’s Choice product and then the top Amazon search result, according to research from Bain & Co.

Amazon’s Choice products are chosen based on several attributes. Positive product ratings, higher sales volume, reasonable pricing and favorable shipping speed are four known factors. Lower rates of return and seller feedback may also factor into a product’s selection for inclusion in Amazon’s Choice.

Amazon’s Choice products are always eligible for Prime, so they are either sold by Amazon itself, or sold by third-party merchants using FBA or Seller-Fulfilled Prime.

Tip: Optimize product listings and improve sales velocity to help get your product in the running for Alexa voice purchasing.

Instagram shopping

Instagram may not be the first channel you’d consider as a multi-channel retailer. However, for brand owners or private label sellers, this channel could help you build direct customer contact and expand your reach.

Instagram has 500 million daily users and 33% of users prefer to contact brands using social media rather than making a phone call. One brand, SpearmintLOVE, experienced a 25% increase in traffic and an 8% increase in revenue from selling on Instagram.

Is Instagram shopping relevant if you are selling on Amazon? Within your bio you can send customers directly to your Amazon page (or website/email sign-up) and, by simply uploading your products to Facebook you can treat this like just another channel to list your products on.

Tip: Consider using a social channel to direct traffic to your website or Amazon store.

WhatsApp shopping

WhatsApp is familiar to many people as a means to keep up with family and friendship groups. However, this is a relatively new platform for brands to use effectively – think of it like a live chat route to your customers.

WhatsApp launched a dedicated business app in January 2018. This allows businesses to create a profile, organize customer interactions and monitor or even automate responses to customers.

We’re in an age when millennials are now moving into their thirties and preferring to use chat rather than email. WhatsApp is the ideal way to communicate with this group.

You can’t shop directly on WhatsApp yet, but it’s already a big feature of China’s top chat app WeChat, and WhatsApp might follow their lead.

Tip: Consider adding WhatsApp to your website to help customers engage with you in the way that suits them.

Conventional channels: brick-and-mortar and web stores

With all these channels and social routes on the rise, where does it leave your own brick-and-mortar store or website?

This really comes down to your strategy. Online channels may be more profitable because overheads are lower. A physical presence, or your own website, might be valuable for brand building and supplier relationships.

Brick-and-mortar stores

The saying is still true that “people buy from people”. There will always be a place for the personal approach that you can offer within a physical store. A brick-and-mortar presence can be invaluable in building customer trust and using traditional selling techniques.

Selling Media Online

If you’re investing in a physical space, it’s worth thinking through how you could weave your online channels into your brick-and-mortar activities. This helps you serve a greater volume of customers, with the same amount of physical space and staff.

You want your channels to be working together to help you build a brand. So, for online customers who need face-to-face contact, guide them to come into your store. For store customers who have purchased on a walk-in, encourage them to make a repeat purchase online.

Your own website

Finally, there is your own ecommerce website. This is a golden tool for multi-channel retailers as, if setup correctly, it can be the most profitable part of your business.

Think about why buyers would want to come to your website rather than going direct to Amazon? If you’re selling products with Amazon Prime, what would compel someone to purchase from your website instead?

This is a chance to get creative around multi-buy offers, sales and delivery options. As we explored above, your channels have to be working together for your profitability.

If your website has a better margin, how can you entice buyers there? How can you drive buyers from other channels to make repeat purchases on your own website?

Tip: Ensure you are using your brick-and-mortar store and webstore together with external channels to increase long-term profitability.

More channels, more challenges

Multi-channel retailing is fraught with challenges and opportunities.

To ensure you’re taking advantage of these, and remaining profitable, it is essential to revisit your business strategy. Analyze and prioritize your sales channels, and get creative about how those channels can work together.

This post was by Katherine Khoo, Managing Director at ecommerce and inventory platform iPages. iPages is one of the UK’s only comprehensive ecommerce sales and inventory management solutions.


Jake Pool

Jake Pool

A content writer in the SaaS, FinTech, and eCommerce spaces, Jake Pool has written hundreds of articles and reviews for dozens of corporate blogs and online publications. With four years under his wing, readers can expect many more informative articles in the future.

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