Multichannel Management Tools: the Essential Guide for Online Sellers

One of the most popular categories in the Web Retailer directory is also the most complex: Multichannel Management.

That’s no coincidence. Selling on one marketplace (Amazon or eBay for example) is hard enough. Throw multiple marketplaces into the mix, and maybe your own webstore too, and you have a recipe for disaster – if you try to do it without the right system in place.

So this post is all about multichannel management software: what it is, what it does, key features, how to choose a supplier and more.

What is multichannel management software?

The basic idea of multichannel management software is quite simple: if you sell through several “sales channels” (marketplaces and webstores), multichannel management tools look after all the data and processes, keeping it accurate and efficient.

The goal is to make selling on multiple channels as streamlined as it can be. With the right software in place, it should take hardly any more effort to sell on multiple channels than it does to sell on one channel.

Why is it so complex to sell through multiple channels anyway? There are two broad reasons:

First, all the marketplaces (and your own webstore if you have one) handle key aspects of ecommerce differently: inventory, payments, orders and customer support all vary. To run an efficient business, you need to rise above all those differences and manage everything the same way – regardless of the channels you are selling through. You’ll quickly tie yourself in knots if you have one process for eBay orders and another for Amazon orders, for example.

Second, each of your sales channels are separate from each other. There’s no built-in communication between Amazon and eBay, or eBay and your own webstore. So when you sell your last blue widget on eBay, you’ll still show as having stock available on all your other channels. When you want to increase the price of your red gizmos, or change their photos or description, you’ll have to do that in every place you sell. Selling stock you don’t have, or that doesn’t match the description, is likely to lead to complaints.

When businesses sell on multiple channels without software (as many do at first),  they often find their time and energy used up by two things: the administrative burden of manual management, and dealing with the mistakes that happen because of all those manual processes.

It’s this operational complexity that multichannel management software deals with, so businesses can focus on activities that generate sales and profits.

What is a “channel” anyway?

In this post, I talk about “sales channels” and “marketing channels”.

A sales channel is any technology platform that can “host” a sale – a consumer can find and buy products without having to leave the website or app.

They include:

• Online marketplaces like Amazon, eBay, Etsy, Walmart and Tmall.
• Webstore platforms like Shopify, Magento and BigCommerce.

Sales channels cover the whole buying process from researching and buying products, to payment and post-sales support. Management tools vary in their level support for each sales channel: some can synchronize changes in inventory data, but can’t list new products, for example.

Marketing channels, in contrast, are platforms for promoting products that are available to buy elsewhere.

They include:

• Advertising networks like Google AdWords and Facebook Ads.
• Comparison shopping engines (CSEs) like Google Shopping, PriceGrabber and Shopzilla.
• Social media sites like Pinterest, Instagram and Twitter.
• Affiliate networks, display ad networks and more.

Marketing channels do not host the actual sale of products, so multichannel software that integrates with them does not need to download orders or handle customer support – that happens elsewhere. Instead the focus tends to be on one-way Feed Management – creating and maintaining accurate data to send to each channel. More on that later.

What types of multichannel management tools exist?

All-In-One Management Solutions

These are the tools that come to mind first for most sellers, when they think about marketplace management or multichannel management software. They are all-in-one, standalone solutions that sit at the center of the business, controlling just about every process and type of data.

They are all-in-one (as opposed to point solutions) because they cover all the important parts of the business – inventory, sales channels, shipping and so on. They are standalone because they are not hosted within any other technology platform – they are hubs in themselves, connecting out to marketplaces, webstores, suppliers and more.

Browse the directory for All-In-One Management Solutions tools, including reviews, news, related discussions, compatibility information and pricing.

Typical core features include:

• Managing inventory data, including detailed product information.
• Listing to multiple channels and keeping data in sync between them.
• Receiving order data from sales channels and managing shipping.
• Monitoring inventory levels and generating purchase orders for suppliers.
• Reporting and analytics on sales, profits, inventory and more.
• Marketing including channel promotions, email marketing, and repricing.

Not all tools include every feature above and, even when they do, they can vary a huge amount in the depth of functionality. Some tools might be very powerful in inventory and listing, but quite weak in order management, for example. That’s not necessarily a problem, because point solutions are also available and can fill the gaps.

Some multichannel tools have integrations with third-party point solutions, even when have equivalent functionality themselves. Why? It gives users the option to choose different tools to meet specific requirements, without needing to switch systems completely. Use the built-in tool as long as it meets your needs, or switch to an alternative if you need something else – without the pain of changing the entire system.

There are many other features that are found less frequently, and might be utterly essential or completely irrelevant to you, depending on your business. Examples include:

• Retail point-of-sale (POS) integration.
• Dropshipping automation.
• Consignment selling support.
• Warehouse management.

All-in-one channel management tools are a sensible option for most multichannel sellers of general merchandise. They provide a complete multichannel solution, without relying on any other technology platform.

But they might not be the right solution for you if:

• You already use an ecommerce platform (such as Magento) for inventory management, and want to extend it so you can sell on multiple channels rather than switch your inventory management elsewhere. See Cart-to-Marketplace Connectors instead.
• You use an ERP or other enterprise system for inventory management and want to bolt-on multichannel selling rather than replace your existing system. See Channel Feed Management instead.
• You sell a category of products with very specific requirements such as used media, event tickets or auto parts. While some general-purpose solutions do have specific features for these categories, you might be better served by a more specialized solution.

Cart-to-Marketplace Connectors

These tools turn shopping carts like Magento or Prestashop into full multichannel management systems, usually by adding a plugin or app which extends the core inventory management features of the platform.

Web Store Connectors can be a compelling proposition for sellers already using an ecommerce platform as their core system for inventory, order management, shipping and so on. These sellers will often be using a range of apps to add functionality to the platform, and selling on marketplaces can be enabled (in principle) by adding just another app.

Browse the directory for Cart-to-Marketplace Connectors, including reviews, news, related discussions, compatibility information and pricing.

There is also a school of thought that even those who aren’t using an ecommerce platform can be well-served by adopting one, along with a connector app, to create their own DIY multichannel management system. UnderstandingE are one advocate of this approach, using Magento and M2E Pro. This can certainly be cost-effective for smaller businesses, when using a free open source platform such as Magento or Prestashop, but it can also be very technically demanding compared to an all-in-one system. Also, connector apps generally have a cost, even if the platform they run on is free.

Another consideration when taking this approach is that the core of the system – the ecommerce platform itself – is usually designed just as an independent webstore, not as a hub for multichannel selling. In contrast, inventory and channel management systems are built from the ground up to manage selling on multiple channels. The Web Store Connector approach can certainly provide good results for some businesses, but it’s not for everyone.

Channel Feed Management

These tools focus on promoting products through sales channels and also pure marketing channels. Whereas sales channels include marketplaces and webstores, marketing channels cover a huge range of services including advertising networks, comparison shopping engines, social media sites, affiliate networks and more. There’s more on that in What is a “channel” anyway? above.

Whereas inventory and channel management tools might support anywhere from two channels (eBay and Amazon, for example) to tens of marketplaces, Feed Management tools can support hundreds or even thousands of channels.

Browse the directory for Channel Feed Management tools, including reviews, news, related discussions, compatibility information and pricing.

Does supporting so many channels make Feed Management tools better than Multichannel Management tools? Not really. They simply serve a different need. Users of Feed Management tools tend to be “brands”, or at least have their own webstore as the main focus of their ecommerce operations. They already have the essential back-office operations covered (inventory, shipping, purchasing etc.) and just want to streamline the marketing side of their business.

That means generating product data in the correct format, and sending it to all their marketing channels at the right time and via the right medium, such as FTP or an API. That is the core purpose of Feed Management tools.

Some Feed Management tools have other features which bring them closer in nature to inventory and channel management systems, such as order download and real-time stock level updates.

They may also have advanced features for managing, monitoring and optimizing the cost of marketing through all those channels, so the retailer can get the best return possible on their advertising spend. Along with their extensive channel support, it is the ability of these tools to help sellers make cost-effective use of marketing channels that sets them apart from all-in-one multichannel tools.

Setting realistic expectations

Multichannel management solutions sit at the very center of your business, providing a wide range of features necessary for your ecommerce operations. They are also the most difficult and time-consuming to research.

Unfortunately not every seller’s experience of multichannel management software is one of sunshine and sparkles. Although it is a very competitive space, with over 100 tools listed in the directory, many sellers are dissatisfied with the software they are using. There were some eye-opening comments on that point in this post and it was backed up by our 2014 survey.

So what can you do to make sure your experience of multichannel management software is positive? While I don’t want to put you off the idea completely, I do want to set some realistic expectations. Here we go:

It’s not a silver bullet

In general, software is great for solving problems or expanding your capabilities. Multichannel software can do both, but it won’t solve all your business problems or be the only component needed to grow your business.

Software is a tool. Just as a screwdriver won’t help you build a wall, multichannel management software won’t solve problems it wasn’t designed for. Even the right tool, if it’s used incorrectly, can cause more problems than it fixes. Decide exactly what you are trying to achieve then find the right tool for the job.

If your business is complex, your software will be complex

Software can have a positive effect on the way your business efficiency in two ways:

1. It can streamline your existing processes, improving efficiency, automating manual steps and connecting separate systems.
2. It can change your existing processes, replacing complex, error-prone or awkward ways of working with simpler or more conventional procedures.

What it can’t do is take convoluted or vague processes, and make them better just because they are now in a software system. In fact, it might do the opposite: your 20-step listing workflow could get exposed for all its complexity, repetition and inconsistency and become completely unworkable.

It’s part of your business, not a bolt-on to it

For an ecommerce business, multichannel software sits right in the middle of what you do day-in and day-out. In business software jargon, it performs the functions of an enterprise resource planning system or ERP. That includes inventory, marketing, sales, shipping, accounting and more. Those functions aren’t something nice to have on the outskirts of your business – they are your bread and butter.

To adopt multichannel management software successfully there are normally wider changes needed in the business. Some of those changes may create ways of working that are better in their own right. Others might be no better than existing processes, but are necessary so you aren’t constantly “fighting” software that wants you to work a different way.

Expect the software to become absolutely central to the day-to-day running of your business, and to have to make some compromises along the way.

There’s a steep learning curve

As the internet has matured with cloud-based applications and mobile apps, both our usage and expectations of software have gone through the roof. Today we are used to tools that install in seconds and can be used instantly, with no need for training or instructions. People carry those expectations over to business apps, and get frustrated when they can’t perform a task or find a setting by just “browsing around”.

But why shouldn’t multichannel tools be easy to use? Well, many solutions do have very high standards of usability, but – once again – selling through multiple sales channels is really complex. There’s no way a system, however well-designed it is, can magically configure itself to fit your business, or automatically lay out all its features in exactly the way you think of them. Some things just have to learned through use, experimentation, training and study. It might also be best to get the system set-up by professionals, as the initial configuration is a one-time job that often requires deep knowledge of the system and how it can be used.

That steep learning curve is not only to do with the technical set-up of the system, it’s also about how you run your business. It often makes sense to change your business processes alongside adopting a new multichannel system. It’s hard to learn a new way of working as well as new software, and the whole process might be intimidating. But with plenty of practice the clouds of confusion will clear and it will become second nature. Just don’t get too discouraged when you are at the bottom of that mountain.

Cheap isn’t necessarily cheap

The market for multichannel management software is highly competitive, with vendors charging from tens of dollars a month to tens of thousands or more. How can suppliers possibly justify charging ten or a hundred times more for what looks like exactly the same functionality?

Well, in some cases perhaps they can’t, but in others they definitely can. Why? Well, it’s not just about cost, it’s about return. To find out the true value of something, you need to look at:

1. Everything you have to give: money, time, the energy and commitment of staff, calls to support, suffering through outages or faults, manual steps due to missing features etc.
2. Everything you get back: higher sales, lower staffing costs, fewer mistakes, fewer missed opportunities, time to grow your business, expert advice, new sales channels etc.

The return you get from multichannel management software is much more complex than you can see by just looking at the price. The cheapest solution could have a very low return, if it’s difficult to learn and has poor support. The most expensive solution could be fantastically profitable, if it’s the best in every way that matters to your business. And vice versa.

The right choice depends on you. Depending on the size of your business, your aspirations, requirements and own capabilities, you might get the best return from the cheapest, the most expensive or anywhere in between.

It’s hard to test, and even harder to switch

In most areas of ecommerce, experimentation is a great idea. You can (and should) try out different product images, sales promotions, shipping options, email messages and more. Some software also lends itself well to experimentation, like repricing tools.

Multichannel management software does not lend itself well to experimentation. Yes, you can take a demo or a trial, and poke around in the system to get a feel for the interface and features available. But taking a full live trial of several systems is something else altogether. Here’s why:

1. It takes significant effort to get set-up and trained properly on each multichannel system. That will be different every time, because each system is different.
2. It’s difficult to run systems in parallel or only switch certain parts, because everything connects back to a master source of inventory data. It’s probably not feasible to keep that in sync between two systems, so you either have to make a full switch or keep everything where it is.
3. The lifetime of inventory and transactions can be long. You might purchase stock in January, sell an item in June, and get it returned in July. If you’ve tried three different systems in that time, it’s going to be really difficult to trace everything correctly. And your reporting will be a chaotic patchwork of different data formats and spreadsheets.

The effort of trialing one multichannel tool after another could paralyze your business from doing anything else. All that work should be saved for a system you are 90% sure is right for you, by doing everything possible to assess its suitability before committing to a trial or a contract.

How to choose multichannel software

As you’ve probably realized by now, selecting this type of software takes a major investment of time and energy. It’s not a process to be taken lightly, and no-one can simply tell you the right answer – there is no “best” provider. Think of it as a research project, that should be scheduled for a time when you can give it the attention it deserves, not when your sales are highest or you are dealing with other major issues.

Here are the most important factors you should consider when researching multichannel tools.

Your business size and type

It’s easiest to look inwards at first. Capture some statistics about your business, such as:

• How many orders do you process, and what is the total value of your sales?
• Are you sales seasonal? When do your orders peak, and at what level?
• Where is your business based? Does it have multiple locations?
• How many SKUs do you have? How many suppliers?
• How many employees do you have? How many will use the software, and in what way?
• What type of products do you sell?

For all of those, how do you see them changing over the next year?

With that information in front of you, you should find it easy to form some initial thoughts about the kind of supplier you are looking for. For example:

• Who is their typical customer? Are they similar businesses to yours (or where you aspire to be)?
• What size or type of businesses do they want to work with? Will you be an important customer for them?
• Do they reference the same type of challenges that you have, or are they pitching something completely different?

The gut feeling you get from their website should answer many of those high-level questions. You can usually tell quickly if a supplier targets smaller sellers fighting to get their first channels established, or million-dollar brands who want to automate an existing operation which already has many global sales channels.

Few providers can be all things to all people, so look for ones who sit firmly within your world.

Matching your requirements

Now it gets harder. The features and capabilities are clearly the reason for wanting a marketplace management system in the first place, so they are crucial to consider carefully.

Features for this purpose can cover just about anything, for example:

• Integrations such as with marketplaces, webstores, parcel carriers and other software.
• Inventory management capabilities such as variations, kits, and bundles.
• Support for multiple users with different levels of access to data and functionality.
• The level of training and support required.

When building the list of features you need in the software, there are two common, and completely opposite, problems to be aware of:

1. Forgetting about key features that you really need, then finding out they don’t exist once you actually start using the system.
2. Building a “wish list” filled with every possible feature you can imagine, so it becomes impossible to find any provider that can meet it.

It’s actually easy to fall foul of both problems at the same time: throwing in lots of features you don’t really need, while forgetting about some that are absolute musts.

I believe the key is a two stage approach of:

1. Generating a list of features, by a number of different means.
2. Giving a score to all those features, so you can focus on the ones that matter most.

Don’t combine the two stages! You need the scoring stage to be really objective, and it’s very difficult to do that at the same time as generating the ideas. Why? Because almost everything feels like a must-have when you first think of it.

Here are some ideas for generating your list of features:

• Brainstorming sessions with your team(s). Do not filter their ideas, so you can get everything out there – filtering comes later.
• Detailed walk-throughs of all your processes, noting what is needed at each step.
• Reviewing feature lists on supplier websites.
• A phase of “heightened awareness” when everyone in the business gives extra attention to what they do and what they need to complete their jobs efficiently. It’s easy to forget what’s involved in your work once it has become second nature.
• Using an external consultant who can more easily give an outsider’s view of your business.
• Watching demos and taking non-live trials of different systems to get an understanding of what’s possible.

To score all the features, I recommend two things:

1. Involving the right people.
2. Using a simple scoring system.

If you don’t include the right people – typically those who do the tasks that the feature supports – you are working in the dark. Unless you are the only person in your business, it’s dangerous to assume you know what everyone needs.

A suitable scoring system shouldn’t have a wide range of scores. A ten-point system, for example, might lead to protracted discussions over whether something is a six of a seven. That doesn’t really matter. For most businesses, a score of one (mandatory), two (optional) or three (not really needed) is enough.

It can also be useful to compare features to each other, and say, “Is feature A the same importance as feature B that we’ve already looked at?”, or, “Is this feature needed to make these other ones work?”, to get the right score. It’s often easier to compare features than look at each one independently.

Pricing and contracts

Many sellers are tempted to start by looking at pricing. You have to choose a system that’s affordable of course, but a cheap system that doesn’t meet your needs can cause more problems than it solves. On the other hand, if the features you need cannot be found in any system in your price range, it might be time to work on the profitability of your business – by concentrating on fewer, more profitable SKUs for example.

Pricing for multichannel management software varies a great deal. Pricing models can include:

• A percentage of sales or a fee per order. Typical percentages are in the 1% to 2% range.
• Tiered subscription levels with an increasing number of orders included as the price goes up.
• A modular approach where you can pick and choose the number of supported channels and other features from a “menu”.
• Per-user pricing with a fixed monthly cost for every user of the system.
• Various combinations of the models above. Tiered subscriptions with additional fees for going over the limits, for certain features, or for extra users, are quite common.

There’s no universal answer to which pricing model is better or cheaper. It depends on your business. While a percentage of sales has the fairness of scaling up only when your business is growing, some sellers hate the idea that a third-party is taking a cut of every sale.

Tiered pricing models allow for some growth without additional fees, but there can be large jumps between pricing levels, or per-transaction fees for going over the limits. Ironically, given the strong opposition some sellers have to percentage fees, the total cost can often be similar under both tiered and percentage models.

Modular pricing can be attractive, because you don’t have to pay for features you don’t use, but they have the downside of a price increase whenever you do need a feature that’s not in the core package. Experimenting with a new marketplace or piece of functionality then has a financial impact, and that might hold you back from making changes that could grow your business.

In summary, I’d advise against disregarding suppliers just because of their pricing model. Instead, calculate how much each solution will cost you both now and in a few different future scenarios you think are possible.

Another key factor is contract length. While some suppliers have monthly contracts, and make that a key selling point, others will want you to sign up for a year. Some offer discounts and other incentives if you sign up for even longer. These contracts are not to be taken lightly – the onus is on you to make sure the software fits your needs both now and in the future, and that you can afford the fees even if your business struggles for a while.

As well as the “hard” costs of using the software, also consider the “soft” costs of other services that might not be mandatory but can make a big difference to successfully adopting the system. For example:

• Setup and configuration.
• Training.
• Different levels of support.
• Business consultancy and advice.

Some providers include all their soft services in the price, while others treat them all as optional add-ons. They may also have third-party integrators and consultants who you can choose to work with instead of using their in-house services. Either way, just because a service is optional doesn’t mean you won’t actually need it.

Try to assess your need for soft services, just as you do the more tangible software features, and include them in your total cost estimate. While a DIY approach can be tempting, it might cost you more in the end.

Overall quality: reviews and references

All the careful feature analysis in the world can’t tell you if a system is actually any good. For example, you’ll find plenty of software that can list to eBay and download sales orders, but they’ll vary a huge amount in areas like:

• How “robust” the implementation is. Does it work every time, without error? Or is it a little flaky, leaving you unsure whether it’s really doing its job or not?
• The responsiveness and usability of the interface. Is it quick and intuitive to use? Is there built-in help, or a searchable knowledge base so you can get quick answers?
• How “available” the software is. No system has 100% uptime with no outages or periods where it performs slowly. Ask how much downtime or degraded performance there has been in the last 12 months. It’s common for uptime to be measured in the number of “nines” e.g. 99.9% but bear in mind that even that percentage equates to around 9 hours of downtime over the course of a year.
• How quick they are to respond to changes such as new marketplace policies, and how often they release new features. They might share their “roadmap” of planned changes with you, which can be useful, but a better measure is what they’ve released over the last 12 months. Roadmaps are often wildly inaccurate. Don’t be surprised if a feature you are waiting for is repeatedly delayed, or disappears from the plan altogether.
• The responsiveness and quality of technical support, both during implementation and in day-to-day operations. When we see negative reviews on Web Retailer, the most common root cause is not the technology, but the support. Slow responses and insufficiently trained support staff are the biggest complaints. Even the tone of responses can cause a lot of ill-will, if they are perceived as unhelpful, dismissive or unprofessional.

The overall quality is where you really need the input of existing or past customers. We work hard at Web Retailer to get high-quality reviews, and they are a key factor in how listings are ranked in the directory. Take a look at the main Multichannel Management category and go into a few listings to get a feel for what people say. Reviews are connected to the forum so you can also reply to reviewers or send them a private message.

But always bear in mind that reviews are just opinions. Look for patterns, rather than giving a lot of weight to individual reviews. Treat it as just another research process. For example, one or two reviewers who had a poor experience could be an anomaly, but if there are ten all making the same point then you should take it more seriously.

Also be aware that people are much more motivated to leave a review if they have had a negative experience, so don’t let isolated one-star reviews outweigh others that are generally positive. Read what they have to say and interpret it accordingly.

Besides reviews, talking to users over the phone or (even better) face-to-face can be very enlightening. Although they will be doing you a favor, don’t be afraid to ask questions and dig into their experience. People are sometimes reluctant to share negative feedback, but it’s rare that a business has a 100% perfect experience with software as complex and business-critical as marketplace management. Find out all the details of their experience, warts and all.

In Closing

Multichannel management tools are really an “enabling technology” for selling online through multiple marketplaces and webstores. Yes, it’s possible to sell through multiple channels without software, but why would you want to? It will drive you just a little more crazy every time you add another channel. The right technology changes it from a chaotic game of whack-a-mole to a relatively straightforward technical task.

The biggest barrier for many businesses is not really the cost of the software, as the savings and opportunities to be gained should easily outweigh that. It’s the time and effort needed to research software, embed it in your business, and get it running smoothly. I hope this post has helped make that process a little easier for you.