Matthew Ferguson takes on his hardest question yet: how to choose a multichannel management tool – the octopus of your ecommerce zoo!
We sell a number of goods from several different suppliers, and we can’t keep it all organized with spreadsheets anymore. We sell on Amazon and eBay, and want to sell on Walmart and others. We were looking at systems out there and there’s so many. Inventory managers, listings tools, etc. I have no idea where to start. They all seem to do different things. Help?
— Chris from L.A.
Oh dear, this is a big topic. Unless you have eight arms, each with suction capability, you’ll never be able to spin all these plates via manual spreadsheets alone. The tsunami of words I could use to flood the next 20 pages might not help, so I’ll try not to put you to sleep. Grab a coffee Chris.
Let’s be clear first…
Yes, you need a system, or three. Any seller on more than one channel needs something in place. The bigger your catalog is, and the more product types you have, the better the system you will need.
That’s about the best I can give you and be sure of being 100% accurate. Everything else is based on many variables and business factors. There is no perfect system for everyone. But there are perfect systems for specific needs.
Types of multichannel systems
There is, as you rightly pointed out, a long list of overlapping systems. Some are focused on a core set of uses only. Others do everything, including taking your trash out at night. They all overlap. Some are strong in some areas, and weak in others. Some support some channels and others don’t, or only in certain ways.
Frankly, it’s a hell of a challenge. We do this selection process for sellers as part of our business, and we get lost in the details at times too. I don’t just mean me, the maverick of our operation, I also mean the smart people in the company. If we find it hard at times, I can’t even imagine how… “challenged” you are by it all. Insert your profanities of choice.
Ignorance is bliss, so do yourself a favor and stop reading my article. Google “listing tools” and “channel listings managers”, and have on-screen demos of the ones that come up on page one. Don’t take it any further. Get out while you still can Chris!
If you’re still here, lets first try to categorize this mess. I’ve listed the categories I use below, but there are lots of systems, and they don’t fit these categories perfectly, any more than mother nature’s creations fit biologists’ spreadsheet columns. Just ask the platypus.
But let’s try. Loosely, these systems fall into:
Channel management systems
These manage your listing data across lots of channels. Stock levels, product data and orders are all centralized in a common area for control. The better ones have layers of reporting, and functionality to make operations easier than handling each channel individually.
Inventory management systems
These handle SKUs as a core focus, with the ability to manage suppliers, purchase ordering, stock level forecasts, and stock movements. Essentially, data management is what underpins these systems.
Warehouse management systems
These focus on the physical aspect of your operations, typically to support multiple carriers and/or multiple warehouse locations. They keep tabs on where everything is and where it’s going next… basically.
ERPs / PIMs
These are fancy names for bigger systems which combine the last two above. They are usually for manufacturers who need to control and follow the full lifecycle of a new SKU, from the moment the company gives birth to it on an unsuspecting Friday evening, till its departure from this world into the next.
These are simple tools, which sync your website to multiple channels. Typically they handle the listings, stock and orders like channel management systems, but they only really focus on the basic controls, and handle just one or two channels.
In practice, these all overlap and the examples I’ve given can (technically) be placed in numerous categories. There are about a bazillion other examples we could add to each one too. The industry is a fractured overlapping mess of tentacles, likely to scare you easily and explode an ink cloud of annoyance across your face.
I have no idea which one you need, Chris. Not a Scooby Doo. It depends completely on your present infrastructure, the size of your team, how you work, your business model, your short- and long-term goals towards channel and catalog expansion, your pain points, your astrological star sign, your blood type and a whole list of other variables. And your budget too, as they range massively in price.
We actually did a presentation on this selection process a while ago. I added it to YouTube just for you Chris:
Let me tip you
I’m going to try to guide you with some questions – it’s the best I can do in this format. I’m winging it without knowing a lot more about your business. More so than normal anyway.
Ask yourself things like:
- Is your goal to control quantities and orders?
- Do you also want to control product data? Is this more or less important than quantities?
- Do you want a system that raises supplier purchase orders too? And shipping orders?
- Do you have a website? Is it on a well-known platform with lots of apps?
- Where do you keep your master data records?
- How do you update your main source of product data, stock levels, order statuses etc?
Basically, you need to figure out what your core pain points are. Don’t worry about the system straight away. Focus on what you need first:
- Make a list of manual processes, or things you feel take too much of your time.
- Include any manual workarounds, between two systems that you use but aren’t connected.
- Add any repeating issues or mistakes you have noticed.
- Rank the whole list from most to least important.
- Add a “theme”, or broad topic, to each item on the list.
Based on the rankings and themes, you will have a pretty good indication of what you do and don’t need, along with which are most critical.
If you find your top-ranked theme is about keeping stock and price updated more reliably, then use a channel management system, or a plug-in for your website.
But if you are having trouble with order control, both outbound and inbound, get an inventory management system too, or a system that does channel and inventory management combined.
If you have trouble shipping orders out the door, you might need warehousing support as well…
Don’t worry too much, because you’ll pick wrong
Yup, I’m sorry to say that even if you make the right choice and continue to grow, it will be the wrong choice eventually. The reason is simple.
The best, most comprehensive systems out there are huge and very costly. If you tried to use one of those right now, it would hinder your growth financially. Now, maybe I’m reading this wrong. Maybe you’ve built a multi-million dollar company on the back of spreadsheets. But, based on the information you shared, I’m willing to bet you aren’t the next Nike just yet.
To become the next Nike one day, you’ll need to grow steadily, and that will take a big step-up in software. The smaller systems I mentioned above are awesome compared to manual spreadsheets. They will be a mega-upgrade. If your growth stabilizes and you plateau on a comfortable income, maybe you’ll never move off them. You can just happily retire on a yacht.
Application programming interfaces, or APIs for us geeks, are basically “open doors” for the transfer of data. If you have a system with an open API, it means this system has a technical means to extract data from it and send data into it.
…am I losing you? If I am, don’t worry. You don’t really need to know what this means. Just follow a few guiding rules:
- If a system has an open API, there is a good chance you can connect other programs to it.
- If you pick systems with open APIs, you’ll be able to automatically tie them together in some, if not all, of your data movement procedures.
So where you have program A and program B, which do not “connect” to one another, if both have APIs then you’ll be able to find some geeks who can connect them.
At the end of the day, that is what a channel management system really is at a fundamental level. It’s an out-of-the-box pre-made fancy-looking easy-to-use group of internal APIs. It connects you to eBay’s API, to Amazon’s API, to Walmart’s API, while also giving you an API to connect another system, while showing you how many cans of unicorn spam you sold in a groovy colorful far-out dashboard pie chart.
Pick systems with open APIs and you’ll always be able to connect them to other systems. Simples.
Know your long term plan
There’s another reason why this is so tricky: you can’t see the future. If you could, let’s be honest, you would be winning the lottery often enough for the FBI to have parked a minivan nearby.
Marketplaces rise and fall. They contract and expand. Your suppliers might go out of business, or raise their rates. Aliens might land, the bad kind, and enslave us as intergalactic fast food kitchen cleaners.
Maybe you’ll win the lottery and send me a picture from your yacht? Maybe I’ll send you a reply back with a picture of my finger. We just don’t know what’s going to happen.
But it is important to have a plan. You are on eBay and Amazon, so you know the system has to support those two channels. Walmart has far fewer systems supporting it, so the list narrows if you want to support all those three at the same time.
If you use any shipping tools, that should factor into the selection process, along with costs of course, and the ability to support the system long-term.
In summary, make sure you know exactly what you need first. Demo the platforms, tally the features, decide which extras make the most sense, and balance all of this with your budget. Make sure it won’t hinder your growth in the short-term, so it has time to sow long-term rewards that you’ll reap later.