There are more ways to sell products now than ever before. With a customized multichannel distribution system, your business can expand its reach well beyond a single store. And if managed properly, that multichannel distribution system will drive more sales to more customers than a single store or channel can attract. But first things first, what is a multichannel distribution system?A multichannel distribution system is a sales and marketing distribution method that weaves together sales from more than one channel or store. Instead of setting up a single storefront (digital or physical) and waiting for customers to arrive, multichannel retailing allows you to present your goods for sale where potential customers are already shopping. It’s an effective and strategic way to increase sales and brand awareness at the same time.

Benefits of Multichannel Retailing 

A well-optimized multichannel distribution system requires the right technology, tools, and strategy. Social media, eCommerce platforms, and online marketplaces each come with unique requirements, and a robust system ensures you can navigate these efficiently. Here are some of the top benefits:

1. Reach a Wider Audience
Multichannel distribution allows you to diversify your targeted audience. You’ll be able to attract different customers through different channels. While some may prefer an Amazon-based user experience, others prefer the convenience of purchasing through social media.

2. More Face Time with Your Customers
By expanding into new channels, you’ll maximize the number of impressions you make on your customer. The more opportunities a customer has to purchase your products, the more likely they will be to convert. And seeing your brand in multiple places, like third-party sites and major retailers, increases brand trust. Selling on well-known channels lends credibility to your brand and product, helping you punch above your weight.

3. Boost Revenue and Profitability
Each channel will have its own unit economics and margin characteristics, so plan for additional analysis around pricing strategy as you expand channels. But with the right tools, resources, and software, multichannel retailing can help your business to increase revenue and leverage your fixed costs, driving operating profits higher.

Challenges to Watch Out For

‍1. Increased Inventory Costs
‍Selling across multiple channels means higher warehousing and inventory management costs. You may have to hold more inventory in aggregate to support sales across multiple channels than just one. And you may not sell exactly the same items on all channels, which impacts your purchasing strategy by product. So while the additional sales are typically worth it, a multichannel strategy means higher working capital investment and more complex supply chains considerations. To retain as much profit as possible from the additional sales coming in, consider investing in software that helps optimize purchasing, as well as intelligent inventory allocation to each channel.

2. Complex Operational Processes
Supply chain management becomes more complex as you expand into multiple sales channels. Make sure to scale up your  internal fulfillment capabilities, or partner with a 3PL that has the operational sophistication to manage the requirements of each sales channel. 

3. Sales Channel Conflicts
Synchronization across sales channels is crucial. Without proper data integration and a centralized view of demand, you risk overselling - leading to backorders and unhappy customers, or underselling - which means getting stuck with excess inventory. Implementing centralized inventory tracking, and allocating stock by sales channel, helps maintain optimal inventory levels and prevents fulfillment delays.

Tips for Multichannel Distribution Success

1. Choose the Right Sales Channels
Not all channels will provide favorable unit economics. After accounting for the necessary retail price (MSRP), wholesale price (if applicable), and all associated fees, some channels won’t generate enough contribution margin for your business. Do the math before signing on - and if you can’t negotiate the right terms, it’s best to choose another channel. 

It’s also worth considering the target audience on each platform. Beauty and wellness products lend themselves to social platforms with an emphasis on visuals like Pinterest and Instagram. If you’re selling books, you may choose other avenues. The important thing is to be thoughtful and deliberate with the channels you choose and to have the right resources in place to handle the additional volume if things go well.
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2. Centralize Sales and Inventory Data
It’s important to centralize your omnichannel data when you are selling through various channels. Choose inventory management software that can aggregate and synchronize order and inventory data. Manually updating multiple platforms or falling out of sync will cost a ton of time in operations and customer service, which will offset the increased sales you’re generating.‍

3. Optimize Order Fulfillment
Don’t wait to be caught off guard! Prepare for higher volume, and large wholesale orders, before they break your current systems. Manually entering one or two tracking numbers per day doesn’t seem like a big deal; one or two thousand tracking numbers will slow your operation to crawl. Plan to automate as much of your order fulfillment flow as possible so that your team is focused on getting the next sale instead of manually processing the last one. 

4. Partner with a 3PL that Integrates With Your OMS
Outsourcing logistics to a trusted partner will allow you to focus on other areas of business while continuing to sell on multiple sales channels. Most 3PLs specialize in either eCommerce or retail fulfillment, but the best ones do both well. Depending on your needs, you may need your 3PL to support distribution into D2C eCommerce, Dropship eCommerce, Small Physical Retail (ship to store), Large Physical Retail (ship to distribution center), and/or Private Label customers.

Each additional sales channel significantly increases the overall complexity of operations. In our experience, it also significantly reduces the number of external providers that are capable of managing the entire business. When you’re ready to explore a 3PL partnership, Endless Commerce can help. Our order management system (OMS) has pre-built integrations to most warehouse management systems (WMS) for quick and painless onboarding. And if you need some friendly intros to non-sketchy 3PLs (aka thoughtful, brand-centeric operators)—we'll hook you up.

Curious about what your revenue could look like with a commerceOS that supports multichannel distribution and logistics? Contact us today.