Multi-Channel Retailing: Definition, Benefits & Challenges

With so many ways for customers to shop, it’s important that your business can stand out from the norm. Sticking to the old traditional brick-and-mortar store just isn’t enough anymore. But like most business strategies, it’s important that you start with baby steps. Multi-channel retailing could be your first step towards transforming your business model.

What is multi-channel retailing?

Multi-channel retailing is a business strategy that offers your customers different sales channels to purchase from you. It is often mistaken for omni-channel retailing. The most common types of sales channels typically include physical stores, online stores or ecommerce platforms like Shopify, third-party marketplaces such as Amazon, social media platforms such as Facebook Marketplace and Pinterest, and mobile applications for shopping on the go.

To understand the concept of multi-channel retailing better, let’s read about an actual business that implements it: Apple. Apple’s multi-channel strategy consists of both online sales channels—third-party marketplaces like Amazon, eBay, and other country-specific platforms—and offline sales channels—the hundreds of Apple retail stores and other electronics-based retail outlets. Customers can pick any one of these sales channels to purchase an Apple product. In most cases however, they like to do their research through one channel, and then buy through another. For example, some customers like to use a technique called webrooming, in which they do their research on Apple’s official website, then use the website to locate a store nearest to them, and finally purchase a product from one of the retail stores. All of these channels put together boost Apple’s sales by a significant margin.

Now, let’s take a look at the benefits and challenges of multi-channel retailing.

How businesses can benefit from multi-channel retailing

Since multi-channel retailing is an improvement over the most common strategies, let’s compare it with single-channel retailing to get a better grasp of its benefits.

Better revenue

Even after you invest a lot of money on advertising and marketing and establish brand awareness, if your customers have only one way of buying from you, it won’t necessarily increase your revenue. But by spreading your business across multiple platforms, you could pop up more often into a prospective customer’s view and therefore receive more attention. This will give them the time needed to browse through your store, compare prices, and do their research which is necessary for them to buy from you eventually. Improved revenue is by far, the most prominent advantage that multi-channel retailing displays.

More ways to buy from you

Like any other skeptical person, most customers would hesitate to buy from a business that they stumbled across once. And if that one viewing is all they ever get, then the chance of them remembering your business and looking for you is impossibly low. With just a single sales channel, all your customers would be forced to buy from you using just that channel. And this is okay for customers that have purchased from you earlier and trust your brand, but it doesn’t necessarily attract new customers who are considering buying from your business. So with multi-channel retailing, you can offer your customers multiple ways to buy from you, from which they can select one based on their comfort and convenience. This will give you a competitive advantage over single channel businesses. Simply put, more ways to buy from you could mean more customers.

Collect valuable data on customer purchases

Multi-channel retailing allows you to collect a lot more data on customer purchases compared to a single channel. By doing this, you can tell which sales channels your customers seem to prefer and which ones they don’t, so that you know what specific parts of your business to work on and how to promote your business. Additionally, with a single sales channel, you wouldn’t be able to compare your sales with any other channel since you’re stuck with the one you have. Comparing several channels gives you more perspective. If you don’t have anything to compare to and you’re selling X volume of goods per month on one channel, you might think that’s pretty good. If you start using several channels and see that you’re selling 10x volume of goods on another channel, you haven’t only learned that the other channel is better—you’ve also learned that you can shoot for much higher than your original X volume. Also, you don’t have to only compare different channels’ overall performance; you can also compare how different products perform on different channels. Knowing which product to promote on which channel is part of the valuable data you’re collecting, right?

What are the challenges of multi-channel retailing?

Although multi-channel retailing is a helpful strategy, there are a few factors that businesses need to consider before implementing it:

Difficulty coordinating inventory across sales channels

By far, the biggest challenge when it comes to multi-channel retailing is the difficulty of managing inventory across all the different sales channels. This is because each channel is independent of the others—so a change in one channel will not be reflected in the others unless they are manually updated. Suppose a multi-channel retailer has 3 different channels: a physical store, an ecommerce platform, and a third-party marketplace like Amazon. They run out of stock for a specific product and immediately mark it as out-of-stock in their ecommerce platform, but forget to mark it in their third-party marketplace. Now if a customer places an order for that product in their third-party marketplace, the retailer will either have to turn the customer away or keep them waiting, both of which are embarrassing and not good for the business.

Costly investment

Multi-channel retailing is expensive. On its own, it might not seem to cost that much, but when added to other pricey business expenses like marketing ventures and advertisements, it could sum up to be a large amount of money. It is especially costly if you plan on setting up a lot of channels. This is because each channel will require you to incur another round of expenses, like setup costs, customization, and hiring employees to manage it. Test the waters first and start out small with just one or two extra sales channels. Once you have a proper strategy in place, you can start adding more.

In an attempt to get customers to buy from them, different businesses experiment with different strategies. One such strategy is multi-channel retailing, which is the practice of selling across multiple sales channels. Unlike omni-channel retailing, multi-channel retailing only allows buyers to use one sales channel per transaction. With multi-channel retailing, businesses can offer their customers different ways to buy from them, boost their revenue, and also collect important data on their customers’ purchases which they can use to improve their sales further. If multi-channel retailing seems like a strategy that would suit your business, then check it out today!