7 Questions to Ask When Choosing a Sales Channel for your eCommerce Business

What types of sales channels are there, anyway?

There are five main types of sales channels and multiple platforms within each. They all have their pros and cons, so you’ll need to research them carefully to which one(s) are right for you.

Consider this a high-level view to get you started:

Auction:

Pretty much everyone has heard of eBay, but there are a host of lesser-known auction sites as well. These range from sites—like eBay—where you can buy virtually anything, to specialty sites like Hip eCommerce, which zeroes in on comic books, postcards, and stamps.

While you can frequently find brand new, mass-produced goods for sale, auction sites lend themselves to rare finds, collectibles, and antiques. 

Fee structures vary by site but generally involve some combination of listing fee and commission. You can get started quickly, but you’re limited in how much you can personalize your listings. You’ll be responsible for fulfillment yourself.

General marketplaces:

Think of these as the “Big Box” stores of the eCommerce world. Sites like Amazon, Walmart, Rakuten, and Sears allow eCommerce businesses to take advantage of huge audiences and instant credibility by selling on established market platforms.

Of course, with the benefits come increased competition and more regulations. You may have to get approval before being able to sell on the site or within certain categories. Even then, you’re subject to strict requirements around images, titles, and categories. It’s harder to establish a brand presence, and it’s much more difficult to build a long-term relationship with your customers. 

On the other hand, some, such as Amazon FBA, offer fulfillment services, an important consideration, especially for high-volume sellers.

These marketplaces lend themselves to mass-produced, mass-market items. Costs can include monthly fees, listing fees, and commissions. 

Handcrafted:

Etsy is the best known of these platforms, but there are others, such as Artfire and Craftsy. These are ideal places to sell handmade items and art pieces. Costs can include a listing fee and a commission.

Typically, you’re responsible for fulfillment yourself, but depending on the platform, you may have some flexibility around your brand. Etsy, for example, allows you to build your own “store” within the platform, giving you a chance to showcase your products, build awareness of your brand, and create customer relationships.

Social Media:

Facebook, Instagram, and Pinterest all offer sales platforms. Since there’s no upfront cost to set up a store on any of these platforms, they can be a great way to test the waters. They can be operated on their own or integrated with your eCommerce site (see below).

The social nature of these platforms allows you to engage with buyers and connect with potential customers. This can help you conduct research about what your audience wants and get feedback on your offerings as well as build brand awareness.

You’ll be responsible for your own fulfillment. Costs are generally limited to commissions on sales.

Your own eCommerce site:

And of course, you always have the option of creating your own site. This can be done through SaaS services such as Shopify and BigCommerce, which make it relatively easy to create a shopping site for a monthly fee. Open source platforms such as Magento and WooCommerce offer ultimate flexibility over design and integrations, but they require deep technical knowledge to build—or deep pockets so you can hire someone to build for you.

You’re responsible for fulfilling orders yourself or finding someone to do it for you. Costs can include design and technical work and monthly fees for hosting and service.

7 Questions to Ask When Choosing a Sales Channel

Now that we’ve established our bird’s eye view of your sales channel options, let’s go over the 7 questions you should ask yourself before selecting one or more of them for your eCommerce business:

1. Is it a Good Fit for my Products?

Are your products custom-made or one-of-a-kind, or are they mass-produced goods aimed at a huge audience? Chances are, you won’t want the same platform for both.

Also, consider your product’s price range and marketplace niche. Higher priced and specialty items may lend themselves to personalized storefronts that allow you to build brand awareness, create upsell and cross-sell opportunities, and build a sense of community for your customers.

2. How Well Does it Support my brand?

The more important brand is to you, the more you should consider steering toward shopping platforms like Shopify or Magento that can be customized. Your visual brand is important, but customizable platforms also allow you to build mailing lists, communicate regularly with your customers, and appeal to them through targeted ads. 

But if brand is less important than instant credibility and access to a huge market, then platforms like Amazon, Walmart, or Rakuten might be a smart way to get up and running quickly.

3. What are my upfront costs?

If you’re starting on a shoe-string budget, sinking all your startup funds into a custom-built website may not be the wisest use of your money. Even if you’re flush with cash, think carefully before tying up too much of your money in upfront costs. Not enough cashflow can severely limit your options later on.

4. Can I build a relationship with my customers?

New customers cost more money to acquire and are less likely to make purchases than repeat customers. That makes high customer retention rates one of the cornerstones of a successful eCommerce business. . Depending on the type of products you’re selling and the opportunities for repeat purchases, being able to build an ongoing relationship with your customer could be vital.

The big-box retailers like Amazon and most auction sites make it difficult if not impossible to contact customers directly. Social media platforms allow customers to contact you directly and offer engagement opportunities through posts and advertising. And of course, with your own site, you can build mailing lists and reach out to customers directly.

5. What are my options for fulfillment?

Once you’ve decided to scale, you’ll quickly outgrow your garage or workshop. Smart decisions about where to keep your inventory, how to package it effectively, and how to deliver it quickly can make or break your business. 

Amazon, Rakuten, and eBay offer fulfillment services, but don’t let that be the sole deciding factor in whether to choose one of them. There are multiple third-party fulfillment services that can provide branded packaging, speedy delivery, and returns management. Look for one that integrates with your platform and works with your business model.

6. What are my margins with this platform?

Of course, you want to keep profits high and costs low, but it’s usually a little more complicated than just comparing the costs of fees and commissions between platforms. 

Amazon offers the potential for high-volume sales and a strong fulfillment program that could help you scale, but charges a host of fees and commissions that can eat into your profits. 

By selling from your own site and building your brand around a specific kind of consumer, you may be able to sell your products at a premium price and make a higher profit per sale, but you may make fewer sales and have to pay more for advertising. And while auction sites can be a great way to reach niche markets, they can also tie up your inventory for weeks at a time, thereby impacting your cashflow.

Try to step back and look at the overall picture to understand all the costs involved in a particular platform.

7. What does the future hold?

Unfortunately, we don’t have a crystal ball on hand to tell you exactly where you’ll be in five years, but it’s worth spending some time thinking about your goals for the future. It’s easier to scale from an existing platform than to switch platforms after you’ve outgrown one, so look for a platform that can grow with you.

And if you hope to eventually sell your business or have it acquired, it’s wise to focus on building your own brand and customer mailing list.

FINAL THOUGHTS

Putting in the time to fully research and understand your sales channel options is one of the best investments you can make in your business.



Ultimately, the sales channel you choose will depend on a combination of factors unique to your business. While the type of product you sell is important, you also need to consider your start-up budget, brand, ongoing cashflow needs, and potential profit margins. There’s no right or wrong answer, but by asking each of these questions about the channels you’re considering, we hope you’ll be able to find the right one for you.