Amazon commanded nearly 60% of U.S. online retail purchases in 2021. So, why would you want to sell your company’s products anywhere else?
Channel diversification is a good idea for a myriad of reasons. Today, over 50% of online stores have started using multiple channels to optimize their sales. They’re expanding their reach, but they’re also mitigating the risks and controlling the costs that come with Amazon overdependence. Through channel diversification, you can drive more business at a time when e-commerce sales have grown over 50% since 2019.
Let’s take a closer look at what you need to know.
Risk Mitigation
Amazon has created a strict set of rules so that sellers always provide quality products. This form of buyer protection keeps customers coming back, and it levels the playing field for businesses of all sizes. Yet even fair-minded sellers who follow the rules can run afoul of them. Amazon can change its terms of service without notice and explaining that you didn’t know about a change won’t get you very far.
If Amazon suspends your business, you’re sure to lose revenue. And if Amazon is your only sales channel, your entire operation could come to a halt. Even if you don’t violate its terms of service, Amazon can restrict the sales of a particular item at any time. The company has a long list of restricted products and aggressively removes items that it deems offensive. To drive new business, you can’t risk losing business.
Cost Control
Fulfilled by Amazon (FBA) is a service that lets you sell your products via Amazon’s online store while outsourcing all of the fulfillment tasks to the e-commerce giant. FBA saves you time and warehouse space, but it comes at a cost – and that’s money you can’t use to buy inventory or advertise your products. Plus, Amazon’s FBA fee fulfillment schedule is complex, so you’ll need to budget some time to figure it out.
Other channels use different, and simpler, models. For example, Newegg charges a commission based on product categories. Other marketplaces charge a per-transaction fee for each product you sell. eBay offers a choice of plans, and Etsy charges for individual listings and transactions. Fees always carry an opportunity cost, so keeping them manageable leaves you with more financial resources to attract new business.
Larger Audiences
Getting noticed on Amazon isn’t easy. To stand out, you can invest in Enhanced Brand Content or a pay-per-click (PPC) campaign, both of which come at a cost. The world of e-commerce is bigger than Amazon, however, and there are channels that let you expand your reach beyond the United States. In China, Alibaba owns almost 60% of all online retail sales—a number that’s comparable to Amazon’s U.S. total.
Amazon remains the leading e-commerce player in Europe, but it doesn’t stand alone in the field. According to Statista, eBay is in a strong second place. Allegro, Poland’s leading online shopping platform, takes third place across the continent. Wildberries, a Russian e-commerce website, made Statista’s list before the war in Ukraine. Today, sellers who didn’t diversify beyond it are paying the price.
Focused Audiences
Channel diversification reduces risk, helps to control costs, and lets you reach larger audiences both geographically and demographically. Sometimes, however, you need to reach a more focused audience instead. For example, sellers with handmade items such as arts and crafts might sell more products through Etsy than on Amazon – or even on Walmart.com.
For truly unique items, Bonanza may be a better online marketplace than, say, eBay. Fruggo caters to cost-conscious shoppers and Zappo only sells shoes. Sellers can also drive sales by investing in their own on-line stores or by selling through Instagram and Facebook.
If you have the latest and greatest in computers, consumer electronics, or products geared toward technology-focused lifestyle, sell on Newegg to put your wares in front of an engaged audience of millions of early adopters.
So, there you go. Through channel diversification, you can reach beyond Amazon and grab hold of new opportunities.
