Struggling to reach new customers and keep up with the competition? Feeling limited by your physical location and traditional sales methods?
In today’s digital world, customers are bypassing brick-and-mortar stores and heading online. Without a strong online presence, you’re missing out on a massive pool of potential buyers and letting your competitors steal market share.
Online distribution channels are the answer! They provide a powerful solution to reach a wider audience, break geographical barriers, and put your products in front of the right customers, all while keeping you competitive. From your own online store to established marketplaces, there are a variety of methods to choose from.
Choosing the Right Distribution Channel for Your Online Products
Navigating the online sales landscape can be exciting, but with so many options, choosing the right distribution channel can feel overwhelming. Here are some key factors to consider when picking the perfect path to eCommerce success:
- Know your product: Is it a meticulously crafted artisan good or a mass-produced gadget? Luxury items might not thrive in the same online space as everyday essentials. Consider the perceived value and uniqueness of your product when choosing a channel.
- Target your audience: Who are you trying to reach? Tech-savvy millennials might gravitate towards your user-friendly online store, while busy professionals might prefer the convenience of a giant online marketplace. Understanding your target audience’s shopping habits is crucial.
- Budget for success: Building and maintaining your online store can be a significant investment. Marketplaces often have lower upfront costs but take a commission on your sales. Dropshipping minimizes initial costs but offers less control over branding and quality.
- Have the resources you need: Do you have the team to manage customer service, inventory, and marketing for your store? Marketplaces offer a streamlined approach, while dropshipping requires less inventory management but might limit customization options.
The Different Online Distribution Channels
- Direct Sales
Direct sales involves selling directly to customers through your own online store.
- Pros: Complete control over branding, pricing, and customer experience. Potential for higher profit margins.
- Cons: Requires significant upfront investment in website development and marketing. Need a strong fulfillment infrastructure.
- Marketplaces
Marketplaces are established online platforms like Amazon or eBay that connect buyers with a vast array of sellers.
- Pros: Instant access to a vast customer base. Easier setup and lower upfront costs. Marketing and fulfillment are handled by the platform (mostly).
- Cons: Fierce competition. Lower profit margins due to platform fees. Less control over brand presentation.
- Dropshipping
This fulfillment model allows you to sell products without holding any inventory yourself. You partner with a dropshipping supplier who stores, packages, and ships products directly to your customers after you receive an order.
- Pros: Low upfront costs. No inventory management is required. Easier to test new products.
- Cons: Limited control over product quality and branding. Lower profit margins due to supplier markups. Reliant on the supplier’s fulfillment speed and reliability.
- Wholesale
This involves selling your products in bulk to other online retailers at a discounted wholesale price.
- Pros: Offloads fulfillment and marketing to other retailers. Increases brand awareness and distribution reach.
- Cons: Lower profit margins due to wholesale pricing. Less control over customer experience and pricing. Reliant on the retailer’s marketing efforts.
The Final Choice: There’s no single best answer. The ideal distribution channel depends on your specific product, target audience, and resources. You can even use a combination of channels, like selling on a marketplace while also having your own branded store! The key is to make an informed decision.
How You Can Apply A Winning Monopoly Strategy To Your Online Product Distribution
I think it’s wrong that only one company makes the game Monopoly. Hasbro took ownership when it acquired Parker Brothers in 1991 and 30 years later, it is still the world’s most popular board game. The property trading contest gives an ironic framework to analyse the state of online commerce – which is amidst the genesis of a shift away from monopolistic marketplaces like Amazon and the iStore.
Any competition with dice is a game of chance, but 3 golden rules will help you win at Monopoly every time:
- The first phase of the game is where it’s won and lost
- Buy railroads
- Always play as the car
I’ll explain each shortly, but first, let’s set the scene: In 2022 Sky News broke a story about Sony PlayStation being sued for £5bn amid claims it ‘ripped off’ nine million consumers by charging a 30% commission on every digital game and in-game purchase made through the PlayStation Store.
It is another use case in a trending theme: merchant and customer get screwed over by the controlling market owner who distributes the product.
If you want to create or publish a game for the world’s most popular gaming console, you become a PlayStation Partner and your game is then sold on their marketplace, on their terms. But you could replace PlayStation with a host of even bigger online stores doing the same. You own your IP, they own the revenue (don’t worry, they give you some of it).
Sony is a big company, but only 67th on Forbes’ list of biggest companies by revenue ($90.5bn in 2024). Incredibly, 6 of the top 25 have some form of online marketplace in their portfolio of products – Walmart (20), Amazon (6), Apple (12), Google (10), Facebook (24) and Microsoft (8). And that excludes Alibaba (41).
There is no doubt that these online marketplaces are valuable – they open up global markets to eCommerce merchants, game & app developers and software businesses. You leverage their brand and network of consumers and let them do all the heavy lifting.
If these marketplaces are such a blessing, why is there a massive push by product creators to move off them and sell from their own website or online store?
That’s a discussion for another time, today I’d like to consider why players do use the marketplaces – it appears Big Tech took the 3 cardinal rules of the board game Monopoly to create their own monopolistic dominions.
- Start trading immediately
It’s hard to catch someone who has had a good start in a game of Monopoly. From the first Begin, start buying and trading immediately. The faster you establish wealth, the greater your chances of winning.
Product creators have a similar mindset in business. The quickest way to have a successful product is to start selling it immediately – and using an online marketplace gives you instant access to an array of marketing channels and millions of buyers. In the age of lightning-fast tech innovation, you want your product first to market.
- Own the distribution network
Everyone who plays Monopoly knows you want to own the railways, as they offer a very attractive, steady return on investment. But conceptually, wealthy people have known for hundreds of years how it pays off to own the logistics networks. Apple dominated music by owning the delivery of singles and albums on iTunes, Amazon changed the game of eCommerce with their FBA model and Facebook made it possible for any kid in her garage to sell an app globally.
Why bother having to find your own shipping company, or develop the tech to make your digital product downloadable or accessible on all devices – when you can simply piggyback off the existing reach, economies of scale, and technology offered by the marketplace? (We all know the answer to this one: there’s no such thing as free delivery)
- The stats don’t lie
Most people who win at Monopoly play as the car. This third rule is a bit of a cheat, or more accurately what the book by Nassim Taleb would call “Fooled by Randomness”.
The fact is that the car is the most popular token to play with – 1 in 4 players will choose the car ahead of the ship, dog, top hat, and whatever other pieces there are. Since most people play with the car, it must be true that most winners will be playing as the car (but this does not mean that playing as the car was a cause of victory).
When you start an online business, all you want is potential buyers. Most businesses will have faith in their product’s sell-ability, but it doesn’t help if no consumers have eyes on your prize. Solving marketing and distribution is harder than creating the product itself, so it makes sense to use an existing shop, with existing tech and place your product in the shop window where millions of eyes can see it.
The question remains: is it better to be one item on a shelf packed with billions of other products in a busy supermarket or the only item in a speciality store? Every product is different, but when you factor in that Apple takes a 30% cut from app developers and Amazon charges anywhere between 10% and 45% to their FBA merchants – it is vital to make sure the numbers add up.
Monopolies are a result of free markets, and there is no right or wrong. The great American business magnate, Howard Hughes, said it best when he was accused of having a monopoly on the oil-well drilling industry. “We don’t have a monopoly. Anyone who wants to dig a well without a Hughes bit can always use a pick and shovel”.
5 Quick Tips For Effective Online Product Distribution
- Pick your perfect platform: Choose a user-friendly eCommerce platform based on your needs and budget (e.g., Shopify, WooCommerce, Wix). Craft a visually appealing and user-friendly website that reflects your brand. And, ensure your store has detailed product listings, a shopping cart, secure payment processing, and SSL security.
- Utilize free and paid marketing channels: Optimize your website content and product listings for search engines to improve organic ranking. Consider paid advertising campaigns to reach a targeted audience and drive traffic to your store. Leverage social media platforms to showcase products, engage with customers, and build brand awareness.
- Choose smart delivery options: Choose between in-house fulfillment (more control but requires resources) or outsourcing to a fulfillment center (less work but higher fees). Make sure you offer different delivery times so people in a rush can get their products faster if they need to.
- Pick the shipping strategies your clients want: Offer clear shipping information and competitive rates. Consider offering free shipping if customers spend a certain amount.
- Prioritize customer satisfaction: Provide multiple ways for customers to reach you (email, live chat, phone support). Respond promptly to inquiries, handle returns/exchanges efficiently, and go the extra mile to resolve customer issues.
In Conclusion
This guide has hopefully equipped you with the knowledge to choose the right path for your online success. Whether you opt for a fully-fledged online store, leverage established marketplaces, or explore alternative options like dropshipping or wholesale, remember: there’s no one-size-fits-all answer.
By carefully considering your product, target audience, and resources, you can break free from the limitations of online monopolies and build a thriving eCommerce empire. Embrace the power of multiple distribution channels, prioritize a seamless customer experience, and watch your online sales soar!