The Benefits of Going Multi-Channel
One of the core strategies we at ChannelAdvisor continuously advocate – naturally – is going multi-channel. Diversifying your online sales channels not only protects you from having all your proverbial eggs (revenue) in one basket (channel), it helps you grow your business by exposing you to a broader audience of potential buyers.
But how much does going multi-channel help, really? To quantify the benefits, we studied same-store sales across our customer based in 2006 and 2007 to see what the growth characteristics looked like as a function of channel strategy.
We broke things down into three basic categories:
- Customers who were single-channel (e.g., eBay-only) in 2006 who stayed single-channel in 2007. We’ll call this the S/S group.
- Customers who were single-channel (e.g., eBay-only) in 2006, who went multi-channel (for example, added Amazon.com, a storefront, or Shopping Channels) in 2007. We’ll call this the S/M group.
- Customers who were multi-channel in 2006 and remained so in 2007. We’ll call this the M/M group.
What we found was interesting, and surprised even us! Here were our findings:
The S/S group (those who stayed single-channel) grew their sales at an average rate of 11% year over year. While this growth isn’t bad on an absolute basis, it reflects the fact that many of our eBay sellers are “capped out” by eBay’s overall slowing growth rate and, ultimately, losing overall e-commerce share to sellers on other marketplaces that are growing more rapidly (like Amazon.com).
The average growth rate for M/M customers (those who went multi-channel more than a year ago) was 42% higher than the S/S group.
Most surprisingly, the median growth rate for S/M customers (who went multi-channel sometime in 2007) was 220% higher than the average growth rate of the S/S group, and 160% higher than that of the M/M group. Needless to say, customers who made the jump from single-channel to multi-channel in 2007 are probably looking back and wondering why they didn’t do so sooner!
What does this mean for you? I hope it quantifies what we’ve been saying all along – that going multi-channel has a significant benefit to your top-line while simultaneously decreasing your risk that the changing dynamics of any one channel will adversely affect your business.
So, if you haven’t actively considered going multi-channel yet, we strongly recommend you make 2008 the year you do so! The benefits are real.