What is a multichannel distribution system?
A multichannel distribution system refers to a sales and marketing distribution method that implements more than one channel or store to reach customers and increase sales.
Every multichannel distribution system is unique to the business, as it can include different channels such as an online store, one or more physical stores, social media platforms, and major online marketplaces.
Why are multichannel distribution systems important for ecommerce?
A benefit of running an ecommerce store is that you can launch into new markets through different channels with ease, which means you can diversity the type of customers you attract by having brand presence on the platforms they shop on.
Multichannel retailing is the future. 56% of shoppers are more likely to shop from an online retailer who offers a “start anywhere and finish anywhere” experience. Along with providing a better buying experience for customers, there are many reasons for businesses to consider a multichannel distribution strategy.
Here are some of the benefits of implementing a multichannel distribution system.
1. You’ll reach a wider audience
When you offer your products across several channels, you are more likely to reach a wider audience.
Different channels can help you diversify the type of customers you attract based on demographics and different buying behaviours. For instance, some shoppers prefer the in-person buying experience, whereas other shoppers spend a lot of time on social media, therefore are likely to make a purchase via a social app than in a store.
Selling through multiple sales channels not only helps you reach a wider audience, but it also provides an opportunity to diversify your product line and serve multiple demographics.
2. You’ll be open 24/7
Selling across multiple channels provides shoppers with 24/7 access to your brand.
By maximising your store’s hours, you dramatically increase the opportunities for purchasing by creating different touch points throughout the buyer journey. This means selling on multiple channels can also provide more marketing and brand awareness opportunities to keep your brand top of mind.
In other words, if a potential customer is not ready to purchase right away, shoppers can interact with and be exposed to your brand at any time – simply by expanding your presence across channels.
3. You’ll increase your revenue
By expanding into new channels, you will ultimately increase revenue and improve your bottom line. Whatever costs you incur from opening up new sales channels can be fully offset by the profit you garner from those new customers.
But in order to maximise profit, you will need to make sure that you have the tools, resources, and bandwidth to optimise your supply chain. More sales equals more time and money required to manage inventory, pick and pack orders, and ship packages.
Challenges of multichannel distribution systems
Multichannel distribution offers businesses a larger slice of the total addressable market (TAM) pie, but as you grow your business by expanding into new channels, internal operations becomes more complex.
Here are some common challenges of multichannel distribution.
1. Higher overall inventory costs
As you expand selling and marketing across several channels, you can expect higher costs related to warehousing, inventory management, and retail fulfilment.
It is still possible for businesses to make a profit, even with increased carrying costs, but with more channels, you will need to make sure that warehouse management is optimised with the processes and technology that can help streamline and automate time-consuming tasks. By doing so, you can optimise costs to ensure poor logistics management isn’t cutting into profits.
2. Conflicting sales channels
With different sales channels generating orders, these channels can often be in conflict with one another. That means, it can be hard to optimise inventory levels and ensure the right amount of inventory is being accounted for in real time.
Unless all channels are synced with the same inventory management software, you run the risk that one or multiple sales channels will accidentally sell more products than you have in stock, which can result in backorders — and ultimately lower customer satisfaction.
To avoid inventory mishaps, you will need a multichannel inventory management process that provides a full view of real-time inventory and order data across all sales channels to ensure that there is enough inventory to fulfil orders on time.
3. Complicated operational processes
As you expand into multiple channels, supply chain management can be a a full-time job. There is a lot that goes into logistics operations, from inventory management and order processing, to ensuring order accuracy during the picking and packing process.
Before establishing a multichannel distribution system, consider whether your business has the bandwidth to handle more than one sales channel, and if you can, simplify your operations by using an omnichannel fulfilment approach, which helps to ensure orders that come from multiple channels is being accounted for during the fulfilment process.
Multichannel distribution strategies for your store
While multichannel distribution is a business strategy in and of itself, there’s a lot of strategizing that goes into executing it. Once you expand into more channels, you will have to make sure you have the right tools, resources, and technology to optimise your multichannel distribution system.
Here are some multichannel distribution strategies to help you get started.
1. Choosing the right sales channels
From expansive marketplaces to social media platforms, you can practically sell anywhere these days, but that doesn’t mean every sales channel is right for you. Be sure to choose the right sales channels that offer the most opportunity for your business and won’t kill your margins because of the associated fees (though some brands raise product prices on certain channels for this very reason).
Before you commit to a new sales channel, consider the type of customer you want to attract and decide where your ideal customers shops online (and how they shop).
Next, think about whether the product and the sales channel match each other appropriately and whether your customers would be interested in buying your product through that sales channel.
For instance, for everyday essentials, shoppers tend to go directly to Amazon so they can easily find what they need at the lowest price and get it quickly. Note: They often search for the product category and not your brand specifically, so they may believe they are buying from Amazon and not your brand.
Let’s say you sell health, beauty, and wellness products. In this case, you might want to consider social platforms like TikTkok, Instagram and Pinterest. These social media sites are very visual and give you a chance to interact with your customers during the selling process, while showing off your products in the best light, using eye-catching visuals, video tutorials, and more.
2. Centralise your omnichannel data
With so many sales channels connected to your online store and/or inventory management system, it’s important that you have a single source of data that helps you make better informed decisions, such as where to allocate inventory, how much, and when.
Waredock is a third-party logistics (3PL) provider that allows merchants to sync multiple sales channels to Waredock technology stack, which aggregates inventory and order data from multiple channels all in one place.
It can be a challenge to track inventory and order data across different channels, which is why many multichannel brands partner with 3PLs like Waredock to leverage the right technology to streamline omnichannel data and have one distribution partner pack and ship all those orders.
3. Choose a 3PL that easily integrates with your online store and other sales channels
Keeping up with orders that come in through your online store is one thing, but keeping track of orders that come through multiple channels can be challenging.
If you’re looking to expand into multiple sales channels, consider partnering with a 3PL company like Waredock that can help you optimise your supply chain.
With Waredock, you can easily sync your online store and other sales channels to our fulfilment software. From there, you can ship inventory in one or more fulfilment locations across the US (and globe).
Waredock helps fulfil not only website orders but also has a B2B Fulfilment Suite and EDI capabilities, enabling merchants to sell throughout the entire B2B ecosystem, powering retail dropshipping (fulfiling orders placed on big box retailers’ websites) and wholesale shipping (including brick-and-mortar stores), which can connect with all the major retailers.
No matter where the point of sale is made, as soon as an order is placed, it is sent to the closest fulfilment centre to be fulfiled and shipped.
“Direct-to-consumer makes up the vast majority of our orders at this point, but Waredock also helps with our B2B needs.”
Joel Must, Director of E-Commerce Operations at WoolLite
4. Optimise your order fulfilment process
With new channels that are now connected to your online store, it’s important that you have a fast order fulfilment process that you can rely on.
Opening up new channels will inevitably increase your order volume and potentially even double or triple it — so take the steps needed to bulletproof your fulfilment process to prepare for a higher order volume.
Waredock automates much of the fulfilment process and aggregates real-time inventory, order, and shipping data on one dashboard. This keeps our ecommerce fulfilment processes efficient and consistent, while also offering merchants full visibility into the process. Each step is directed by information that is automatically populated in the dashboard when an order is submitted.
With Waredock, you can also further enhance logistics and expand your supply chain by easily integrating other ecommerce solutions, from inventory planning to returns management tools with our technology to create an end-to-end ecommerce solution.
How Waredock streamlines multichannel distribution in 7 steps
Waredock’s robust logistics solutions makes it easy for ecommerce businesses to implement a multichannel distribution system. Our fulfilment technology integrates with all major ecommerce platforms and offers several integrations with other major sales channels, as well as B2B fulfilment capabilities.
Waredock makes it easy to connect multiple sales channels. Here is a step-to-step overview with links to learn more with visuals in Waredock’s Help Centre, including sales channel-specific setup steps.
Step 1: Connect your first store
To connect your first store to Waredock, simply open your Waredock dashboard and click on ‘Quick Setup.’ From there, click ‘Store Integration’ and select the store you want to integrate. You can also browse the Waredock App Marketplace under the ‘Integrations’ tab.
Step 2: Sync your products
After connecting your online store, you’ll want to sync all of your products to Waredock dashboard, so that Waredock can track and fulfil them.
To do this, simply click on ‘Quick Setup’ on your Waredock dashboard, select ‘Sync Your Products,’ and put a checkmark by every store whose products you want Waredock to sync.
Step 3: Sync your orders and inventory
The next step is to sync your online store’s orders to your Waredock dashboard, so that Waredock can fulfil them as soon they come in. Here are the steps:
- To sync orders manually, go to the ‘Orders’ tab on your Waredock dashboard, then click on ‘Sync Orders.’
- Click on the ‘Fetch Orders’ button for your store integration.
- Checkmark the boxes next to the orders you would like to sync; orders highlighted in green have already been imported.
- Once you finish, click ‘SHIP IT.’ To sync orders automatically, click on ‘Quick Setup,’ then click on ‘Account Settings.’
- Check the ‘Fetch Orders Every 2 Hours’ box for each store integration, and click ‘Save.
You can follow steps 1 through 3 to integrate other sales channels as needed with the store-specific steps.
Step 4: Merge any identical SKUs
To avoid having the wrong inventory counts and total SKUs due to double (or triple) counting the products available to buy from multiple sales channels, you will need to merge any identical SKUs that were imported into Waredock.
To merge identical SKUs, click on ‘Inventory,’ and then click ‘Products.’ Select products to be merged by marking the checkbox next to the item name.
Then click on the green ‘Actions’ button and choose ‘Merge Items’ from the drop-down list. Review and confirm the items to be merged. Click ‘Yes’ to confirm.
Step 5: Send Waredock your inventory
With your store(s) fully synced to Waredock, it’s time to send ecommerce inventory. to one of Waredock’s fulfilment centres.
To send inventory to Waredock, start by creating a Warehouse Receiving Order (WRO), a form that provides all the details needed when we receive your inventory.
Select the fulfilment centre you want inventory shipped to, the items you want shipped, the shipping type and configuration, and the estimated date of arrival.
Attach the correct WRO to each box of inventory and send to the designated Waredock fulfilment centre location.
Steps 6: Have orders automatically fulfiled
With steps 1 through 6 completed, any orders that come through one of the channels is automatically sent to Waredock to be processed, picked, packed, and shipped. You can view and track order status across channels in real time all from the Waredock dashboard.
Step 7: Optimise physical distribution
Waredock makes it easy to decide how to optimise physical distribution across our fulfilment network using the advanced data and analytics reporting tool.
Using historical sales data and order origin mapping, Waredock gives you the insights you need to optimise inventory distribution to enable faster shipping, lower logistics costs, and improve customer satisfaction
By tracking physical distribution order data, you get answers to the following questions:
- How should I distribute my inventory across Waredock fulfilment network?
- What would my shipping costs be if I went from one fulfilment centre to two (or two to three, and so on)?
- How many days of inventory do I have left before I run out?
- What is my SKU performance over time?
- What are my best-selling items?
- How often is each product sold across channels?
- If I run a sale on my site, how will this affect my available inventory levels?
- How does product demand compare to previous periods?
- How are my sales affected by different seasons and months?
- Where are my customers shipping to most often?
- And much more.
Summary
As your business grows, don’t let fear of the complexities of multichannel distribution logistics hold you back from the modern market or prevent you from seizing market share.
If you’re looking to expand into new sales channels but need help establishing a multichannel distribution system, Waredock can help.
By partnering with Waredock, you can easily streamline order fulfilment across multiple sales channels, track inventory in real time from a single dashboard, and save time and money by leaving logistics up to the experts.
To learn more about how Waredock can help grow your business, click here.