Buy online, ship to a store. Buy online, ship from a store. Buy online, return to a store.

I know what you’re thinking, sounds like another blog post on omni-channel. It isn’t, it’s about leveraging sales channels for competitive advantage. Omni-channel strategies are important. However, in an effort to align channels there can be missed opportunities for financial gain and competitive advantage, by not taking advantage of the fact consumers with different needs, priorities, purchase motivations and preferences often purchase in different channels.

Not taking advantage of the opportunities limits the ability to compete on other than price and promotions, which erodes profits and therefore the ability to compete.

Though the following focuses on multi-channel retail sales, it also applies to manufacturers selling through retail stores and direct-to-consumer, and applies to e-Commerce pure-plays too.

For e-Commerce pure-plays, it may apply at the sales channel level in terms of online customers vs. call-center customers. And, it applies at the marketing channel level too.

Differentiate and brand-build

“With …… the commoditization of products…, it becomes apparent that finding a way to differentiate is the only way to survive.” Paraphrased from a white paper, this statement summarizes what this series of posts is about.

This is the third post in the series, written to help you differentiate your products and brand-build in an effort to not rely on discounting and promotions to compete. The first post addressed market analysis, the second post product positioning.

This post builds on the first two posts by addressing leveraging sales channels as part of your competitive strategy.

Sales vs. marketing channels

As you know, sales and marketing channels are not the same. A sales channel is where a transaction takes place. Marketing channels create awareness, inform, engage and drive traffic to sales channels.

Why does the distinction matter? Because how you leverage marketing and sales channels is different.

It’s my belief that balancing an omni-channel experience and optimizing how you meet different needs in different sales channels is optimal.

Why bother?

Like any strategy that is not one-size-fits-all, more time and resources are required for an optimized multi-channel sales strategy. So, why bother?

Because, the benefits can be well worth it;

  • Increased sales through better product mix at the sales channel level
  • Better margins with different pricing strategies at the sales channel level
  • Opportunities to further leverage your competitive advantage with market segmentation
  • Increased brand-building through a better value proposition by more effective targeting

I’ll provide an example below from when I was working on the re-launch of a software product line sold in e-Commerce stores, specialty and mass retail stores. We were able to increase revenue, margin and unit sales with a multi-channel sales strategy.

Is this done often?

Yes. Here is an example from my recent past.

Launching a new product concept that included new technology, consumer education was needed. To ensure a smooth launch, we made the decision to drive all traffic to our independent retailers for the launch, to get the retailers behind the launch and to maximize consumer adoption by having personal selling and a higher level of service than if we only sold online.

Our launch plan assumed eventually we’d also sell the product line direct-to-consumer ourselves as well as continue to drive traffic to our retailers nationwide, for an integrated multi-channel sales strategy.

Of course, others implement multi-channel sales strategies that we experience in our daily lives.

Retailers don’t always carry the same products in every store. And, some companies offer more products in their e-Commerce stores than they do in retail stores due to limited space and higher operating costs.

In the nutritional supplements and vitamins industry, consumers who buy primarily based on price tend to shop in grocery stores, drug stores and mass-merchants (vs. specialty stores or online). As a result, manufacturers have differentiated product lines, pricing and brands for different sales channels.

Should retailers (and manufacturers) carry all items in their e-Commerce stores? Yes. This is where omni-channel comes in. They should carry them online, show inventory availability at the store level, and offer to ship items to local stores that don’t have inventory.

Also, best sellers and the most profitable products sold online may be different than those in stores. If so, what products are featured and how products are merchandised may be different, another example of leveraging different sales channels.

How do I go about it?

You use the market segmentation discussed in the first post in this series on market analysis…identifying different segments, prioritizing segments, quantifying the segments, understanding their sales channel preferences, needs, interests, purchase motivations and product usage. (Of course, you have to conduct competitive analysis too.)

Not a quick fix, the market and competitive analysis will inform product development, SKU-mix, pricing and product placement, among the most impactful competitive levers you have.

Following is another example from my past, from the re-launch of the software product line sold direct-to-consumer and through retailers nationwide.

To inform product development, we conducted quantitative consumer research with multiple market segments to identify needs, priorities, product usage, channel preferences and price sensitivity.

We then statistically modeled the research findings.

As a result, we identified that consumers who preferred to purchase in retail stores wanted different product features than those who preferred to buy online, and we also identified that retail store customers were less price-sensitive.

Since we had to differentiate products for retail stores, we took advantage of the research findings and modeling when we designed, priced and packaged product, optimizing our SKU-mix, pricing and product positioning by sales channel.

In the above example we didn’t also carry the products developed for retail stores in our e-Commerce stores, since the independent retailers wanted product exclusivity. However, even if we carried all products in our e-Commerce stores, what we featured and how we marketed direct-to-consumer would have been different than for our retail store channels.

Same time, same channel

Next week’s post will focus on “driver items” strategies, a strategy used by CPG and retail companies, however a missed opportunity by many direct-to-consumer companies. Then the fifth, and final, installment in this series will address multichannel marketing channel strategies for driving growth, efficiencies and brand-building.

In the meantime, if you have any questions about market analysis, product positioning, sales channel strategies, branding, e-Commerce, growth or marketing strategies, you can reach Paul at pbecker123@gmail.com

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