Bob is an eCommerce merchant. He started his business with his bare hands, and he is passionate about making it grow.
Bob also knows the importance of implementing a multichannel strategy. He knows that he needs to expand his business, so that he can sell to different types of customers through different kinds of touchpoints. But, Bob is a little stumped. How is he supposed to figure out what expansion opportunities are best for him? How should he evaluate the options in front of him?
Bob isn’t a real person, but his archetype is. He may even sound like you!
Merchants need to make decisions about how to grow their business. Sometimes they are risky decisions. While you can’t avoid the risk of failure completely, you can reduce it by taking an intentional, strategic approach to decision making.
In this post, we’ll look at how the Bobs of the world should make one of their most critical decisions: how they plan to expand their business to seize new channel opportunities.
Defining Channel Opportunities
“Channel” is a funny term. Many people define it differently. Many people use it without really even thinking about how its defined.
To avoid the nomenclature discussion, which would talk at least another blog post in itself, I’m using the term “channel opportunity”. These opportunities involve incorporating different channels into your strategy. But, focusing on the opportunity allows you to just assume a sort of open-ended definition of the term “channel”.
The opportunity itself is more important than the dictionary definition. And, we believe there are four key opportunities that every merchant should consider:
- Brick & Mortar Retail
- Online Marketplaces
Don’t get me wrong. There are other opportunities for growth–many of them. We just feel these are the most important. They are almost ubiquitous opportunities for any merchant who already sells using one or more of these strategies (to-be-startup entrepreneurs too!).
Almost any merchant can and should consider these four opportunities. Assess your gaps, and decide how to fill them profitably.
Channel Strategy Criteria
When deciding what channel opportunities are best for your business, there’s a lot you could consider. Channels can be very different from one another in terms of customer type and general structure. That can make it difficult to line them up and compare.
If you take a step back, you can compare all channels using these key criteria:
- Cost Structure: Where does selling through the channel cost you money? Are the costs mostly transactional (i.e. per sale) or are there heavier overhead costs? It’s not a hard and fast rule, but generally a channel opportunity will swing one way or the other.
- Market Potential: This represents the size of the market, but it isn’t necessarily limited to the number of customers you can through a channel. Consider the customer profile, including how much they will typically buy at a time and how frequently they may buy.
- Engagement Opportunity: Different channels provide/require different levels of engagement with your customer. Consider how each channel will impact your brand, and what you must do in each channel to ensure your brand is maintained.
- Integration Effort: When you expand your business to new channels, it means new processes, technology, and mediums that you must integrate. Opportunities vary in how complex this is.
Each channel opportunity you assess will have its own special traits you’ll need to consider. Each one is different from the others, and examining those details is important, too. But, using these four criteria allows you to compare channels side-by-side, using the same terms.
Evaluating Channel Expansion Opportunties
Given the ubiquity of these opportunities and the common criteria by which you can compare them, we created a white paper for helping you assess which opportunities are right for you. (Call it a lightweight channel strategy framework.)
Its contents compare channel expansion opportunities from above in the context of the four criteria described above.
If you’re assessing expansion opportunities, but see them differently than the four we suggested, you can still use the white paper to compare. It’s just a simple abstraction of how different opportunities compare, so use it how you think you need it.
This isn’t gospel. It isn’t going to answer every question you have. But, it’s a way to start thinking about these opportunities on the same playing field. It’s a way to make more intelligent decisions about how to expand your business.
You can download white paper here. And, keep an eye out for deeper dives into the Growth Curve implications for each of these channel opportunities.