Multi-Channel E-Commerce or Not?

Is Multi-Channel E-Commerce Selling the way to go?

According to a Techradar article by Mark Hook, e-commerce companies should start multi-channel selling. I may disagree. The short answer and reason for my disagreement is simple, you need to be ready for multi-channel e-commerce selling.

Let me explain by offering you a slightly longer version of why I disagree with a statement that says, “Online businesses should start multi-channel selling!”.

The Gillette Company Example

A while ago I worked for the Gillette Company. I started in Europe HQ in London, in the now to movie stage converted Gillette building with the famous Gillette tower. From there I moved to Gillette The Netherlands and on to Gillette Sweden. After which I moved back to the Netherlands to work for the Gillette Benelux/Scandinavia (Benscan) region. Before finalizing my Gillette period at Boston WorldWide HQ.

I worked for 10 years in different countries, different divisions and worked with different products. At the time, The Gillette Company as a whole owned brands like Gillette Blades and Razors, Gillette Female Grooming on the Shaving side.  Braun Household Appliances, Oral-B Dental Care and Stationery in the form of Waterman, Parker and Papermate in other product categories.  In those 10 years moving from one division to another and from one brand and product category to another I learned a lot.

One of those things is, that you very carefully have to analyze your business and cash-flow first before considering to “start” with a multi territory/country launch and marketing. Unless you have an unlimited budget and/or really don’t care about the bottom line. I am saying “multi territory” instead of “multi-channel” because in those days, multi territory or multi country is more similar to todays’ “multi-channel” marketing.

In the “old days”, pre internet, “multi-channel” meant drugstores vs mom & pop stores and/or department stores. Although selling to those different channels also has its marketing challenge, selling to different countries at the same time is closer to the current “multi channel” approach in terms of marketing and cash-flow challenges.

Multi-channel E-Commerce KPI

So why am I saying that “starting multi-channel selling” may not be such a great idea. Simply put, dilution of resources. As a startup, or even as a small business, depending on your cash-flow and balance sheet status, you may want to focus on one (or two) market/channel first. To gain traction and positive cash-flow before moving to the next one.

When I started in Gillette Sweden I was asked to help recover the business from difficult times. Part of the “difficult times” was caused by a strategy to launch Oral-B toothbrushes simultaneously in Denmark, Sweden and Finland. Norway was skipped. Because Oral-B’s competitor had over 60% market share it was recognized as a potential black hole for marketing cash. And although Oral-B’s competitors did not have such a large market-share in the other Scandinavian countries, the budget allocated to the launch, in three markets at the same time, got diluted too much, too soon without the required results.

The outcome was a cash-flow problem in Scandinavia. Gillette Europe had to pump in extra funds to keep it solvent. Management was changed and a new strategy with a more linear and focused approach was adopted. The new strategy was to focus on one country at a time, push hard and smart to get traction. With the objective a, what we used to call, “marketing profit”, i.e. gross profit minus marketing expenses. This was an acceptable strategy because most Gillette Brands shared offices with each other, thus sharing fixed overheads.

The end result turned out much better than the first attempt; Oral-B became successful in Scandinavia.

The Moral – Plus Additional Thoughts

Yes, muti-channel selling can increase your sales. However, start with one or two key channels/countries (key to your type of product and goals) before you spread out to other channels. Avoid diluting your marketing efforts too soon, potentially resulting in cash-flow problems and ultimately bankruptcy.

Strengthen your brand awareness? Yes, that will happen if you spread your brand and message across multiple platforms. However, if you can’t do it profitably, what’s the point, right?

Enhance your customer experience. I am not sure how you laterally enhance your customer experience by selling in multiple channels. The experience is different per channel. It’s good or bad per channel. Increasing the number of channels does not necessarily improve or destroy the customer experience. Selling across multiple channels should increase your exposure (profitably) whereas a great customer experience should be a given. I find the suggested correlation between selling in multiple channels, and as such interconnectedly increasing customer experience a flaky and possibly wrong comparison. Selling in multiple channels to increase customer experience is the wrong objective connected to the wrong action and vice versa.

Streamline your business. I would say that by NOT selling in multiple channels at the start of the growth of your business, you streamline your business. Going multi-channel when you are not ready, from a sales, marketing or cash-flow standpoint potentially creates the opposite of “streamlining your business” in my opinion.

Conclusion

Like I always say, in marketing if you shoot with a proverbial “shot-gun”, you may hit a lot of targets, but none will be truly nailed. If you shoot with a proverbial rifle or sniper gun, you are much more focused and more lethal in the execution of your marketing plan, without dilution. In my experience it can be a better strategy to stay focused and use your limited cash-flow to gain traction, momentum and profits (marketing profits at a minimum) first before tackling another channel or territory. Tailor your strategy to the cash you have readily available, but with the above in mind.

The original article by mark Hook appeared on the www.techradar.com.