Sales channels: it is better a holistic approach or an individualistic one? None of these.

Yes, also marketing strategies have a soul!

More than a soul, I would define it as a connotation, a tendency, a characteristic way to reach specific results.

In recent years, with new sales channels mostly linked to the appearance of the internet, much is being said about multichannel strategies and, more recently, of an omnichannel strategy.

But why this distinction, and what are the practical implications?

The multichannel sales strategy consists of placing one’s products on the market through two or more distinct channels, more specifically the off-line and on-line ones.

With the rise of multichannel consumption behaviors and technologies that have improved the purchasing process of consumers, the concept of omnicanality has arisen.

Needless to say, the main difference between the two at first glance lies in the prefix: multi vs omni.

Multi means to many, while omni to all.

This difference in definition is the key to distinguishing multichannel from omnichannel selling.

Multichannel selling refers to the various sales channels used, considering them as individual and separate entities, with particular regard to the interactions between companies and customers, and the corresponding income flows.

The omnichannel approach, on the other hand, is a more holistic one, where “all the various entities, interactions and transactions work together to create a unique experience”.

In conclusion, the difference between multichannel selling and omnichannel selling lies fundamentally in the ability to optimize the different channels and experiences and to understand how they work together throughout the buying process.

In my opinion, they do not actually seem to be two different things, but rather the natural evolution of how companies deal with the market concerning the change in the way consumers buy.

It is like a child who becomes a boy and then an adult. Always a human being is, not a different species.

Quite apart from the abstract definitions, what interests us is to understand what changes from a practical point of view, and what are the operational and organizational repercussions.

Given that the fundamentals of marketing – from going to market – are immutable, new tools and new possibilities require a different implementation of sales activities.

Penalty, staying behind, and irreversibly losing competitiveness and ability to attract new customers.

According to the first fundamental rule of marketing, whatever channel you choose to use, it must offer the most considerable possible profit for your company.

I’m not just talking about revenue but about margins, those that in the end represent the driving force of your business.

As you know, in recent years, producers of fast-moving consumer goods have been facing an important strategic decision. A bit for trend and a bit for real convenience, today the internet is considered the future of sales.

In particular, the direct sale to consumers – D2C – which in recent years has become the Eldorado of all companies that produce consumer goods.

In fact, the main advantages of D2C seem undeniable, almost a daydream for anyone doing business in this sector.

Here they are.

• Better margins: when you sell directly to your customers, your profit margins are better because there is no middlemen store/distributor. This disintermediation also makes it possible to pass on cost savings to customers, which can help your products to be more competitive.

• More control: when you sell your products directly to consumers, you control every step of the sales process – how to present products, marketing initiatives, customer service and more.

• Direct links/feedback with customers: direct selling to your target customers, gives you the ability to interact directly with them. They can provide you with immediate feedback on your products, and you can build a strong individual relationship with them, all to the benefit of higher brand loyalty and more significant Life Time Value.

I told you, the benefits of D2C are almost, let me say, pornographic.

But get control of yourself, there are also some downsides.

• No cost-sharing: this is the other side of the coin if you have decided to sell directly to consumers. All costs remain on your shoulders, from customer acquisition to product distribution to marketing.

• Unstable sales: depending on the products and your market niche, relying heavily on D2C sales can mean that your revenues fluctuate heavily from one month to the next (or from one season to the next). This instability is a big problem for your cash flows.

• Massive competition: competing with certain giants is not easy at all. It would be nice to open an e-commerce and start selling avalanches of stuff. Still, apart from the costs to promote your site – we’ll see better after – the implementation and management are expensive and complicated. It’s like having another company, including charges.

As mentioned before, D2C is sold as if it were the only future of the distribution, but as so often happens with marketing agencies, they don’t see beyond their nose. Or rather, they only see one side of the coin, perhaps the one that suits them best.

What they don’t tell you is that the only companies that can afford this type of distribution are big companies and multinationals corporations.

Why that?

Unfortunately, yes, we are at the usual point, because to set up an on-line sales system takes a mountain of money, a lot of staff, and especially a long time before we see the results.

Moreover, there is a fact that is never highlighted, which is related to the typical customer acquisition model of D2C, which is entirely based on the use of social or on-line search engines.

It’s not the subject of this article – maybe I’ll write about it soon – but think that it is sufficient Facebook or Google makes some changes of their algorithm, or even the opinion of the first influencer who (instead of finding a real job, ed.) decides to talk badly about your company, and the damages and costs to remedy these situations become huge.

I remember when a few years ago, I too decided to open “my own” e-commerce site, under the advice of the marketing consultant. For almost two years, I have been throwing fresh money into that project with, alas, very poor results.

In fact, the problem is that a concept that is absolutely useful for certain companies, such as D2C in this case, is also recommended and applied to companies that play a very different league from that of multinationals.

And the blame is not on the entrepreneurs, nor on those who deal with sales, but on those who claim to upset the balance of a company, looking at what is said on the internet and what more in vogue.

By the way, after that adventure, I decided to take care of my company’s marketing by myself, even though I had to start studying again as in my university days. But this is another story.

The other channel available to fast-mover consumer goods companies is the physical one, which usually takes place through wholesalers, distributors or retailers.

Here, too, we have hard nuts to crack, but at the same time, also significant benefits.

Let’s see the cons.

• Lack of control over final sales: when you sell your products to intermediaries, they are the ones who call the shots. Often they dictate the terms and conditions and have control over how they market and sell your products.

• Lower profit margins: of course, the intermediary gets his share, which means less revenue for your company.

It must be said that in these cases, companies that know how to stay in the marketplace, have the opportunity to mitigate, if not cancel out entirely, these disadvantages, using specific marketing tools for points of sale.

The positive points are very interesting because they affect the three fundamental assets for a company: net worth, cash flows and sales margins.

• Diffusion and awareness of your brand: the broad presence in stores allow you to be in front of the eyes of consumers more easily. If you’ve done things right, your products and your brand will gain the trust of the consumers, and the value of your company will soar.

• Constant cash flow: having multiple distributors and sales channels means you get a steady flow of money.

• Higher sales margins: although, as we have seen, part of the profit is absorbed by the distribution chain, physical stores, particularly specialist stores, are the preferred place to shop for high-end customers, who prefer premium products to low-cost ones.

As it is clear, not all sales channels are meaningful for every company, and the choice of which is the one to be developed most, cannot be the result of passing fashions, but of the analysis of which of all offers the highest ROI.

This does not mean renouncing to direct sales but avoiding throwing oneself headlong into a land that needs time and money to bear fruit.

I remind you Amazon itself took almost 25 years to see any profits from its e-commerce, investing millions of dollars every year …

It is clear that the best choice is to focus on the “traditional” channels that work and make sure that they are the ones to sponsor the growth of your on-line channel.

The main goal is to make the most of the sales channels that are currently more profitable and to continually invest a small portion of the proceeds for your on-line growth.

But you have to be careful because it’s not easy to sell in retail stores at all.

Or rather, it’s not easy to sell with margins that allow you to reinvest something in the development of your new commercial channels.

The fact is that it doesn’t make sense to be present in the stores as one of the many producers, but it is a priority to make your way through the hundreds of alternatives that are available to consumers.

You know that there are only two ways to increase sales margins: the first is to reduce production and distribution costs. The second is to raise prices.

I already know that you are thinking of raising sales prices is madness. And you’re right because as long as you don’t offer consumers a good reason to pay more for your products than your competitors’ ones, nobody would be foolish enough to spend more. You first.

But it would already be a good thing if, for the same price, your product were perceived as better, more interesting, more performing, more convincing.

To achieve this goal in the stores, you have only one possibility: to present your products in the best possible way.

So, in conclusion, the way to bring your company to compete with the big brands and multinationals passes first in becoming the leader in retail sales and then, over time, to set up that complicated and expensive organization that will allow you to reach consumers directly.

If you really believe it worths it.

Sell & Succeed.

Giuseppe Tripodi

P.S. If you want to increase the ROI of your retail sales without running the risk of falling into the hands of the marketing “ready-to-wear” CLICK HERE.