Magento and multi channel selling

21 January 2013

 
San Jose:
 
These days it is not enough to have a single web site. The E-commerce market keeps evolving and you have to move with it to keep up. When it first started 15 years ago, it was relatively new. It was an extension to your B&M store that brought in extra income. So you have two sales channels. Over the years the internet has matured, and some very large players have become well established. Particularly Ebay and Amazon. There are a significant percentage of customers who will look first at one or the other of these sites, when they are looking to purchase. Indeed some people no longer purchase anywhere else. So you are missing out of a large number of potential customers if you do not consider selling on these channels.
 
With multi channel selling there are three challenges
Stock Control
It is never a good idea to run out of stock. There is nothing more annoying than having orders that you cannot fulfill. It is particularly annoying when such order(s) are on a third party channel like Ebay or Amazon, because they really do not like this and will penalize you. Indeed with poor stock control you may find yourself giving priority to sales on these third party channels rather than your own customers who want to buy either in your shop or from your own web site. Because you will not ban yourself from selling on your own site!
 
So you must either reserve stock for each channel. Which inevitably means you have to invest in more stock? OR you use a central stock control system that automatically updates all stock levels on all channels whenever you have a sale on any channel.
 
This is where using E-commerce Magento is useful. There are a lot of options around that can do this. Not least M2E Pro, which integrates Magento with Ebay and has started to integrate it with Amazon. This is currently free, mainly because Ebay purchased Varien (the company that develops Magento) and have subsidized this extension. They want more people to list on both Magento sites and Ebay. The use of Linnworks allows order processing and integrates label printing with the chosen shipping. These are not the only solutions available.
 
The thing to watch for when evaluating a multi channel stock control solution is how it works. Specifically the time lag between getting an order and the other channel stocks being changed to reflect this. If you only make one or two sales of an item a day, then this will not be critical, but for a fast moving item, even a 10 minute lag may be too long. If you get really unlucky you can sell your last few items simultaneously on more than one channel, and be left with orders you cannot fulfill.
 
Data Entry
If you sell one item on three channels, then it has to be listed on each channel. Thus you have to enter it three times. Now most of the stock control solutions typically let you create a single entry, and then it is pushed onto each channel. Then there is either a central stock database (Linnworks and similar) or Magento is used for the stock database (M2E Pro). There is no perfect solution.
 
Magento has a lot of pages of data needed to be filled to fully create a product, so if you create it first on something like Linnworks, you still have to go in and complete the entry.
 
Amazon may have more than one catalogue entry for the item. Although it is frowned on by Amazon, it is foolish to ignore these other entries. For stock control however you must have only one stock control item and somehow these duplicates need to be linked. A similar problem exists with Ebay where you may have several listings for the same product. Any solution should let you list a number of duplicates without losing stock control.
 
Pricing
Third party sales channels charge commission. Amazon for example charges 15% on much of its categories. Thus you either have to increase the price of your offerings on these channels to maintain your margins, or accept a lower profit. However Amazon frowns on you undercutting them on your own site. Amazon UK actively seeks out such undercutting and treats each case as a policy violation. After a few of these you get suspended and subsequently banned.
 
This becomes a problem when you change your price on one or more channels. How do you keep them in line? I do not know of any automatic solution here.
 
Pros and Cons of Multi Channel retailing
Whilst selling on many channels could increase your sales, you have to be aware that the customers on Ebay and particularly Amazon are not YOUR CUSTOMERS. They are Amazon's and Ebay's customers. Their loyalty is to the sales channel and not you. They will buy from whoever is cheaper, or offers better perceived value, rather than keep coming back to you. It is possible to divert some from Ebay to your own web site, as you can actively promote your magento website with leaflets and offers contained in each delivered order. You cannot do this for Amazon orders. If Amazon catches you doing this, then it is a policy violation and will get you suspended and possibly banned.
 
The problem is that more and more customers are moving to Amazon and Ebay. As more retailers do multi channel selling, the variety and value of offerings on both Amazon and Ebay will increase. Thus more people move to use these channels. So by doing multi channel selling you are promoting it. There is no easy solution to this. Whilst it is good business to expand and increase your sales, by doing so you are feeding a competitor, who may turn round and bite you. It is very much like having a tiger by its tail.
 

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