Identifying the Right Sales Channels for Your Business

Sales channels are the various pathways through which you sell your products or services, ranging from e-commerce platforms to brick-and-mortar stores. Choosing the right sales channels is crucial, as it directly impacts your reach, customer experience, and profitability, requiring a strategic approach that considers your product type, target audience, and competitor tactics.
Written by
Brett Renken
Published on
17 January 2022

When launching a business, one of the critical decisions you will face is determining how to get your products or services into the hands of your customers. This is where sales channels come into play. In this article, we will explore what sales channels are, the different types available, and how you can identify the right ones for your business.

What are Sales Channels?

Sales channels are the pathways through which products and services are sold to customers. They are the touchpoints that connect your offerings to the market, and they can vary widely depending on your business model, target audience, and industry. Choosing the right sales channel can significantly impact your business's reach, customer experience, and profitability.

Common Sales Channels

There are a variety of different sales channels that could be appropriate for your business depending on what you're selling and your audience. Let's dive into some common sales channels at your disposal, then we can talk about how to define which channel is best for your business.

  • E-Commerce:
    E-commerce involves selling goods or services online through digital platforms such as your website, online marketplaces (like Amazon or eBay), or social media shops. This channel allows you to reach a global audience and operate 24/7, offering convenience to customers who prefer shopping online. E-commerce is widely used across industries like electronics, digital services.
  • Brick & Mortar:
    This traditional sales channel involves selling products or services from a physical location, such as a retail store. Brick-and-mortar stores offer customers a tangible shopping experience, where they can see, touch, and try products before purchasing. This channel is ideal for businesses targeting local markets or those that offer products where in-person shopping is preferred. Brick-and-mortar stores are common in industries like apparel, groceries, and specialty retail.
  • Resale:
    Resale involves purchasing goods from a third-party supplier and selling them to customers at a profit. This channel is popular in retail businesses that sell branded products. It’s a relatively low-risk model because you’re selling proven products. However, margins can be thin, and competition is often high. Resale is prevalent in the electronics and automotive industries.
  • Consignment:
    In a consignment arrangement, your products are placed in a third-party store, and you only get paid when the item sells. The store typically takes a percentage of the sale. This channel is beneficial for products that need more exposure or where the seller wants to avoid upfront costs. It’s commonly used in the fashion and art industries. It’s commonly used in the fashion and art industries, particularly for high-end or unique items.
  • White Label:
    White labeling involves providing your products or services to another company, which then sells them under its own brand name. You earn a percentage of the revenue from these sales. This channel is useful for businesses that want to focus on production rather than marketing and branding. This practice is common in the food/grocery industry, with Trader Joe’s being a great example of a storefront that puts its own branding on products made by other companies.
  • Wholesale:
    In wholesale, you sell your products in bulk to resellers, who then sell them to end customers. This channel allows for larger volume sales and can lead to long-term relationships with retailers. However, it usually involves lower margins, as products are sold at a discounted rate compared to retail prices. Wholesale is widely used in industries such as food and beverages, home goods, and consumer electronics.
  • Sales Staff (1 to 1 selling):
    Hiring a dedicated sales team to promote and sell your offerings directly to customers is a traditional and effective sales channel. Sales staff can engage customers, build relationships, and close sales, often working on commission. This approach works well for complex products that require a more personal touch. This channel is particularly effective in industries like business software, financial services, and real estate.
  • Personal Selling:
    Personal selling leverages your network of family, friends, and affiliates to sell your offerings. It’s a cost-effective method that relies on trust and personal connections. This cost efficiency makes it a particularly prevalent channel for start-ups. Personal selling is often used in industries like cosmetics, insurance, consulting, and handmade crafts.

3. How to Identify Which Channels Are Right for Your Business

Selecting the right sales channels requires a strategic approach, some internal review, and a bit of market research. Here are some steps to help you determine the best options for your business:

  • Consider What You Are Selling:
    The nature of your products or services will greatly influence your choice of sales channels. For instance, high-priced items might require a more personal approach, such as through sales staff or brick-and-mortar stores, where customers can have a hands-on experience. Conversely, digital products or low-priced commodities might be better suited to e-commerce platforms.
  • Consider Your Audience:
    Understanding your target market is crucial. You need to meet your customers where they are and cater to their shopping preferences. For example, if your audience is tech-savvy and prefers online shopping, an e-commerce platform might be the best fit. If they value in-person experiences, a brick-and-mortar store could be more appropriate.
  • Analyze Competitor Channels:
    Look at how your competitors are selling their products. Are they focusing on online sales, or do they have a strong physical presence? You can either follow a similar path if it's working well or identify gaps in their approach that you can capitalize on to enhance the customer experience​.

Conclusion

Choosing the right sales channels is a critical decision that can shape the success of your business. By understanding the various options available and aligning them with your product, audience, and competitive landscape, you can develop a sales strategy that maximizes your reach and profitability. As you grow, we strongly encourage experimenting with different channels to see which combination works best for your business.

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