Multichannel Distribution: Importance, Challenges and Best Practices to Enhance the Efficiency of Multichannel Distribution System in 2022

Customers can receive your products in a variety of ways. However, most businesses start with just one form of distribution, such as offline or internet stores.

As your company expands, you might wish to use more channels to communicate with your clients, such as a physical store or an internet store.

Whatever channels you decide on, a multichannel distribution system is necessary if you want to sell through multiple channels.

The distribution industry is evolving quickly. As a result, the processes between the point of sale and customer fulfilment are competitive. Success and expansion require a multichannel distribution model.

Distributors who embrace multichannel distribution must be dynamic and adaptable. They must meet omnichannel communication and purchasing expectations from B2B and B2C customers while ensuring that their supply chain procedures are effective and simplified.

When set up and handled effectively, a multichannel distribution system broadens your consumer base and increases sales. Nevertheless, setting up a multichannel distribution system that reduces costs and maximizes profit can be challenging without the appropriate technology, tools, and resources.

This detailed guide provides all you need to know about a multichannel distribution system.

What Is Multichannel Distribution?

Consumers today prefer to shop from many locations whenever it is convenient. A businessman who sets up two or more sales and marketing channels is said to have a multichannel distribution system. He does this to broaden his customer base and boost sales since he can sell through physical stores, internet stores, and online marketplaces.

The channels retailers wish to utilize which channel to deliver goods to their clients are up to them. Physical stores, branded websites, auction platforms like Amazon and eBay, or dropshipping models are all examples of distribution methods.

These numerous distribution channels provide a unique way for a customer to purchase from a retailer. They can buy straight from you as you deliver the goods to them. 

Customers may also purchase products indirectly, such as when you give another store or third party your products to sell to their customer base.

The decision by a retailer to strategically distribute its goods to clients through many channels, such as physical storefronts, an online marketplace like Amazon, or another major retail chain, is known as a multichannel distribution system.

The primary operating tool of a multichannel distribution system is technology. However, creating a multichannel strategy and correctly implementing it are both crucial.

Why do Consumers Prefer Buying Across Different Channels?

Customers are given more information through various marketing channels, enabling them to make judgments about purchases more quickly. They enjoy more freedom as well. They are no longer limited by a brick-and-mortar store’s operating hours and are free to shop whenever and wherever they choose.

Customers like the flexibility that comes with multichannel distribution. Some buyers prefer to browse merchandise in person before making an online purchase. Some people are more inclined to look up things on their phones before purchasing them.

Customers study online guidelines and reviews to learn about the advantages since they want to feel assured while making purchases or using services. Because they are familiar with the product before seeing it in the store, their enthusiasm for the product increases. Trust is crucial since it might motivate customers to make larger purchases or choose more expensive items, boosting your profit.

You may build a linked consumer experience by selling your goods and services across several marketing platforms. As a result, customers are inspired to purchase more goods because shopping no longer feels like a hassle.

And even if you don’t offer tangible goods, you can still use multichannel distribution to broaden your customer base, boost your revenue, and expand your business.

WareIQ – Amazon-prime Like Logistics for Modern Brands in India

WareIQ, an eCommerce fulfillment company, empowers online brands with a superior-tech platform to compete with Amazon like service levels by bringing their average delivery timelines from 5-10 days to 1-2 days.

"With WareIQ’s full stack digital enabled fulfillment solution, we got access to the pan India network of fulfillment centers & cold storage facilities enabling same/next day delivery, without any upfront investment in supply chain infrastructure from our end. During the IPL campaign in April 2022, WareIQ efficiently handled unpredictable 200x surges in daily order volumes of ~20k/day with a 99% fulfillment rate. With WareIQ as our preferred fulfillment partner, we witnessed 172% growth in online order volume in just 4 months, with a significant improvement in the overall customer experience in fulfillment."
- Damanbir Singh, Product & Operations Head, Lil’Goodness

Importance of Multichannel Distribution Networks in eCommerce

One advantage of operating an online business is the ease with which you may enter new markets through various channels. As a result, you can attract a variety of clients by establishing your brand on the platforms where they purchase.

The future of retail will be multichannel. According to BRP’s Consumer Study statistics, 56% of retail customers are more inclined to shop at a store that allows them to have a shared cart across channels than at a business that does not; however, only 7% of retailers provide this shared cart concept.
Businesses can expand and give customers a better shopping experience using a multichannel distribution strategy.

Here are a few advantages of the implementation of a multichannel distribution system.

Expand Your Consumer Base

The multichannel distribution strategy’s inherent flexibility and agility allow distributors to reach a more extensive consumer base and many additional market segments.

Businesses may effortlessly combine brick-and-mortar retail, eCommerce, and sales and marketing capability because of the benefits of both B2B and B2C distribution channels. In addition, companies can quickly expand into previously unexplored markets if they can reach a much more comprehensive range of clients (an integrated ERP system will play a vital part in this).

A broader geographic reach, exposure to new clients, and first-time purchases will benefit distributors. In addition, they can increase their sales and marketing reach by looking into new possibilities and utilizing platforms like pop-up shops and internet marketplaces.

Reduced Risk through Multiple, Diversified Distribution Channels

In today’s omnichannel fulfilment and distribution environment, relying just on one distribution channel carries significant risk. Businesses can significantly lower this risk by diversifying their distribution channels to include ones with a variety of audiences and levels of competence.

When it comes to properly diversifying the distribution network, an integrated ERP system will provide significant advantages. For example, real-time monitoring, management, and tracking of numerous channels are essential for risk management. In addition, an ERP system is vital for guaranteeing that the most economical and effective channels are used for swiftly distributing goods and services.

To stay competitive in today’s challenging business environment, distributors must diversify. For enterprises of all sizes, a multichannel distribution model offers many advantages. For example, businesses can expand naturally and affordably without adding staff by reaching out to new clients, markets, and geographical areas.

The best method to establish a multichannel distribution plan is to find a comprehensive ERP system and reliable 3PL partner, such as WareIQ. In addition, businesses may quickly diversify and pursue new and exciting distribution channels by utilizing flexibility, automation, and granular administration.

Supply Chain Optimization

Any business that engages in distribution relies on its supply chain. Distribution through many channels ensures the entire chain is optimized, from front-end sales to eCommerce fulfilment and everything in between.

Retailers and distributors alike have learned from Amazon that the distribution pipeline is still developing and can be a hazy and ill-defined conduit. Distributors must understand the value of supply chain optimization if they want to stay competitive, and a flexible, multichannel distribution strategy is the only way to achieve this.

Revenues Will Skyrocket

You will ultimately raise sales and strengthen your bottom line by diversifying into new channels. The profit you get from those new consumers can eventually outweigh any expenditures you incur from establishing new sales channels.

However, you must ensure the instruments, resources, and bandwidth necessary to optimize your supply chain to maximize profit. More sales mean picking and packing orders, shipping parcels, and managing inventory will all need more time and money.

Boost Availability and Customer Interactions

Offering your brand through various channels gives customers access to it around the clock.

By having many touch points throughout the customer journey, you may significantly enhance the prospects for purchasing by making the most of your store’s hours. In addition, selling through various channels can offer extra marketing and brand recognition options to keep your brand at the forefront of consumers’ minds.

In other words, by extending your presence across channels, shoppers may connect with and be exposed to your brand anytime, even if a potential buyer isn’t ready to make a purchase immediately.

Businesses that adopt a multichannel distribution strategy give their customers purchasing choice and convenience, giving them an advantage in the increasingly competitive omnichannel distribution markets.

Access to Valuable Data

You have full access to first-party data when your loyalty programme is available via various channels. You may, for instance, provide your customers incentives for updating their accounts with personal information. You can also obtain details about geolocation, interests, and demographics. The ability to create a tailored customer experience is made possible by having more knowledge about each of your clients.

You can better gain your clients’ loyalty by communicating with them through various channels. Join PassKit, a digital loyalty solution with a built-in multichannel distribution system, even though developing a multichannel distribution system for your loyalty programme may seem daunting.

Related Article: Scope of Advanced Distribution Management System in 2022

Challenges Faced in Multichannel Distribution Systems

You want to offer a seamless consumer experience by cross-channel selling. The procedure, though, might not be simple. 

The following are some typical limitations with multichannel distribution.

Increased Complexities

The more sales channels you have, the more work you can do in order fulfilment, inventory updates, customer service, efficient distribution, additional shipping expenses, supplier partners, and operating costs.

You will need to put in extra time and effort to give customers a good experience and avoid problems like sluggish order fulfilment or inability to satisfy seasonal demand. You can resolve these problems by utilizing supply chain automation.

Increase In Inventory Costs 

As you expand selling and marketing across numerous channels, you anticipate increasing expenditures for warehouse management, inventory control, and retail fulfilment.

Even with higher carrying costs, businesses can still turn a profit. Still, with additional channels, you must ensure that warehouse management system is optimized with the technology and processes that can assist in streamlining and automating labour-intensive jobs. Doing this may save expenses and prevent poor logistics management from eroding your earnings.

Potential For Channel Conflict

Orders are generated through various sales channels, which frequently compete with one another. Therefore, the proper amount of inventory must be accounted for in real-time, which might be challenging.

You run the danger that one or more sales channels will unintentionally sell more products than you have in stock, leading to backorders and ultimately reduced customer satisfaction unless all channels are linked with the same inventory management system.

A multichannel inventory management method that offers a complete picture of real-time inventory and order data across all sales channels is necessary to prevent inventory errors and ensure adequate stock to fulfil requests promptly.

Complicated Operational Processes

Supply chain management can become a full-time job as you diversify into more channels. A lot goes into logistics operations, including order processing, inventory management, and guaranteeing order correctness during the picking and packing.

Consider whether your company can manage more than one sales channel before establishing a multichannel distribution system. If so, streamline your operations using an omnichannel fulfilment strategy, which helps ensure orders coming from multiple channels are considered during the eCommerce fulfilment process.

Best Practices to Enhance the Efficiency of Multichannel Distribution

Multichannel distribution requires a lot of planning, even though it is a business strategy in and of itself. For example, as soon as you add more channels, you must ensure that your multichannel distribution system is optimized using the appropriate tools, materials, and technology.

Mentioned below are a few multichannel distribution approaches to get you started.

Consider The Most Beneficial Sales Channels

You may sell almost any place these days, from vast markets to social media sites, but that doesn’t imply every sales channel is appropriate for you. Instead, pick the best sales channels for your company that won’t kill your margins due to associated expenses and provide the most opportunity.

Think about the kind of customer you want to draw in and determine where your ideal customers shop online before committing to a new sales channel (and how they shop).

Next, consider whether your clients would be interested in purchasing your product through that sales channel and whether the product and the sales channel are a good fit.

Centralize Multichannel Data

Having a single source of data is vital when selling on various channels. In addition, having data at your fingertips will enable you to manage inventory for the advantage of your company.

It might be challenging to keep track of your inventory when you process orders through many channels. A consolidated data system will make it simpler to keep track of inventories and replenish them as needed. Additionally, you can use technology to speed up and improve the procedure.

Choose a 3PL that Easily Integrates to Your Sales Channel

Keeping track of orders that arrive through several channels might be more complicated than managing orders that arrive through your online business.

You can link your multiple sales channels using the platform provided by the 3PL service provider. As a result, all your orders are instantly collected and synchronised, allowing you to check all your orders from various platforms on a single platform. You must process and send out orders using the platform in addition, the 3PL platform also assists in managing orders and inventories.

Optimize Your Order Fulfilment Process

Your online store has access to multiple channels, so your order fulfilment system must be quick and reliable.

You should take the necessary precautions to fortify your fulfilment process to be ready for a more significant order volume. Opening new channels will undoubtedly increase your order volume, which may even double or triple it.

Real-time data on inventory, orders, and shipping can be compiled on a single dashboard by automating eCommerce fulfilment services. As a result, eCommerce fulfilment procedures remain effective and reliable, and merchants benefit from complete process transparency.

Each stage in automated procedures is guided by data automatically filled out in the dashboard when an order is submitted.

How WareIQ Streamlines Distribution Across Multiple Channels?

Don’t let the complexity of multichannel distribution logistics scare you away from the modern market or keep you from capturing market share as your company expands.

WareIQ can assist you in growing into additional sales channels with personal assistance in setting up a multichannel distribution system.

You can effortlessly automate order fulfilment across many sales channels by working with WareIQ, tracking inventories in real-time from a single dashboard, and saving time and money by outsourcing logistics to the pros.

The warehousing and distribution network of WareIQ, which includes inward inventory processing, intelligent inventory placement, real-time inventory tracking, speedy fulfilment, and automatic shipment, enhances the eCommerce distribution process.

A national fulfilment network, cutting-edge technology, and first-rate customer care are all available to you when you work with WareIQ as a partner to help you improve your logistics procedures and optimize your supply chain. For instance, WareIQ can help with the supply chain projects listed below to improve them all:

Monitoring of inventory in real-time across the supply chain includes-

  • Selecting the most effective product distribution method.
  • Providing shipping discounts through reliable local and national carriers.
  • Utilizing a broad network of fulfilment centres to expand the reach of your customer base.
  • Access to cutting-edge data and reporting analytics tools improving operations.

Multichannel Distribution FAQs (Frequently Asked Questions)