Blog Posts Ecommerce Fulfillment Study Shows Trend Toward Omnichannel Expansion

It’s hard to find a merchant operating exclusively in a single sales channel today. To be competitive, retailers, manufacturers and ecommerce companies alike are broadening the scope of their sales efforts.

Saddle Creek recently conducted a survey of merchants with one or more online sales channels. Their responses help to shed light on many issues, including who is using which sales channels and plans for channel expansion.

Following is an excerpt from the 2020 Ecommerce Fulfillment Trends Report

Online Sales Channels Today

Today’s merchants are utilizing a variety of online sales channels. Online stores/websites are, by far, the most common for respondents overall (87%). However, most respondents are embracing multiple ecommerce channels. In fact, just 14% of respondents utilize an online store exclusively.

A remarkable number are selling via newer channels, including third-party marketplaces such as Amazon and eBay (56%), social platforms like Facebook and Instagram (39%) and mobile apps (31%).

“With 70 percent of U.S. consumers frequenting social sites and recent reports of 112 million Amazon Prime members, it makes sense for merchants to target these audiences,” says Perry Belcastro, senior vice president, fulfillment services, at Saddle Creek Logistics Services. “They offer the potential for increased sales volume with relatively minimal barriers to entry.”

Channel usage varies by merchant type and size. Not surprisingly, ecommerce companies are most likely to expand beyond web stores. However, wholesaler/distributors aren’t far behind in utilizing other online channels, particularly favoring third-party marketplaces. Manufacturers also gravitate toward marketplaces as well as social commerce.

Smaller companies with less than $50 million in revenue, also are more likely to utilize marketplaces and social commerce, probably because there is lower cost to entry.

Traditional retailers appear to be slower to adopt additional online channels, perhaps needing to maintain focus on brick-and-mortar business. However, they, along with subscription-based companies and direct sellers, are most likely to sell through mobile apps.

Moving Forward

Looking ahead 12 to 18 months, 69% of respondents plan to add additional sales channels.

Social commerce (26%) and third-party marketplaces (23%) are the most widely planned channels, as might be expected given size and scope of the potential target market.

Perhaps most surprising is that 18 percent of respondents plan to add a brick-and-mortar retail store.

“Merchants may be interested in physical retail space to enhance their presence offline – giving consumers the opportunity to experience their products firsthand,” Belcastro says.

Adding a direct-selling (multi-level marketing channel) is on the agenda for a number of respondents, particularly wholesalers/distributors.

Ecommerce companies appear to be exploring a full range of options. Roughly a third plan to add a social sales channel. They are also most likely to add a subscription channel.

“The subscription model intrigues merchants because it gives them a new way to sell existing products and generate a steady revenue stream,” Belcastro says. “However, it’s important to note that there are significant differences in the fulfillment requirements for subscription boxes. You simply can’t handle them in exactly the same way you treat standard ecommerce orders.”

To learn how merchants are handling the increased complexity of operating in multiple sales channels, read the full report.