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Choosing the Right Business Sales Channel

Once you’ve gone through the stages of product development, the next step is to craft a go-to-market strategy. This should include the types of sales channels you’ll use, whether this involves a brick-and-mortar storefront or ecommerce website. A multichannel approach is often recommended to provide the widest customer reach, but how can you choose which channels will be most effective? Here are a few options to consider.

What are sales channels?

A sales channel refers to any venue in which you sell your products. There are many ways to channel sales to your business, both direct and indirect.

  • Direct sales involve a direct line of sale between your business and the client. This may be in a physical location like a retail shop, or it could be through an ecommerce site. Some businesses will employ in-house sales representatives to contact prospects, while others will use direct sales mailings.

  • Indirect sales involve a third party. Rather than selling your products directly, you sell them to a third party who resells them to the end user. You could channel sales through a consultant or make affiliate sales through a reseller’s website. Catalogue retailers and wholesalers would be additional examples of this type of sales channel.

A third option is to go hybrid with a mix of indirect and direct sales. For example, your ecommerce strategy might involve selling products directly on your business website as well as through an online marketplace.

Examples of sales channels

Here are a few examples of the most frequently used sales channels, along with their advantages and disadvantages.

1. Marketplace sales

Major online marketplaces like Amazon and Alibaba allow businesses to sell products to the largest possible audience. Another benefit of marketplace sales is that small businesses instantly gain credibility through their association with the better-known marketplace website. A customer feels like they’re making a purchase from Amazon rather than a third-party business. However, the downside of this is that it doesn’t enhance your own brand reputation.

2. Auction marketplace sales

Another option is to use an auction site like eBay to sell your products to the highest bidder. If you sell rare or vintage items, this type of sales channel lets you access niche customers who will best appreciate your wares. It’s important to consider listing fees and commissions when looking at auction sites.

3. Social media channels

An increasing number of businesses are using social media platforms like Facebook and Instagram as sales channels. These can be incorporated into your ecommerce strategy, linking up with your site to sell products through your existing Facebook page. At the same time, you can communicate exciting new promos and offers to your audience to drive sales.

4. Subscription services sales

The subscription sales model has really taken off, offering a wide variety of different products. With subscription services, your customers sign up for product shipment at regular intervals, with automatic online payments. You can include free samples of upcoming products to increase brand loyalty and customer reach.

5. Wholesaler channels

A prime example of a popular indirect sales channel is to use a wholesaler. Wholesalers handle distribution for your business. You provide the goods, and the wholesaler gets it onto the shelves for consumer access. They may also have their own sales representatives who can sell your product to independent retailers and online markets alike. One example of a big-name wholesaler is Costco, which buys its products from manufacturers and passes them on to its own customers at a markup.

How to choose the best sales channel

There are many different approaches to take when it comes to sales channels, so how can you choose the best option for you? Here are a few things to keep in mind:

  • What type of products do you sell? Do you cater to a high-end niche or mass produce everyday goods?

  • Where does your audience demographic prefer to shop? Are they social media-savvy or frequent Amazon users?

  • Do you want to cater for a local audience or scale up to a larger region?

  • Does the channel fit your budget and align with the overall ecommerce strategy?

You should use sales data to make your decision, looking both at financial projections as well as a breakdown of customer habits with a segmentation analysis. By looking closely at your business needs, you can find the most useful channels for future sales.

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