Ecommerce or Bust? Part 2: Demands of the Channels

Before getting too deep on the ecommerce topic, it’s important to understand a couple of key terms that define various fulfillment and sales channels that we’ll discuss. If you’re not familiar with the definitions of fulfillment channels and sales channel, skip to the bottom for a quick lesson.

Why Consider Ecommerce

Ecommerce is not as simple as loading a couple of products onto Amazon and waiting for the money to come in. If you’ve ever heard advertisements for topics like ecommerce order fulfillment software or dropshipping, you know running your own online store is no walk in the park either. And it’s not always a channel that businesses need to invest in to meet the needs of their customer.

Ecommerce is a complex beast that requires powerful supply chains and involves unique challenges and requirements. For consumers, it is probably the most important shopping channel, compounded even more since the start of COVID-19. However, for suppliers of wire, it has not yet become the predominant channel because of the range of customers we experience and the value they place on expert advice.

While yes, we see consumers like professional artists and hobby DIY-ers who frequently shop online and know what they want, we also get orders from businesses like chemical companies and general contractors who have large custom orders. And though not unique to us, it begs a couple of questions: How much should we invest in ecommerce? How much should we invest in our own online store? How should we change our sales and marketing strategies to support additional channels?

Operational Complexities of Fulfillment and Sales Channels

Each fulfillment channel and each sales channel have their own supply chain strategy, marketing strategy, customer service strategy, etc. When businesses start out, they most often focus on one fulfillment channel and one sales channel. For us, that happened way back in 1932 before ecommerce was even an idea.

By focusing efforts, businesses can keep their operations fairly simple and establish a strong balance of supply and demand. Introducing another fulfillment channel, let’s say expanding into D2C from B2B, requires increased need to monitor and analyze inventory levels and order volume of each SKU through each channel. Overhead costs increase. You open the risk of not delivering on customer experience should you run out of inventory because one fulfillment channel outperformed another.

Add sales channels to the mix, and you’ve given buyers more power (which is great for their experience) but you’ve also leveled up on complexity exponentially. So while consumers may view it simple for businesses to operate a brick-and-mortar store, an online website, and an Amazon shop, it is in reality an impressive feat.

To Expand Channels or Not to Expand Sales Channels

Traditionally, Western Steel & Wire has focused on meeting our customer’s ordering needs through phone and email. This channel has been great to build relationships, provide expertise and customer service, and ensure customers receive the best product for their needs. We’ve expanded into marketplaces like Amazon and Alibaba (in process) to broaden our reach, providing more customers with quality wire products. As we reach more and more buyers, we’ll start to see different buyer preferences and the importance of evaluating what sales channel strategies make the most sense.

We pride ourselves not only on our quality and range of products, but on our expertise and desire to educate. Not everyone buying wire knows what types of rods to use in securing insulation, or how centerless grinding can deliver tight tolerances. So while ecommerce marketplaces are great for speed and the educated buyer, we must ensure sales channels that empower us to guide buyers through their options, but also keep our operations scalable and profitable.

Continue to Part 3: Improving Speed to Market and Exceptional Customer Service

Key Terms and Definitions

Fulfillment Channels (How Product Moves through Fulfillment)

  • Business-to-Business (B2B): the process in which a business (like Western Steel & Wire) fulfills orders to other businesses that turnaround and manufacture or re-sell goods and services (like a retail store or electronics manufacturer).
  • Business-to-Consumers (B2C): the process in which a business fulfills orders to end consumers. They may sell their brand of product and/or other brands as well (like grocery stores and hardware stores).
  • Direct-to-Consumer (D2C): this process is similar to B2C but is specific to one brand (like Western Steel & Wire) who fulfill orders to end consumers directly themselves.

Sales Channels (How Buyers Purchase Product)

For simplicity, these are being kept to the channels most relevant to our customers.

  • Direct Touch: includes methods like phone, email, and in-person (through brick-and-mortar stores) and is a high-touch channel that requires 1:1 human interaction
  • Online Store: enables buyers to submit orders directly to a supplier without the need of human interaction, but does so through the supplier’s own business website
  • Ecommerce Marketplace: an online store that sells a variety of brands without the need of human interaction, but does so without interacting with the suppliers business website. The most common example of this is Amazon.

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