Sales channels are the methodologies that businesses and corporations employ to conduct business. Whether businesses choose to sell directly, indirectly, through wholesale, or online, are all examples of different sales channels. Sales channels are commonly referred to as a touchpoint between a business and their customers. In laymen’s terms, a sales channel is the ways in which a business delivers it’s product or service to their customers.

The importance of sales channels cannot be overstated. Without proper sales channels it can be virtually impossible, and definitely problematic, to make revenues and profits. The backbone of any small business can be linked to well-thought and well-executed sales channels. Furthermore, sales channels emphasize and help to achieve the marketing goals of any organization. Marketing goals are often, if not always, linked to sales channels.

Online Sales Channels

There are many various online sales channels that are out there for small businesses. Increasingly, people are shifting their purchases from in-person to online. In particular, this has truly become the case after crises such as the COVID-19 pandemic. Therefore, the need for and utilization of online sales channels are growing daily, both in options and leverage. Here are a few examples of online sales channels that can be especially helpful for small or growing businesses:

Email Marketing

Email marketing functions as an excellent tool for small businesses in several ways. On the whole, it allows businesses to reach out to existing and new customers in order to gain further attention. In turn, this increased exposure can lead to higher sales for the business. Email marketing also is a direct way to link your potential customers to your business. Instead of needing to go through a third-party website, or a referral (online or in-person) your customer is able to directly go to the business page from the email. Furthermore, the customer can be linked directly to a specific product that caught their eye, as opposed to having to sort through the entire webpage.

Another positive aspect of email marketing for an effective sales channel for small businesses is cost. Email marketing, compared to other forms of adverting, is relatively low-cost. Sales channels that are low cost and can produce higher revenues can be essential for small businesses, especially those working with minimal funding. This is especially true in the digital era of today, where often spending more money can lead to much higher rates of exposure. Rather, email marketing provides the opportunity for businesses to have a large reach, while minimally spending.

Social Media Sales

This channel for sales and marketing offers many advantages for small businesses pursuing online revenues. Social media platforms offer a unique online sales channels for many reasons. Principally, social media platforms operate and depend on person-to-person interactions. These interactions are also applied to businesses and services in the form of “Word-of-Mouth”(WOM). WOM can be either detrimental or helpful to businesses, depending on the negativity or positivity of the review. People always have less skepticism when hearing a good review from a friend, coworker, or neighbor, than from a paid-advertisement.  Therefore when positive, WOM offers some of the most helpful and pure form of advertising for a small business.

Other positives for social media sales channels are present, aside from the positive increase in marketing/exposure. Namely, the opportunity to sell to different demographics of online buyers. People who purchase products and services from Amazon and Google searches are not always the same people searching for deals on platforms such as Facebook. Therefore, taking advantage of a differing user-base can also allow for more efficient and/or boosted sales. Utilizing social media platforms as a sales channel always small businesses to get closer to “covering all of their bases” in terms of customer populations. A few examples of specific social media platforms that function as great sales channels are Facebook, Instagram, and TikTok.

Search Engine Marketing

Search Engine Marketing (SEM) offers many similar advantages as email marketing in terms of boosting ability for customers to connect with a small business. SEM creates an advertisement that will lead a customer directly to your business. Often, similar to email marketing, specifically to one of your business’s products. As mentioned, marketing and sales channels are intertwined; both strive to boost viewership to business pages and offer the crossing-point for customers and businesses. SEM ads are usually visually stimulating for customers, and excellent at grabbing their attention. Furthermore, SEM utilizes keywords to link customers to businesses based exactly upon customer’s needs and preferences. In turn, SEM creates an excellent sales channel to lead customers to small businesses.

Retail Sales Channels

Storefront

Commercial retail locations are one of the oldest and most effective sales channels. This may seem redundant, establishing a brick-and-mortar location in order to make sales. However, today’s digital age has leg to an increase in many small businesses that are 100% online. Businesses such as these often have physical locations for logistics, but no actual storefront location as a sales channel. Therefore, it is important to evaluate if a storefront channel could offer a boost in sales and revenues for your small business.

On the other hand, not having a retail storefront can also save money for small businesses in some instances. This depends on what kind of business a person is in, among other factors. An example is if storefront sales are especially low for a small business that thrives on online sales. In this case, a r4etail storefront may not be the most efficient sales channel.

Wholesale Sales Channels

Previously-mentioned channels have targeted smaller sales demographics. In contrast, wholesale offers a channel for sales that targets larger quantity sales. Bulk sales have many advantages in compared with smaller online and typical retail sales. In particular, wholesale offers small businesses a sales channel that allows for large revenue sales. With wholesales, a business can sell five-hundred shirts instantaneously, as opposed to order by order, or sale by sale. This increased efficiency and revenues can be a huge boost to small businesses. Furthermore, wholesale offer a sales channel that often leads to recurring and sometimes longstanding relationships between businesses and consumers. Buyers want to return to a small business when things go well. This concept is amplified when applied to wholesales, seeing that buyers are obtaining much larger quantities.

Nonetheless, wholesale channels offer a downside as well. Customer service plays a large role in wholesales. Additionally, service can be much more difficult at the wholesale level. Orders are often larger and/or more frequent than what many small businesses can anticipate, or have the workforce to handle. Small businesses can struggle with large upscales, and should keep that on their radar. Another downside of wholesale can be that consumers often expect, if not demand, lower prices when buying in bulk. Sometimes lower prices work out for both parties; larger sales for the business, cheaper price per unit for the consumer. However, small business owners should analyze the tradeoffs afford the cost associate with lowering prices.

What Sales Channel is Best for My Business?

Deciding which sales channel would most effectively help your business is a hard question. There are a few key factors that any business owner should consider when deciding which sales channels to employ. One factor is the finances of your small business, and simply what sales channels your business can afford. For example, not all small businesses can afford the costs of upscaling that often comes with wholesale as a sales channel. Another financial consideration stems from the cost to utilize certain sales channels. The cost of email marketing can be much lower than SEMs due to the fact that SEMs often are pay-per-click. To boot, pay-per-click can often lead to a variable set of cost, as opposed to the standardized rate that comes with the rent of a storefront. All sales channels offer differing levels of financial costs, benefits, and utility for a small business.

Written by Brian Kennerly, Pennsylvania SBDC Lead Office Marketing Team

Brian Kennerly is currently a Graduate Assistant at Kutztown University of Pennsylvania while pursuing his Master’s in Business Administration. His hometown is Upper Darby, PA, and he attended the University of Virginia for his undergraduate career.