9 sales channels for effective selling and how to implement them

Choosing a sales channel is one of the most important decisions business owners will make. There are several routes you can take. Making the right choice can affect not only your go-to-market strategy and marketing plan but also your business profits. 

You may choose to sell your goods exclusively through direct or indirect channels or opt for some sort of combination. Here are nine of the most popular sales channels, including tips for determining the best ones for your business:

1. E-commerce

2. Retail

3. Wholesale

4. Resellers

5. White label

6. B2B sales

7. Partnerships

8. Marketplaces

9. Social media

1. E-commerce

Best for companies that sell products or services that are easily shipped or delivered, such as digital products or clothing. 

E-commerce can be an all-encompassing term, but it generally means you sell products on a website. With an e-commerce sales channel, you can have a 24/7 virtual storefront that targets a global audience. It’s a direct sales channel, where you sell your goods or services directly to ‌consumers—versus indirect channels, which means you go through an intermediary. 

In today's digital age, e-commerce has become integral to the sales landscape. E-commerce accounting software like QuickBooks Online can further streamline your sales channel management. 

Here are the key benefits of e-commerce sales channels: 

• Lower overhead costs: Eliminates the need for businesses to invest in physical retail spaces, significantly reducing overhead costs.
• More convenient and available 24/7: Provides a more convenient shopping experience for customers, with the ability to browse and purchase products from the comfort of home at any time.

However, there are also cons to consider, such as:

• Management: E-commerce requires businesses to invest in website development, maintenance, and efficient shipping processes. 
• Competitiveness: Increased competition in the online marketplace means it can be challenging for businesses to stand out and attract customers.

E-commerce is particularly suitable for businesses looking to reach a wider audience and operate globally. It works well for businesses with digital or easily shippable products.

2. Retail

Best for companies that sell products that want greater brand control, have products that benefit from being seen and touched in person, or want to take advantage of foot traffic. 

A retail sales channel allows you to sell products or services to consumers through brick-and-mortar stores. There are several types of retail stores, with many catering to a specific market. Common retail stores include department stores, specialty stores, convenience stores, and discount stores. 

The benefits of using retail stores as sales channels include:

• Tangibility: The ability to provide a tangible shopping experience, creating a stronger connection and trust with customers. Face-to-face customer interactions can allow businesses to build personal relationships 
• Convenience: Physical stores also provide instant gratification, as customers can purchase and take home products immediately. 

Like all sales channels, there are downsides to retail locations:

• Costs: Initial investment and ongoing costs, such as rent or lease payments, can be significant, making it a more capital-intensive sales channel.
• Unpredictability: Additionally, the success of a physical store depends on factors like foot traffic, competition, and consumer trends, which can be unpredictable.

Retail sales channels work well for businesses that need personal interaction for their products. For businesses with limited resources or those in industries with rapidly changing consumer preferences, other sales channels may be more suitable.

3. Wholesale 

Best for businesses selling products to other businesses, such as distributors, retailers, or resellers.

Wholesale sales channels allow you to sell products in bulk quantities to retailers or outlets, who then sell these products to their customers. It’s a channel that works well for companies that produce physical products and have the capital to invest in inventory.

Wholesale channels are great for helping businesses:

• Sell large volumes: The primary advantage of wholesale is the opportunity to sell in large volumes, allowing businesses to move large quantities of inventory and generate higher revenue.
• Reach more customers: By distributing products through wholesale channels, businesses can expand their reach and tap into a network of retailers who can introduce their products to a wider audience.

On the other hand, there are cons to using the wholesale channel, including:

• Time intensive: Building wholesale relationships takes time and effort, as businesses need to identify and establish connections with target resellers. This may require creating a compelling proposal and negotiating favorable pricing strategies.
• Testing: Before committing to larger wholesale orders, businesses often need to conduct a test or limited run to ensure the product is well-received.

Wholesale distributors can be a beneficial sales channel for businesses with a large inventory of products that are looking to sell in bulk. However, it requires time and effort to establish relationships.

4. Resellers 

Best for companies that sell products that are already well-known and established, such as electronics. 

In a sales channel strategy, resellers play a significant role in expanding the reach of a business and increasing product visibility. Resellers are intermediaries who purchase products from manufacturers or wholesalers and then sell them to end customers. 

Working with resellers offers several benefits, including:

• Wider audience: You can tap into the reseller's existing customer base, gaining access to a wider audience without extensive marketing efforts.
• Market feedback: Resellers can provide valuable market feedback, helping you identify trends and adjust product offerings accordingly.

However, there are limitations to consider when working with resellers:

• Lack of control: You won’t have control over the customer experience, as the reseller represents you in the eyes of the end consumer. Success depends heavily on the reseller's performance.
• Lower profits: You’ll have to share part of your profits with the reseller through commissions or wholesale prices, reducing your net and gross margins.

Resellers are a bridge between the producer and the consumer, leveraging their existing networks and expertise to distribute products effectively. A reseller channel could be worthwhile if you have a product that can easily fit into an existing market segment but limited resources or expertise in reaching ‌consumers.

5. White label

Best for businesses that want to sell their products under another brand's name, such as private label brands or generic products.

White labeling is a concept in sales channels where a company's product is rebranded and sold by another business under its brand name. The white-label sales channel allows you to increase market reach without directly marketing to end users. The business that sells your white-label products gets to offer a product without investing in product development.

The main advantages of white labeling are:

• Reduced time to market: With a white label, you can focus on product development and reduce the time and resources it takes to bring a product to market.
• Increased brand exposure: You’ll be able to reach a wider audience and gain visibility in new markets.

With that, there are also disadvantages to white labeling:

• No control: You’ll lose control over branding and customer experience.
• Fees: You’ll have to share profits or pay licensing fees to the partner.

If you have an innovative product but lack the resources or expertise to market directly to end-users, white labeling is another good option. It works well for companies that prioritize product development and prefer to leverage the marketing and distribution capabilities of established brands.

6. B2B sales 

Best for companies that sell products or services to other businesses, such as software, marketing services, or consulting.

B2B sales, or business-to-business sales, is a sales channel where businesses sell their products or services to other businesses. This sales strategy involves a different approach compared to selling directly to consumers. It requires understanding the unique needs and challenges of B2B customers and building long-term partnerships to deliver exceptional value.

There are key pros to B2B sales:

• Higher sales volume: B2B transactions often involve higher order volumes, which can lead to increased revenue and profitability, especially if you leverage flexible payments. 
• Longer-term deals: B2B sales typically involve long-term contracts, providing businesses with a more steady and predictable source of income.

However, when it comes to B2B selling, you’ll want to watch out for:

• Longer sales cycles: B2B sales cycles tend to be longer than B2C sales cycles. Building relationships, negotiating contracts, and navigating procurement processes can take time and resources.
• More complex selling: B2B sales often require specialized sales teams experienced in dealing with the complexities of selling to other businesses.

B2B sales can be highly lucrative for businesses that can meet the unique needs of B2B customers. Companies that excel in building long-term partnerships and have specialized sales teams can do well with the B2B sales channel.

7. Partnerships

Best for businesses looking to reach a wider audience or tap into a new market, such as through co-marketing, joint ventures, or strategic alliances. 

Partnerships allow businesses to leverage the resources and expertise of other companies to expand their reach and enhance credibility in the market.

The key benefits of partnerships are:

• New audiences: Partners with an established customer base will expose you to a wider range of potential customers. This can be advantageous for entering new markets or targeting specific customer segments that are difficult to reach through traditional channels.
• Greater credibility: Being associated with a trusted brand or industry leader boosts credibility. You can enhance your reputation and instill trust in potential customers with key partnerships.

But here are some drawbacks of partnerships to consider:

• Costs: There may be associated marketing costs involved in promoting the partnership and joint offerings. This can include joint marketing campaigns or financial incentives for partners, such as commissions. 
• Complexities: Identifying and connecting with potential partners can be a complex. This may include using networking events, industry conferences, or online platforms to find suitable partners who align with your goals and values.

Partnerships work well for companies looking to expand their reach and access new customer segments. However, it is important to consider the associated costs and invest time and effort in identifying and onboarding the right partners.

8. Marketplaces 

Best for sellers with products that are easily commodities looking to reach a large number of customers quickly. 

Online marketplaces have emerged as popular sales channels in recent years, allowing businesses to reach a large customer base while ‌streamlining the payment and shipping processes. There are still traditional marketplaces like Etsy and eBay, but newer platforms, such as Amazon, offer advantages for businesses looking to expand their reach.

Marketplace sales channels can provide such benefits as:

• Customer base: Marketplaces provide a large customer base and millions of active users. You can tap into that traffic of potential customers that are actively shopping.
• Simplified processes: You can rely on the marketplace to handle payment infrastructure and in some cases, shipping logistics. This can save you time and resources to focus on other business areas.

On the other hand, marketplaces do come with some cons:

• Competition: There are likely numerous sellers offering similar products, making it hard to stand out. Not to mention fees for advertising or access to premium features.
• Branding limitations: With many marketplaces, you’ll also have limited control over branding, which means you’ll be unable to create a unique identity and loyal customer base.

Marketplaces work best for companies looking for quick market entry, have products in popular categories, and are looking for access to a large customer base.

9. Social media  

Best for companies that need to connect with potential customers on a personal level. 

Social media has emerged as a powerful business sales channel, providing numerous opportunities to promote products, reach new audiences, and generate referral sales. It works for companies that want to build brand awareness. 

With the integration of e-commerce channels on popular social networks, businesses get the benefits of marketplace channels while leveraging the user base of social platforms to boost sales.

The key benefits of using social media as a sales channel include:

• Target specific audiences: You can promote products directly to specific audiences with sophisticated targeting options. 
• Increases referrals: Social media lends itself to referrals, where users are likely to share their experiences and recommendations with their followers. 

On the flip side, social media comes with cons, such as: 

• Frequent changes: Changing algorithms and policies of social media platforms can impact your reach. 
• Competition: Competition on social media can be fierce, with numerous businesses vying for users' attention. Standing out from the crowd requires developing compelling content and engaging with the audience consistently. 

While social media can benefit most businesses in some way, it can work best as a sales channel for companies with visually appealing products that target a younger demographic. Industries such as fashion, beauty, home decor, and lifestyle do well with leveraging the visual nature of social media marketing.

How to pick the right sales channel

Here’s a quick five-step process for finding the right sales channel for your product.  

Step 1: Define your target customer segment 

Before selecting a sales channel, it's essential to identify your ideal customer segment. Who are they? Where do they shop? What are their preferences? Knowing your target audience will help you choose the most effective sales channels to reach them.

2. Assess your product offering 

Consider the type of product or service you offer and how it fits into each sales channel. For example, if you sell high-end electronics, an online marketplace like Amazon might not be the best fit due to competition and price sensitivity. On the other hand, if you offer a niche service, specialized online communities or social media groups could be a better choice.

3. Evaluate the profit potential 

Each sales channel has its costs, including fees, commissions, and marketing expenses. Consider these costs carefully and evaluate the revenue potential of each channel. Calculate your break-even point and projected profit margins to determine which channels are worth investing in.

4. Consider your brand identity 

Your brand identity and values should align with the sales channels you select. For instance, if sustainability is crucial to your brand, partnering with a platform that promotes fast delivery may not be suitable. Instead, look for channels that support your values and contribute to your brand reputation.

5. Test and optimize your channels 

No one sales channel is perfect for every business, so experimentation is key. Try out different channels, track performance metrics (such as retention rates and other KPIs to track as a small business), and optimize your strategies based on insights. This process helps you identify the most profitable sales channels and adjust your tactics accordingly.

Grow your business with confidence 

When choosing a sales channel, there are multiple factors to consider. You have to assess how your competitors are selling their products, but you should also consider the costs of these methods and customer preferences. Once you determine a viable sales channel, you can expand to a multichannel sales model. 

It’s no secret that many small business owners have limited time. With that in mind, several companies opt to outsource key tasks, such as sales or payroll, to focus on the things they enjoy. Accounting software like QuickBooks can help streamline your finances—from invoicing to tracking payments from all your sales channels.