This post was written for the TurnKey Playbook for Amazon Blog
If there’s one thing that recent world events have shown us, it’s the value of diversifying your eCommerce business. Thousands of online sellers have been impacted by changing buying habits, broken supply chains, and disrupted FBA services, despite there being a simple and affordable solution: diversification.
In this guest post, we’re exploring the value of diversifying your eCommerce business and sharing some quick and effective areas you can get started with.
The value of diversifying your eCommerce business
Diversifying your Amazon business involves adding more strings to your bow, showing a greater deal of variety, and covering more bases.
1) Spread risk
Diversification spreads your risk. If you rely on one manufacturer, one product, or one sales channel and it becomes unpopular, disrupted, or ineffective, you immediately lose out.
Diversification spreads your risk so that if one SKU or supplier fails, you have other options to rely upon.
2) Increase profits
Diversification increases your profits. By diversifying your products, sales, and marketing methods, you appeal to more customers, increase your sources of revenue, and boost your overall sales.
You can also use diversification to operate your eCommerce business in the most profitable way possible, without impacting service.
3) Enhance business value
Diversification increases your business value. While you might not be looking to sell your eCommerce business right now, it could be something to consider in the future.
Multiple traffic sources, products, and forms of monetization all boost business growth and enhance the overall value of your eCommerce business.
How to diversify your eCommerce business
There are three steps to effectively diversifying your eCommerce business:
- Conduct a risk assessment to identify the areas of your business that rely on only one factor for continuity. For example, products, sales channels, advertising, etc.
- Research the product, partner, or software that can help you to reduce this reliance and increase your diversification, following your usual research methods.
- Test your diversification in action, ensuring that it complements your existing set-up and can be relied upon when necessary.
Where to diversify your eCommerce business
To get you thinking about where you can utilize diversification in your business, let’s look at four common and effective areas for eCommerce; products, sales channels, operations, and communication channels.
If Coca-Cola needs more than one product to survive, then you do too. A diverse product selection is great for:
- Attracting new and different customers
- Retaining customers and encouraging repeat custom
- Reducing the risk of an unsuccessful or seasonal product
- Keeping your business in-line with current trends
There are three types of product diversification:
This involves selling products similar to your existing products. For example, expanding from one style of running trainer to two styles.
This involves selling new products to your existing customers. For example, expanding from running trainers to running shorts.
This involves selling unrelated products to a different audience. For example, expanding from running trainers to ski wear.
Further reading: 3 useful product research tools for Amazon sellers
According to Shopify, multi-channel selling increases revenue by 38%, 120%, and 190% with each additional channel – making sales channel diversification essential for growing eCommerce businesses.
Beyond Amazon, there are four big sales channels to consider, depending on your product selection.
With customer numbers and fast shipping capabilities to rival Amazon, Walmart is a popular second marketplace for mainstream products.
Finally, if you’re looking to bring Amazon shoppers directly to your own website, Shopify is an easy-to-use, and simple-to-set-up eCommerce platform that’s great for selling niche items to direct customers.
According to the State of Multi-Channel eCommerce Survey, eBay is the first recommended sales channel for existing Amazon sellers, especially those selling mainstream products at a competitive price.
Wish’s mobile-first platform and curated product feed makes it a popular sales channel for Amazon sellers targeting younger audiences with niche and budget items.
Further reading: how to conduct a product-market profit assessment
COVID-19 has demonstrated that a diverse supply chain is crucial for weathering a crisis and keeping your business open. Look at your suppliers and fulfillment sustainability to avoid unpleasant surprises.
Look to spread your suppliers across more than one country to overcome any local disruptions and travel restrictions. If you can’t find suppliers in multiple countries, use suppliers in different regions who use different transport networks.
Protect your customers’ orders by using different packaging suppliers, warehouse locations, and shipping carriers. If you cannot do this in-house, use an outsourced fulfillment partner who uses multiple shipping carriers, warehouses, and sales channels to maintain fast shipping speeds regardless of what’s happening in the world.
For example, Deliverr’s warehouse partner network is spread across the USA, making it more resilient due to the flexibility and ability to expand where demand is.
Offer: Use the promo code TURNKEYDELIVERR in your Deliverr portal to get 30 days of free storage after inventory is received. Create a free account.
Finally, don’t forget that your customers diversify their shopping and communication methods too. Ensure that you deliver your message to customers through ads, search results, and other channels.
Amazon PPC advertising is ideal for getting your products and brand in front of the right audience on Amazon. However, don’t forget about other advertising methods, such as Facebook advertisement, for reaching shoppers at different stages of their product discovery.
Ensuring you have fast shipping tags activated for your listings will help you increase your placement and visibility in the search results. But, remember that when diversifying your sales channels, you must diversify your fast shipping programs too, including Walmart TwoDay Delivery and Wish Express.
There are many ways to communicate with eCommerce buyers about product questions, order updates, and problems – use the same variety of communication channels that your customers use, including social media, SMS, and email.
Diversifying your eCommerce business may sound like a lot of work. You’ve already spent time finding the perfect product and partners, now you need to do it all again?
However, the time invested in diversifying your products, partners, and processes can significantly pay off with business growth, continuity, and survival – even when the unexpected happens.
We hope that this guide has got you thinking about how you can start diversifying your business – whether that’s your products, fulfillment, or advertising.
About the Author
This is a guest post from Rachel Go, who handles content and partnerships at Deliverr. Deliverr provides fast and affordable fulfillment for your Shopify, Walmart, Amazon, eBay, and Wish stores, helping to boost sales through programs like 2-day delivery for Shopify, Walmart 2-day delivery, eBay Fast ‘N Free, and Wish Express.
Deliverr’s FBA-like multi-channel fulfillment comes with clear and transparent pricing, easy onboarding, and hassle-free experience so you can focus on growing your eCommerce business.