Episode 39
In today’s episode, David and I discuss why sales channel diversity is crucial in your eCommerce business. We share some recent stories from our own businesses, some good and some horrible. We also dive into how having the right sales channel diversity can actually make you over 200K if you plan on selling your eCommerce business.
Let’s dive right into this episode and be sure to stay tuned for a strategy.
[00:01 - 13:29] The Downside of Having Only One Sales Channel
- Can Amazon shut down your business with one stroke of a key?
- Ken shares an analogy that explains the risk of having only one sales channel
- David shares his experience of being shut down on Groupon
- Any success story has a pile of trial-and-error stories behind it
- Ken shares an interesting story
- He was shut down from his entire Etsy Shop
- David shares his bad experience with Amazon Zero
[13:30- 22:39] The Importance of Sales Channel Diversity for Your E-Commerce Company
- The benefit of having a plan B if one channel gets shut down
- Send us an email to get the template (See links below)
- We talked about the upsides of having sales channel diversity
- “Historical marker” eCommerce multipliers generally bring around 3X
- Before Tax and broker shares, you potentially get $600,000 exit
- 5 diverse sales channels which reduce the risk for the buyer and increase the value
- Opted for a 4X multiplier because it had less risk than the previous business
- the upside would be SDE of 200,000 x 4 = 800,000 exit
- the total upside of 200K
- What determines that multiplier?
- Diversification, Email list, Other brand assets, Intellectual-property
- What can you do to mitigate this risk? Add more sales channels, diversify your sales channels, and mitigate the risk.
[22:40 - 29:35] Things to consider before adding a new sales channel
- Complexity
- Automation
- Upside (sales)
- Liability
- Sales tax complexity
- Cost commission%
- Are your customers on that sales channel?
- List of Sales channels:
- David talks about the things that separate your own website from some of these other third-party
- Final words
Resources Mentioned:
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