Against the backdrop of the e-commerce market’s rapid growth, customer purchasing behaviour has become increasingly diverse. In this context, sales channels, which are the point of contact between companies and customers, are key for attracting more customers and increasing sales opportunities. If your business has too few sales channels, you risk missing out on sales opportunities and losing profits that otherwise could have been earned.

In this article, we’ll explain the basics of sales channels by introducing specific types, and provide a detailed explanation of key considerations for managing multiple channels, as well as the latest strategic trends.

Key takeaways

• To expand sales opportunities, it’s important to establish multiple sales channels in order to increase touchpoints with customers.
  
• By integrating online stores with physical stores, it becomes possible to deliver a seamless shopping experience to customers.
  
• To ensure the smooth operation of each sales channel, several key points must be considered.
  
• Among the many sales channels available, key strategies currently gaining attention include the implementation of unified commerce, which can be seen as an evolution of omnichannel retailing.
  
• With Stripe Terminal, you can centralise in-person and online payments and achieve unified commerce through the integrated management of multiple sales channels.
  

What are sales channels?

A sales channel refers to the routes, touchpoints, and media through which a company delivers value (in the form of products and services) to customers. The major types are shown below.

• Physical stores
  
• Ecommerce sites (e.g., company-owned sites, ecommerce malls, apps)
  
• Social media (known in Japan as social networking services, or SNS)
  
• Email newsletters
  
• Direct messages and mail (print and electronic)
  
• Catalogues, magazines, and newspapers
  
• TV commercials
  
• Print advertising
  

In the current retail market, simply displaying products isn’t enough to drive sales growth. To lead a business to success, you need a sales channel strategy that identifies the target audience and reliably delivers your company’s value to that audience through the most effective channels.

Why a sales channel strategy is necessary

The need for a sales channel strategy stems from the fact that the sequence of customer behaviours—searching, comparing, and purchasing—has become more complex and diverse.

Today, it’s common for customers to engage in purchasing behaviour that spans multiple touchpoints. This can include examining products in person at a physical store before buying them online, or reading reviews on social media before purchasing products in a physical store.

If businesses fail to adapt to these changes and limit themselves to a single sales channel, they risk missing opportunities to offer products at the precise moment when customers want to buy, which could in turn inspire customers to switch to a competitor.

On the other hand, implementing the right strategy across multiple sales channels will allow your business to offer products at the optimal time and through the optimal channels and media, which can lead to the following benefits:

• Increased sales through maximised sales opportunities: Establishing multiple sales channels increases sales opportunities, which can result in higher revenue. It also creates more opportunities to attract repeat customers.
  
• Improved convenience and customer satisfaction: Providing a consistent shopping experience across all sales channels enhances the overall quality of service and leads to higher customer satisfaction.
  

For example, by sharing inventory data between ecommerce sites and physical stores to complement each other’s offerings, and by providing customer service that transcends the boundaries between online and offline channels, you can improve customer satisfaction, which in turn can lead to increased sales and ultimately create repeat customers.

In this way, a good sales channel strategy aims to create a seamless customer journey that allows customers to move comfortably between multiple sales channels by integrating online shops with physical stores.

Classification of sales channels

When developing a sales channel strategy, it’s important to consider the overall distribution structure. Sales channels are broadly classified into “direct sales channels” and “multitier sales channels” based on the “length” of the channel. In this context, the term “length” refers to the number of intermediaries—such as retailers and wholesalers—involved in the process before the product reaches the customer.

Direct sales channels

Using a direct sales channel model, manufacturers sell products directly to customers through their own e-commerce sites or similar in-house channels. This is sometimes called a “zero-tier channel.”

By handling sales in-house, direct sales channels offer the advantage of allowing manufacturers to establish and maintain their brand image, as well as respond directly to customer feedback.

However, the disadvantages of direct sales channels include the need to control every aspect of the operation internally, as well as the difficulty in achieving widespread product distribution.

Multitier sales channels

Using a multitier sales channel model, products flow from manufacturers to retailers or wholesalers; depending on the number of intermediaries involved, these channels are classified as single-tier, two-tier, or three-tier.

A single-tier channel is a distribution system in which manufacturers sell products directly to retailers.

In two-tier or three-tier systems, wholesalers act as intermediaries alongside retailers, and products are delivered to retailers after passing through these stages. Note that three-tier channels, which involve secondary wholesalers, have been on the decline in recent years due to efforts to streamline distribution channels.

Generally speaking, each incremental increase in the number of stages (e.g., from zero to one or from one to two) makes it that much easier to distribute products on a wider scale. However, since margins must be paid to intermediaries—and costs tend to rise as the number of stages increases—it might be necessary to adjust the selling price to ensure profitability.

Leading sales channels specialised for ecommerce　

Here are six major sales channels that can be used for ecommerce. If your business operates physical stores, implementing an online-merge-offline (OMO) strategy can create synergistic effects that enable you to provide customers with a better shopping experience both online and in-store.

In-house ecommerce sites

One of the major advantages of operating an in-house ecommerce site on a custom domain is that it allows for complete control over brand image. Additionally, there are no margins for intermediaries, which makes it easier to secure a healthy profit. Another key strength lies in the ability to directly collect customer data and use it to improve future services. In particular, for businesses aiming to build their brand over the long term and establish direct relationships with customers, this is an indispensable sales channel.

However, given the potential concerns about costs associated with customer acquisition and site operations, it’s important to manage cash flow carefully. While prioritising cost-effectiveness, it’s key to establish a robust framework for collaboration among internal marketing and engineering teams, as well as with external partners.

E-commerce malls

When opening a store in an ecommerce mall (EC mall) with massive brand recognition, such as Rakuten Ichiba or Yahoo! Shopping, the key advantage is that you can leverage the traffic these platforms already generate. This makes it relatively easy to attract customers and generate sales within a short period of time.

However, since opening a store in an EC mall involves setup fees and commissions, profit margins are lower than those of a company-owned ecommerce site. In addition, because you must adhere to the EC mall’s standardised format, there are limitations to showcasing your unique brand identity.

It’s important to note that fees, listing requirements, and regulations vary by EC mall, so be sure to verify these details in advance.

Social commerce

Social commerce—which involves promoting and selling products and services through social media platforms such as Instagram or TikTok—is also a key sales channel. The interest generated through social media promotion can lead to increased sales not only online but also in physical stores.

In recent years, social media platforms have started to incorporate shopping features. Through social commerce, businesses can not only target the large number of people who use social media on a daily basis, but also guide them towards making purchases in a natural way.

However, it might take some time for products and services to gain recognition on social media. Successful social commerce requires consistent posting and livestreaming; it also demands the operational expertise to continuously produce content that can capture and sustain the interest of potential customers.

Mobile apps

As a sales channel, mobile apps allow customers to search for, browse, and purchase products entirely within the company’s official app. With a mobile app, customers can enjoy shopping with just a few simple taps, anytime and anywhere. Because this channel is particularly valued by customers who prioritise convenience, it offers an effective means to boost customer retention rates and strengthen customer engagement.

However, developing and maintaining an app entails costs, such as those for technical resources. In addition, to ensure regular system updates and maintenance, it’s important to have a robust app management framework in place.

Live commerce

Live commerce is a sales channel that combines livestreaming with ecommerce. It’s a method of introducing and promoting products and services in real time through live video streams.

Many users appreciate that live commerce gives them the ability to interact with streamers in real time—such as by posting questions in the comments section while watching a video—as well as the ease with which they can make purchases directly within the livestream.

Because live commerce can be highly entertaining, it’s an effective sales channel for building relationships with customers who seek the sense of personal connection and comfort found in face-to-face interactions. However, because results depend heavily on the streamer’s product knowledge and skills—such as their conversational ease, improvisational ability, and flair for presentation—securing and training the right talent is imperative.

Wholesalers and resellers (distributors)

This is a sales model in which the company’s products are delivered to customers through wholesalers or resellers (distributors). Although this sales channel has existed in Japan since before the advent of ecommerce, wholesale transactions still account for a significant portion of the current ecommerce industry.

Instead of selling their products directly to customers, businesses sell them in bulk to wholesalers and resellers. Since these are large-scale transactions, the major advantages include the ability to move large volumes of inventory at once and the fact that partner distributors will handle sales on your behalf. As a result, this sales model is well suited for regions and markets that would be difficult for your business to enter on its own.

However, because this sales model involves no direct contact with end customers, it can be difficult to understand customer needs; in addition, margins paid to the intermediary company could squeeze profits. Therefore, it’s advisable to combine this approach with other sales channels—for example, by collecting customer data through direct sales channels while simultaneously expanding market reach through wholesalers and resellers.

Key points and considerations for operating sales channels

To ensure the smooth operation of sales channels, the following points are key. In particular, when running both physical and online stores, it’s important to approach operations strategically and carefully balance the needs of each sales channel.

Beware of cannibalisation across sales channels

Watch out for the potential of cannibalisation—where multiple sales channels compete against one another for sales, rather than generating added revenue; this can result in the need to discontinue services on lower-profit channels.

A typical example is the transformation of physical stores into mere showrooms (known as showrooming). This refers to the practice of customers examining products in a physical store—checking their size, colour, and texture—and then placing an order later through an online store rather than purchasing them on the spot. For customers, it might seem reasonable to check the details in a physical store and then purchase from an online retailer offering the lowest price. However, for the physical store, this means only costs, and no sale.

To prevent cannibalisation, it’s important to clarify and differentiate the roles and value of each sales channel. For example, immediate product availability and in-person customer service are forms of added value that are available only in physical stores. Businesses must strive to create sustainable value by leveraging not only these benefits, but also the unique capabilities that only physical stores can offer.

Perform STP analysis

STP (segmentation, targeting, and positioning) analysis is a key element in the development of a marketing strategy. The results of the analysis will help to implement effective promotional activities across each sales channel.

• Segmentation: Divide the entire market into distinct groups (i.e., segments).
  
• Targeting: Identify the specific customers to target from among these segments.
  
• Positioning: Differentiate your business from competitors to help your target customers recognise the uniqueness of your brand and products, thereby clarifying your company’s market position.
  

Give full consideration to the 4Ps

In addition to STP analysis, it’s important for your sales channel strategy to effectively leverage the 4Ps: product, price, place, and promotion.

• Product: Define the products and services that are intended to meet customer needs, including their quality, design, features, and brand names.

• Price: Determine the selling price (whether list price or discount price), and formulate a pricing strategy based on market rates and competitor analysis.

• Place: Select where the products will be sold, and define the channels through which the products can reach customers (e.g., physical stores, ecommerce sites, distributors).

• Promotion: Decide how to communicate information about the products or services and build awareness, including promotional activities such as advertising and campaign announcements on social media.

Older systems have difficulty supporting multiple sales channels

As the number of sales channels increases, back end operations—such as inventory management, order processing, payment processing, shipping, and customer service—become increasingly complex. As a result, legacy systems often struggle to execute these operations smoothly. Therefore, it’s important to consider replacing older systems with a modern one when the need arises.

By centralising inventory, customer, order, and sales data, you not only enable the smooth execution of customer enquiries, inventory management, and marketing initiatives, but also ensure the consistency of your brand image.

Strategic trends in sales channels

Business strategy trends evolve in step with the times, driven by advances in information technology (IT) and the emergence of new services. Therefore, to ensure the continued growth of your business, it’s important to adapt flexibly to changing times. With so many sales channels available today, here are three strategic trends every business should keep in mind.

Expansion of e-commerce

In the modern retail industry, it’s no exaggeration to say that using e-commerce as one of your primary sales channels is indispensable.

According to figures from the Ministry of Economy, Trade and Industry, the size of the B2C e-commerce market in Japan in 2024 was ¥26.1 trillion, a 5.1% increase over the previous year’s figure of ¥24.8 trillion. Further, the market size for B2B e-commerce reached ¥514.4 trillion, 10.6% higher than the previous year’s figure of ¥465.2 trillion.

In addition, e-commerce adoption is progressing in both the B2C and B2B sectors, where the e-commerce penetration rate (the ratio of the e-commerce market size to the total value of all commercial transactions) is as follows:

• B2C e-commerce: 9.8% (up 0.4 percentage points year-over-year)
  
• B2B e-commerce: 43.1% (up 3.1 percentage points year-over-year)
  

This shows that demand for e-commerce is steadily rising, and it’s expected that the shift towards online shopping will continue to accelerate in the future.

Adoption of unified commerce

Unified commerce takes omnichannel retail a step further by enabling the real-time, integrated management of all sales channels within a single platform. The term “unified commerce” translates to “integrated commerce” in Japanese.

As you can see from the discussion thus far, sales channels take various forms, including physical stores, e-commerce sites, and social media platforms. Traditionally, customer data management and marketing initiatives were handled separately for each of these channels. However, by unifying data across all channels, it becomes possible to gain a more precise understanding of customer needs and to implement optimal marketing strategies across channels. In addition, customers can enjoy a consistent shopping experience regardless of which sales channel they use.

Use of social media as a sales channel

Making the most of social media platforms, which offer high reach and make it easy to post and view content, is a key component of modern sales channel strategies.

Social media offers a wide range of applications, including running paid ads, hosting live commerce events, and engaging directly with potential customers. By leveraging social media as a sales channel, you enable customers to not only stay up to the minute on information about products and services, but also seamlessly navigate to landing pages linked to specific posts.

How Stripe can help

Stripe Terminal allows businesses to grow their revenue with unified payments across in-person and online channels. It supports new ways to pay, simple hardware logistics, global coverage and hundreds of POS and commerce integrations to design your ideal payments stack.

Stripe powers unified commerce for brands like Hertz, URBN, Lands' End, Shopify, Lightspeed and Mindbody.

Stripe Terminal can help you:

• Unify commerce: Manage online and in-person payments on a global platform with unified payments data.

• Expand globally: Scale to 24 countries with a single set of integrations and popular payment methods.

• Integrate your way: Develop your own custom POS app or connect with your existing tech stack using third-party POS and commerce integrations.

• Simplify hardware logistics: Easily order, manage and monitor Stripe-supported readers, wherever they are.

Learn more about Stripe Terminal or get started today.