Go-To Market Strategy (Decide On Your Sales Channel)

Go-To Market Strategy (Decide On Your Sales Channel)

The first step in project research is defining general criteria for what you are looking for. What makes a good potential product? What characteristics should you be looking for in a new product you want to bring to market? These are loaded questions, and we will dive into them in this section.

Before we can define the product characteristics of a potential winning product, we first need to define our general go-to-market and marketing strategy. Without starting here it’s impossible to define what we are looking for in a good potential product.

Here are some examples of general sales/marketing strategies for ecom businesses:

  • You will sell on your own website, and drive traffic to that site using paid advertising or paid influencer marketing.
  • You will sell on your own website, and drive traffic to that site using organic or SEO (Search Engine Optimization) tactics.
  • You will sell on the Amazon marketplace and drive traffic by ranking organically on Amazon search.
  • You will sell on other online retail marketplaces (ie. Walmart.com, staples.com, etc) and drive traffic by ranking organically in the marketplaces.
  • You will sell in physical brick and mortar stores (Walmart, Staples, etc.).

All of the above strategies can work and be extremely lucrative. And it can often be beneficial for brands to expand into more than 1 of these different marketing/sales channels over time. However, when starting a new brand from scratch it’s almost always better to hyper focus on one channel/strategy. And the reason is that all of the above marketing/channel strategies are competitive. We live in a competitive world, so to succeed in any of the above you need to dedicate a large amount of time to learn it inside and out. You need to outwit and outwork your competition to succeed, which means studying the strategy, launching products, failing, getting back up and trying again. And this is a lot easier if you hyper focus on just one strategy to start.

So which one do you choose? Well, that’s definitely a personal choice. For me, I hyper focused on Amazon when I first got started with ecom. But if I had my time back I would of started with selling on my own website and driving paid traffic instead. Private labeling on Amazon can be extremely risky for new sellers, largely due to inventory risk. This is something the gurus do not teach you in their $1000 courses. The reason is that to compete on Amazon you need to get your inventory into Amazon’s physical warehouses (they call this FBA – Fulfilled by Amazon). So that involves heavy up-front investment in inventory + freight cost to get it there. Then, once your goods are in the Amazon warehouses, you have little to no flexibility on the sales channel. There’s no backup plan, so to speak. You basically need to sell that product on Amazon by ranking organically for Amazon search. If you are not able to rank your new product in Amazon’s search algorithm, you can be easily left with tens of thousands of dollars of inventory sitting in an Amazon warehouse somewhere, and you holding the bag. I’ve been there, and it sucks.

The first reason I recommend most new sellers to start selling on their own website is because you have complete control over your website, and there are various options you can pursue to try and sell your inventory. Broadly speaking, to attract new customers there are paid advertising and organic SEO methods, both of which can be effective to drive new traffic to your website.

Each of these categories contain many different options within them. For example, for paid advertising you can choose to advertise on Facebook/Instagram, Twitter, Youtube, Google Search, Google Shopping, Pinterest, Linked-In, etc. There are a wide array of advertising platform choices available to you, all of which may work or not work. So you have a wider net of options, should one advertising method fail. Similarly, you can choose to optimize for SEO on Google, Bing, Yahoo, or other search engines. The point being that all your eggs are not in one basket (as is the case for Amazon FBA more or less).

The second reason I recommend new sellers to start on their own website is because you can get started without purchasing inventory. This is where the ever-so-popular drop shipping  model comes in. Drop shipping is a fulfillment model, and it can be an outstanding way to jump in without incurring a massive amount of inventory risk. With drop shipping you literally do not pay for your inventory until you make a sale. Once you close a sale for your product, you then purchase that product from your supplier and send it to your customer. There is no inventory risk on your part. This is an amazing way for new business owners to test products and learn how to launch ads with little risk.

From a marketing perspective, drop shipping is pretty much the same as if you had inventory in warehouses somewhere. In other words, you still market the same way if you are drop shipping as if you were not drop shipping. Remember, drop shipping is only the fulfillment model you are using to send products to your customers, that’s it. You would still drive traffic to your website in the exact same way via paid or organic methods. So that’s why drop shipping can be a great way to jump in and get some experience marketing a product, without having to invest a bunch in inventory and take a big risk your products will not sell.

As for selling in other retailers, like Walmart or BestBuy, this can also be a lucrative venture. However, it’s carries with it similar downsides to Amazon FBA. For brick and mortar you need to invest heavily in inventory up front, and distribute that inventory to the retail stores. Larger retailers are even worse than Amazon from my experience in their payment terms. It typically takes a long time for you to get paid. Plus, many larger retailers will only buy on consignment, so they force you to carry all of the inventory risk if your products do not sell through. Similar to Amazon, if your products sell poorly at the retailer you send them too, you do not have a lot of options either in terms of backup plans to sell your product. It’s more of a one-time bet that your products will sell in the retailer you send them too, not ideal from a risk perspective.

Looking back I truly believe that Amazon and other retailers are best utilized as sale channel expansions for existing brands already selling on their own website. They are a great way to expand your sales channels, but too risky from my perspective for your go-to market strategy.

That’s why I generally recommend new sellers sticking to their own website to start, especially if you have little funding behind you to make it work. Once you prove demand on your own site, then it makes sense to branch into other retailers from there, like Amazon, or Walmart.

So that’s the general list of sales channels/marketing strategies you can pursue to launch and scale your ecommerce business. Next, we will dive into what metrics you should look for when trying to decide what product you should sell.
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