In the ecommerce business, choosing the right distribution channels can make the difference between success and failure. 

Remember, the quality of your products means little if you can't figure out an efficient and reliable way to get them to your customers. And that tiny detail in your ecommerce business model can impact everything — from your profit margins to your customer loyalty.

In this article, we'll cover the most effective ecommerce distribution channels, their benefits, and how to choose the best ones for your business. 

What are Ecommerce Distribution Channels? 

In simple terms, ecommerce distribution channels are the routes through which products are sold and delivered to customers. 

Distribution channels can be categorized into two groups: direct and indirect.

Direct distribution occurs when the company sells products to consumers through first-party platforms. In ecommerce, this means selling products directly through your website or app — no intermediaries required.

On the other hand, indirect distribution requires third-party platforms such as online marketplaces, retailers, wholesalers, or social media shops. 

Both types of distribution channels come with their own pros and cons. 

Relying on your own platform can, of course, result in higher margins and more control over your business. Utilizing indirect distribution channels, however, provides opportunities to reach more customers much faster.

At the end of the day, successful ecommerce brands always use a combination of direct and indirect distribution channels. 

It's all just a matter of which channel to start with and where your priorities should lie.

The Best Distribution Channels for Ecommerce Brands

Let's take a closer look at the best distribution channels for ecommerce businesses:

1. Direct-To-Consumer (D2C)

Most ecommerce startups that sell their own products and care about their brand image start with D2C. 

This can be their own website, mobile app, or both. 

The primary benefits of going D2C are full control over branding, the customer experience, and your customer data. Of course, products sold through your own channels also lead to bigger margins.

D2C distribution platforms:

• WooCommerce
• Shopify
• BigCommerce
• Magento

2. Ecommerce Marketplaces

If driving sales as quickly as possible is your top priority, you can "piggyback" an existing ecommerce marketplace that already has an established user base. 

Selling through ecommerce marketplaces also streamlines the logistics side of things — from order tracking all the way to returns. The main downside is, you'll have to deal with fees and conditions that limit your control over the shopping experience. 

Ecommerce marketplace platforms:

• Amazon
• eBay
• Etsy
• Walmart Marketplace

3. Social Media Marketplaces

Using social media commerce is identical to selling through ecommerce marketplaces, but with a few distinctions.

Although social media marketplaces will help you reach more customers faster, the shopping experience can be diluted with all the non-commercial content on the platform. Not to mention that — unless you integrate your social media store with other distribution channels — you still have to take care of logistics yourself.

On the flip side, social media platforms come with tools that can help you form meaningful customer relationships. You can accumulate followers, share content, and interact with users in a more organic and impactful way than with an ecommerce platform.

Platforms for social media commerce:

• Facebook Marketplace
• Instagram Shopping 
• TikTok Shop

4. Wholesale and Retail 

Even as an ecommerce brand, wholesale and retail distributors should never be out of the question. 

Wholesalers let you capitalize on their connections to get your product out to more channels, whereas retailers leverage their reputation and existing customer base to generate sales. Both can help grow your ecommerce business, but such a transition can be a slippery slope and overwhelm your company without proper planning. 

Platforms for wholesale and retail:

• Alibaba.com
• Business Directories 
• Local Chamber of Commerce

5. Subscription-Based Distribution

In a subscription-based distribution model, customers only need to set up their purchase once to continuously receive products indefinitely or for a specific period of time. 

Selling ecommerce products on a subscription basis leads to predictable monthly recurring revenue and higher customer retention. It also helps improve customer loyalty, which is a key piece for sustainable ecommerce growth.

Subscription models are not exactly a standalone distribution channel per se. After all, it doesn't address how the products will be delivered to customers, but it's an effective practice if you're after improving Customer Lifetime Value (CLV).

Platforms for subscription-based distribution:

• Utterbond Subscriptions
• Recurly

Factors to Consider When Choosing Distribution Channels

Great — you now know the top ecommerce distribution channels. 

You're halfway to creating a more efficient and profitable distribution system. 

To get you to the end zone, here are six important factors you should consider when choosing the ideal distribution channels for your ecommerce business:

1. Target Audience

In ecommerce, success starts and ends with your customer. 

Whichever distribution channel you use, you need to make sure your target customers actually shop there. 

Use market research data, social media listening, competitor analysis, and — most importantly — common sense to determine where people go to find products like yours. 

You can get a broad sense of where online customers go to shop with generalized industry reports. For example, data from Statista reveals that 32% of customers use marketplaces to search for products, whereas 20% prefer browsing first-party-owned sites. 

From there, dig deeper into more advanced reports that break down online shopping preferences by product category. 

Just take note that some of these statistics aren't free. And if you're looking for a more budget-conscious solution, you can analyze how top competitors distribute their products and start there.

2. Brand Control

Ask yourself, how important is branding to your vision?

If you envision a value proposition that includes the experience of purchasing, owning, and using your product, direct distribution channels provide the legroom you need. 

Selling directly through your website, for instance, gives you complete control over product search features, the checkout process, and customer support. You're also free to experiment with creative payment models, like Dollar Shave Club's seamlessly integrated subscription option. 

Of course, that doesn't mean other distribution channels completely suck the identity out of your brand. Most ecommerce platforms offer customization options — albeit limited — for your storefront.

Social media channels also enable you to communicate brand identity, but more through your content and user interactions.

It's just a question of how much brand control you need to stay true to your company's mission.

3. Margins and Costs

Next up, you need to think about your comfort level in terms of costs. 

Direct channels generally let you keep more of your profits since you don't have to pay for memberships and various optional tools or programs. These margin-reducing fees are among the biggest drawbacks of indirect distribution channels, particularly in ecommerce marketplaces. 

Remember, you need to pay most of those fees whether or not your products actually sell. And when they do, most ecommerce platforms and marketplaces will charge you a referral or transaction fee.

4. Scalability

Another thing to consider when choosing ecommerce distribution channels is scalability. 

Again, direct-to-consumer channels have the advantage in this regard. You can pop in third-party integrations or upgrade backend services like your web hosting or performance optimization tools at any time. 

Although most indirect distribution channels are also built with scalability in mind, they will never match the level of flexibility that a first-party channel has. Some marketplaces also have hard limitations, like the countries you can deliver to and the amount of storage space that can be allocated for your data. 

6. Integration and Logistics

Although direct distribution is generally better for your margins, it can also get messy quickly without a solid strategy for warehousing, inventory management, and fulfillment. 

Indirect channels offer services (i.e., Amazon FBA) that simplify these aspects of ecommerce — perfect for lean startups. Just be sure to compare these services or look for supported integrations with third-party providers when choosing an ecommerce marketplace or platform.

Combining Multiple Channels for Growth

At this point, it should be clear that there's no such thing as a one-size-fits-all distribution channel in ecommerce. 

While there may be a best-fit channel for new companies looking to gain traction, some of the biggest ecommerce brands eventually adopt an omnichannel approach to maximize growth.

TL;DR: omnichannel distribution means selling products across multiple channels while creating a seamless and consistent experience for different customer groups. This expands your reach, maximizes your revenue, and nullifies the risk of relying on a single sales channel.

To make omnichannel distribution less intimidating, consider tools like Cin7 to streamline inventory management and logistics across multiple channels.

Just don't forget to implement consistent branding on all touchpoints to establish brand recognition and boost customer loyalty. Apart from visual branding, you should also stick to a consistent core message to reinforce your identity. 

Omnichannel Distribution in Action: Three Examples

Curious to see what omnichannel distribution looks like? 

Here are three successful ecommerce brands you can take inspiration from: 

1. Glossier

Glossier is an omnichannel beauty brand that sells through a direct-to-consumer website and physical store locations across North America. The company also uses social media to connect with a younger, mobile-first audience while promoting special deals, User-Generated Content (UGC), and influencer collaborations.

2. Casper

Casper is an ecommerce brand that sold sleep products initially through their own website. Over time, the company expanded through partnerships with Amazon and Target — eventually opening up physical store locations to widen their reach.

3. Warby Paker

Lastly, Warby Parker is an eyewear company that combines D2C ecommerce, marketplace distribution, and physical store locations to create a hybrid shopping experience that appeals to customers with different preferences. 

Despite their successful growth, Warby Parker stayed focused on their website as the centerpiece of their omnichannel distribution strategy. The company's former VP of performance marketing, Brian Magida, sat down with Nostra AI to dig into their successful conversion rate optimization efforts for their D2C channel.

Evaluating and Optimizing Distribution Channels Over Time

Remember that expanding to new ecommerce distribution channels rarely results in overnight success. It's important to have an ongoing optimization strategy to help you make the most out of your ecommerce sales channels. 

The first order of business is identifying the performance metrics you need to track, namely:

• Sales volume by per channel
• Customer Acquisition Cost (CAC) per channel
• CLV per channel
• Conversion rates (CVR) per channel

Most ecommerce marketplaces and platforms come with built-in reporting tools to keep these metrics top of mind. 

If you're planning to diversify your distribution, an omnichannel platform like Cin7 and Ordoro to consolidate your ecommerce analytics. These tools also let you schedule automated reports for sales forecasts, fulfillment speed tracking, and sales channel performance with ease.

As a final piece of advice, don't be afraid to experiment with new sales strategies that could resonate with your target audience and growth objectives. 

There are plenty of new, low-cost strategies out there that let you tap into new markets. 

For example, Three Ships is a Canadian beauty brand with a track record of success in expanding their distribution. Not only did they successfully penetrate the U.S. market through Target, the company also capitalized on the live selling trend to exceed their sales objectives tenfold. 

How Nostra Can Help

No matter what ecommerce distribution channels you start with, history shows that having your own website is an important milestone that every successful ecommerce brand reached. 

It's up to you to leverage D2C distribution or just use your website for brand recognition. Regardless, having a fast website that offers great user experience is an absolute must to establish a reputable online presence. 

That's where we come in. 

Nostra AI's proprietary Edge Delivery Engine will help you achieve near-instantaneous loading speeds anywhere in the world. If global distribution is in your sights, click here to book a demo.