One more channel is not a strategy. Six criteria and a clear threshold to choose your sales channels starting from margin, not revenue.
Opening a new sales channel has become the automatic answer to any slowdown. Sales drop on the website, so a marketplace gets opened; the marketplace gets crowded, so TikTok Shop gets a try; then a foreign distributor shows up promising volume. My view is simple: one more channel is not a strategy, it is a fixed cost dressed up as an opportunity. Before opening it, you need to know how much margin it will bring, on which product, with which people, and above all how you get out if it does not work. In this article I propose a grid for deciding where to sell, with six criteria and a clear threshold below which the answer is no.
Why adding sales channels does not mean diversifying
The word you hear most often is diversification. The reasoning is that if one channel goes badly, another one will make up for it. The numbers tell a different story. Amazon says more than 95% of its sellers are present on multiple channels. Yet in the United States, seven out of ten sellers who have Amazon as their main channel and are active on at least one other marketplace still earn three quarters or more of their marketplace revenue from Amazon.
Being everywhere, then, does not mean depending less on anyone. Often it means having one channel that really works and four that consume time, catalogue, advertising and attention without moving the risk an inch. The clearest signal comes from the platforms themselves. At the end of September Amazon announced tools to manage sales on eBay, Shopify, TikTok Shop and Walmart from inside Seller Central, free of charge and, for now, in the United States. A great operational convenience, but also an elegant way to stay at the centre of the seller's life while the seller believes they are branching out. Anyone opening channels to diversify should first ask who they are really diversifying away from.
Every sales channel rewards a different product
The second mistake is thinking that a channel is just another shelf for the same catalogue. It is not. Every platform has its own logic and rewards a certain type of product, price and behaviour.
TikTok Shop is the clearest example. Among the best-selling products on the American platform, more than two thirds of revenue comes from things applied to the body, taken into it or worn on it, and beauty alone is worth almost 30%. The median price of top products is around 40 dollars, high enough to matter and low enough to buy without leaving the video. There, the competitive advantage is content, not catalogue breadth, and the seller leaderboard turns over faster than on the other large marketplaces. A viral month gets you to the top; staying there is a different job.
A company selling industrial spare parts, made-to-measure furniture or technical electronics can be an excellent business and have no reason at all to be on TikTok Shop. Conversely, a cosmetics brand that does not produce videos every week would go in there to lose money. I liked the way Currys, the British electronics chain, decided to enter it just these days: a narrow selection of products chosen for that audience, from beauty to coffee to audio, a trial period and a specialist partner running the shop, the live streams and the creators. Not the whole catalogue, not forever, not alone. That is exactly the right approach.
Margin per channel is the only number that really matters
When a channel is assessed, people almost always look at potential revenue. It is the easiest number to imagine and the least useful for deciding. What matters is the contribution margin per order, channel by channel, after removing everything the channel takes.
The calculation includes platform fees, the logistics and packaging costs specific to that channel, returns at their real rate rather than the hoped-for one, the advertising needed to be seen, any discounts imposed by the platform's promotions and the cost of the content it requires. Then there is the item almost nobody includes: people's time. Every channel needs someone to update listings, answer customers, check stock and handle disputes. If that person is already on the team, their time is being taken away from something else.
The result is that the channel with the most revenue is often not the one with the most margin. It is common for a company to discover, after a year, that a marketplace generates a third of its revenue and almost none of its profit. The right question is not how much I can sell there, but how much I keep for every order and how many hours it takes.
The grid for choosing sales channels
To make the decision less emotional I propose a grid with six criteria. Each criterion gets a score from 1 to 5 and a weight. The weighted average tells you whether the channel deserves a test, should be opened with conviction or should be left alone.
| Criterion | The question to ask | Weight |
|---|---|---|
| Margin per order | After fees, logistics, returns, advertising and discounts, how much is left on each order? | 25% |
| Customers | Do my customers already buy there, or do I have to bring them? | 20% |
| Product fit | Does the channel reward my type of product, price and content? | 15% |
| Operating cost | How many hours a week and which skills are needed to run it well? | 15% |
| Control | Can I decide price, positioning and the relationship with the customer? | 15% |
| Reversibility | If it goes badly, how much does it cost to leave and what do I leave behind? | 10% |
Margin weighs most because it is the reason you sell. Customers come right after, because a channel where the audience is missing has to be built from scratch, and that cost rarely makes it into the business plan. Product fit, operating cost and control carry the same weight because they are the three things that, over time, turn a good channel into a problem. Reversibility weighs less, but it is what separates an experiment from a mortgage.
The threshold I suggest is this. Below 3.5 the channel does not get opened, however promising it looks. Between 3.5 and 4 you run a limited test, with few products and an end date. Above 4 you go in with a full plan and dedicated resources. The value of the grid is not in the final number, but in the fact that it forces you to write down the answers before signing up with the platform, while it is still possible to say no.
How to enter a new channel without mortgaging the company
Even when the grid says yes, the entry should be designed as a test. My advice is to start with a narrow selection of products, the ones the channel rewards and that have the strongest margin, and to set a duration, for example ninety days. Before starting, you write down three numbers: the minimum margin per order, the number of weekly orders below which the channel does not repay the time, and the return rate above which you stop.
At the deadline you look at those numbers and decide. Either you widen the assortment, or you fix one specific variable and allow a second period, or you close. Closing a channel is not a failure; it is the grid doing its job. The real failure is keeping it open out of inertia, just because you are already in.
How the work is organised matters too. A single catalogue, shared stock and sales data read in one place are worth more than any new channel. If a company today cannot say within a few minutes how much margin it makes on each channel, its first investment is not the next marketplace but the system that lets it know. It is the same principle we work on at BusinessLabs: visibility on the numbers first, expansion second.
My position: fewer sales channels, done better
I believe that in the coming years the winners will be companies that sell on fewer channels, but choose them methodically and run them well. Platforms will keep multiplying, each with its own rules, and each will do everything to look indispensable. The temptation to be everywhere will grow, and with it the number of companies with many open channels and only one that pays the salaries.
Strategy is not the sum of the places where you sell. It is the deliberate choice of the places where you do not. If I had to give one piece of advice to an entrepreneur about to open a new channel, it would be this: before asking how much you could sell, ask how much it costs to stay and how much it costs to leave. If you cannot answer, you are not ready.
CEO & Co-Founder of BusinessLabs. I have attended major international trade shows since 2015 and share here experiences and insights for online sellers.
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