Ecommerce and Routes to Market
Why it matters. Selling more isn't the same as earning more. Knowing what each route to market leaves you with, after every cost, is what lets you grow without going broke. Your earlier topics built the proposition, the price and the communications that bring people in. This topic follows the money from there: which routes your organisation sells through, how well its online selling works, and what each sale really earns. By the end you'll compare routes to market on contribution per unit and choose which to grow, test or decline.
Progress marker: I can compare routes to market on what each sale really earns. Rate yourself now on this marker (not yet, with support, independently or could teach it) and note your rating in your portfolio.
Choose your route. On a first pass, work through the lessons in order; the Route-to-Market Profit Calculator fills up as you go. If a route has been offered to you and you need to decide, read the worked example, then start at Lesson 11.3 and come back to the others. If your online shop is the worry, start at Lesson 11.2.
Route-to-Market Profit Calculator
Enter the price and costs for up to three routes side by side and see the contribution per unit, the contribution margin and the units each route must sell to earn the same as your best route.
11.1Routes to Market
A route to market is the path a product takes to reach the buyer. It makes place, one of the 7Ps from Module 4, concrete: who sells your product, and who controls the sale.
The main routes.
| Route | What it is | Control | Reach | Customer data | Cost to you |
|---|---|---|---|---|---|
| Direct to consumer (DTC) | Your own shop, site or app | Most: price, presentation, service | Only people you can attract | You keep it | Marketing, delivery, payment fees |
| Online marketplace | A platform where many sellers list products | Less: the platform sets the rules | Large, existing shopper base | Mostly the platform's | A fee on each sale, plus fulfilment |
| Retailer | A shop or grocer buys or lists your product | Little: they set the shelf price and layout | Many shoppers, in person and online | Mostly the retailer's | The retailer keeps a margin |
| Wholesale | You sell to businesses that resell or use the product | Some: terms are negotiated | Through each customer | Business customer only | Lower price per unit, larger orders |
| Social commerce | Selling inside a social platform | Less: the platform sets the rules | Where your audience already spends time | Partly shared with the platform | Platform terms and fees vary |
Read the table as trade-offs, not a ranking. Control and data usually fall as reach rises, and fees and rules change, so check them at the source.
With direct to consumer you also carry the work of bringing people to your shop, which is the marketing you planned in Module 7. A marketplace gives you shoppers who are already looking, but takes a fee and puts you beside rivals. A retailer keeps a share of the shelf price, called the retailer margin: you trade some of the price for reach you couldn't afford alone.
UK example: Graze. Graze began as an online snack-box subscription business. In spring 2015 it ran a trial in Boots stores, and in July 2015, the trade press reported, its first shop range launched in Sainsbury's, Boots and WHSmith Travel. Unilever bought Graze in February 2019 and sold it to Katjes International in a deal announced in December 2025 and completed in February 2026. A business that started direct chose to add a route with different reach, control and economics.
Your organisation's routes. Most organisations use two or three routes and ignore the rest. Larkfield Coffee Roasters (fictional, with illustrative figures) sells through its own online shop, wholesale to cafés, and farm shops and delis. It doesn't use an online marketplace yet.
11.2Ecommerce Essentials
Whatever mix of routes you choose, your own online shop is the one you control. Run it well, because everything else is measured against it. This lesson is a quick audit of the basics.
Product pages. The page has to answer the questions a buyer would ask in a shop. Clear photos that show the real product, a plain description in the customer's words, the price including anything extra, and what's included. Put the main action, such as "Add to basket", where a thumb can reach it. Use the usability checks from Module 8: clear labels, one obvious next step and a layout that works on a phone first.
Checkout. Checkout is a journey like the sign-up you mapped in the UX topic, and it loses people in the same ways. Offer guest checkout, ask only for what you need, show the full cost before payment, and explain errors where they happen. The consent rules from Module 5 still apply here: no pre-ticked marketing boxes.
Delivery promises. Say when the order will arrive, what delivery costs and who carries it, before the customer pays. Then keep the promise. A delivery promise is part of your proposition; for Larkfield it is "at your door within three days of roasting". Late or vague delivery is one of the quickest ways to lose a repeat buyer.
Returns and refunds. Make the returns policy easy to find and written in plain English. In the UK, buyers who purchase online generally have a right to cancel within 14 days, with exceptions such as goods that deteriorate rapidly. The rules sit in the Consumer Contracts Regulations 2013, and the exceptions differ by product, so check what applies to yours. This isn't legal advice.
Customer service. Say how to reach a person and how fast you reply. Questions people ask often belong on the product page.
Genuine reviews. Reviews help buyers decide, and they are one of the reasons marketplaces work. You met the fake reviews rules in the regulation topic. Since 6 April 2025, the Digital Markets, Competition and Consumers Act 2024 bans fake reviews, including paying for reviews without saying so. The CMA published guidance on the ban in April 2025. The safe approach is simple: ask real customers for honest reviews, publish the bad ones as well as the good, and never write or buy reviews.
The one-journey check. Pick one product and buy it on your organisation's site, on a phone, as a new customer. Score it on what you find: the page, the checkout, the delivery promise, the returns policy, how to get help and the reviews.
11.3Channel Economics
Read the worked example later in this topic first: it works one figure through all three routes.
Revenue isn't profit. A sale through a marketplace or a retailer can look like growth while earning far less than the same sale through your own shop. The price the customer sees isn't what you keep. To compare routes you need the contribution per unit: the price the customer pays, minus the costs that come with each sale. Those costs are the product itself, the fee or margin the route takes, delivery and fulfilment, and payment fees.
Four questions for one sale.
- What does the customer pay?
- What does the product cost to make and pack?
- What does the route take: a marketplace fee, a retailer margin, delivery or payment costs?
- What's left?
What's left is the contribution. It goes towards costs you pay regardless of volume, such as salaries and rent, and then profit. Contribution margin is that contribution as a share of the price the customer pays. Module 12 builds on it with lifetime value.
Fees and margins you can't see. You often don't know a marketplace's fee for your category or a retailer's margin. Look up the marketplace's own seller fee page, or ask the retailer, and until you have it use a stated assumption, labelled as one. For retailers, work from the shelf price: if they keep 35% of £8.00, you receive the other 65%.
VAT. If your product carries VAT, take it out of the price first, because VAT goes to HMRC, not to you. Larkfield's roasted coffee is assumed to be zero-rated in the UK, so its prices carry none. Check your own product's rate on GOV.UK.
What the number leaves out. Contribution per unit shows what a sale earns once it happens. It doesn't include the marketing needed to win the sale. Read the contribution beside the reach: how many sales each route can realistically deliver.
Retrieval: choose the measure. In Module 6 you set baselines before judging change. A route decision needs the same discipline. Before you grow a route, note the baseline you'll measure it against: orders, contribution per order, and orders from new customers.
AI activity. Ask an AI assistant to summarise a real marketplace's seller fees for your product category. Then check every figure against the marketplace's own official fee page, with the date. Record what the AI got wrong or out of date, and whether it presented any figure with more confidence than the page justifies. Then decide which fee figure you'd use and label it an assumption, or confirm it from the page.
11.4Choosing the Mix
Having worked out what each route earns, you now decide which to grow, which to test and which to decline. The numbers inform the decision. They don't make it.
Grow, test or decline. For each route, ask three things.
- Does it earn enough per sale to be worth the effort, once every cost is counted?
- Does it reach people you can't reach another way, or only people you already sell to?
- Can you serve it well, with stock, delivery and customer service, without harming the routes that already work?
A route with strong contribution and proven demand is one to grow. A route that looks promising but has gaps in the evidence is one to test, small, with a baseline and an end date. A route that earns too little or puts the brand at risk is one to decline, for now. Saying no to a route is a decision, and worth writing down with the reason.
Channel conflict. Channel conflict is tension between your own routes. It shows up in three ways.
- Price: one route sells at a lower price than another and pulls customers across.
- Availability: a product is on every route, so no route feels special.
- Brand control: a partner presents the product in ways you wouldn't, from the photo to the description.
The fix isn't always a policy of identical prices. It might be a product only one route carries, such as a gift set, or a clear difference in what each route offers.
Leadership: making a call others may not like. A route decision usually has someone who wants a yes. A sales colleague likes the big listing; a customer service lead worries about new complaints. Lead the decision by showing the numbers, saying what you assumed, giving the reason for the choice and saying what would change your mind. People can disagree with a call and still trust how it was made.
Larkfield's Three Routes
Larkfield Coffee Roasters is fictional, and all its figures are illustrative. Maya Collins, the marketing manager, wants to know what a 250g bag earns on each route before anyone gets excited about reach. She starts from the £9.50 one-off price; roasted coffee is assumed zero-rated for VAT.
The 12% marketplace fee and 35% retailer margin are assumptions; Maya would replace them with real terms.
| £ per bag | Own shop | Marketplace | Grocery |
|---|---|---|---|
| Customer pays (shelf price for grocery) | 9.50 | 9.50 | 8.00 |
| Retailer margin (assumed 35%) | n/a | n/a | -2.80 |
| Marketplace fee (assumed 12%) | n/a | -1.14 | n/a |
| Coffee and bag | -3.40 | -3.40 | -3.40 |
| Pick, pack and post, or fulfilment | -1.60 | -1.80 | -0.40 |
| Payment fees | -0.20 | n/a | n/a |
| Contribution | 4.30 | 3.16 | 1.40 |
| Margin on price paid | 45.3% | 33.3% | 17.5% |
The marketplace fee is 12% of £9.50 = £1.14. The retailer keeps 35% of £8.00 = £2.80, so Larkfield receives £5.20; the grocery column's last cost is distribution of £0.40.
The subscription bag. A subscriber pays £8.50. Two bags share one £1.80 parcel, so postage is £0.90 a bag: £8.50 - £3.40 - £0.90 - £0.20 = £4.00. Two bags a month gives £8.00 a month per subscriber, used in Module 12.
Bags to match 100 own-shop bags (£430): marketplace £430 ÷ £3.16, about 137; grocery £430 ÷ £1.40, about 308.
What Maya notices. The marketplace earns £1.14 less per bag than the own shop. The grocery listing earns less than a third of the own shop's contribution, and its £8.00 shelf price undercuts both the £9.50 one-off and the £8.50 subscription price, which invites channel conflict.
The decision. Maya stays led by the own shop, tests the marketplace for gift boxes only, and declines the grocery listing for now.
- Own shop first: it earns most per bag.
- Marketplace test: gift buying is concentrated before Christmas, and Gift Buyers are the secondary target from Module 3. She checks gift-box costs and sets a baseline first.
- Grocery declined: low contribution and less control over price.
In the Route-to-Market Profit Calculator, enter the three routes and read down the contribution row.
Knowledge Check
A seller lists a £20 candle on a marketplace. Product cost is £8, delivery and fulfilment £3.50, and the marketplace fee is assumed to be 10%. What is the contribution per candle and the contribution margin?
The fee is £2.00, so the contribution is £20 - £8 - £2 - £3.50 = £6.50 and the margin is £6.50 ÷ £20 = 32.5%; the 10% is an assumption to confirm on the marketplace's own fee page.A producer's product has a shelf price of £5.00 in a supermarket, an assumed retailer margin of 40%, product cost of £2.00 and distribution of £0.30 a unit. What does the producer earn per unit?
The retailer keeps £2.00, so the producer receives £3.00, and £3.00 - £2.00 - £0.30 leaves £0.70 per unit; margin on the shelf price is 14%.A manager says the marketplace is the best route because it sold three times as many units as the own shop. What do you ask before agreeing?
What each sale contributes after the fee and fulfilment, because three times the units at a much lower contribution can earn less in total, and revenue isn't profit.A brand sells on its own site and through a retailer, and the retailer's shelf price is lower than the brand's own. Name the conflict and one way to ease it.
This is price conflict, as customers switch to the cheaper route; ease it by giving each route something different, such as a pack size or gift set that only one carries, rather than competing on the same item.A friend says reviews on their shop are not worth the risk of bad ones, so they ask staff to post five-star reviews. What is wrong?
Fake reviews are banned under the DMCC Act 2024 from 6 April 2025; ask real customers for honest reviews and publish the critical ones too.An AI assistant says a marketplace takes a particular fee for your category. What do you do before using it in a decision?
Check it against the marketplace's own official fee page, note the date, and record anything the AI got wrong or out of date; use the figure as a labelled assumption until it is confirmed.
Resources & Further Practice
- The UK example at source: Retail Week, "Graze launches into UK shops as next step in expansion plans" and Confectionery News, "Online snacks business Graze ramps up UK retail presence with Tesco and Asda listings" (4 December 2015); Unilever's own news pages for the February 2019 acquisition and the later sale to Katjes International.
- Fake reviews: Competition and Markets Authority, "Fake reviews guidance" (CMA208, 4 April 2025), on GOV.UK; it explains the ban under the Digital Markets, Competition and Consumers Act 2024.
- Returns and cancellation: The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 on legislation.gov.uk, where regulation 28 lists the circumstances that exclude cancellation; Citizens Advice and GOV.UK give plain-English summaries. This isn't legal advice.
- VAT on food: HMRC, "Food products (VAT Notice 701/14)" on GOV.UK, which sets out which food is zero-rated and which is standard-rated; check your own product there.
- Marketplace fees: the marketplace's own seller fee page for your category. Date what you read and use only the figures it states.
- Further practice: complete the Route-to-Market Profit Calculator for one product and keep the result in your portfolio. It feeds the route you choose in Module 13.
Your Routes and the Route I'd Test
- What I made: a list of my organisation's routes and ones it could use, a one-journey ecommerce check, contribution per unit for up to three routes in the Route-to-Market Profit Calculator, and a route decision with reasons.
- The cost I'd missed before I worked it through, and the route I'd test and what I'd measure.
- Rate yourself again on this topic's progress marker (not yet, with support, independently or could teach it) and note your before and after ratings in your portfolio.
- Choose what to do next: check one assumed cost with someone who knows, such as a fee on the marketplace's own page or a retailer's terms, or move on to the next topic.
Did this module make sense?
Thanks for saying so: the Faculty sees every “not really”.
Which part lost you? (optional, anonymous)
Thanks: that tells the Faculty exactly where to look.
In the meantime:
Another way in
Follow one sale, in four steps.
Picture a £10 bag of coffee. Step one: the customer hands over £10. Step two: take away what it cost to make and pack, say £3. Step three: take away what the route takes, such as a fee for the platform or a share for the shop, and what it costs to post or deliver. Step four: what's left is the contribution. That is the money the sale really earns.
Now do the same sum for each route. The shop you run yourself keeps the most. A platform keeps a slice. A supermarket keeps a bigger slice and may also set the price. The bag and the customer's money are the same each time. The part you keep differs.
The usual misconception is that more sales means more money. It only does if each extra sale leaves enough behind after the route has taken its share. If the whole topic feels too much, take one product and one extra route you've heard of, and do the four steps once, with every guess labelled as a guess.
Key terms in this module
- Route to market
- The path a product takes to reach the buyer, such as the organisation's own online shop, an online marketplace, retailers or wholesalers.
- Direct to consumer (DTC)
- Selling straight to end customers through channels the organisation controls, without a retailer in between.
- Online marketplace
- A platform where many sellers list products and the platform takes a fee on each sale.
- Contribution margin
- What's left from a sale after the costs that come with that sale (product cost, fees, delivery), before fixed costs; it contributes to covering overheads and profit.
- Retailer margin
- The share of the shelf price a retailer keeps.
- Channel conflict
- Tension when an organisation's routes to market compete with each other, for example on price.
Thanks. Good to hear.