What is Channel Conflict?
Channel conflict is the process in which a manufacturer or supplier of a product bypasses their normal method of selling their product in favor of selling it directly to the end user. This creates competition amongst the distributors of a product and the product’s manufacturer or main supplier. Some examples of channel conflict are:
- Selling a product on Amazon that is also being sold through a physical distribution network
- Channel Conflict can occur when there is a surplus, newer version or changes in trend of the product
- When one channel targets customer segments already being serviced by an existing channel
- Price differentiation between sellers of the same product
What are the Consequences of a Channel Conflict?
Channel conflicts can have a variety of consequences. Some examples of consequences to channel conflict are:
- Channel partners face the possibility of a drop in sales
- Loss of suppliers and/or customers due to retaliation from a distributor or the distributor simply decides to stop selling the product
- Loss of trust between brand owners and their suppliers and distributors
- Forcing overpriced players to adapt or decline in sales
How do we Avoid Channel Conflict?
Some brand owners want to capture online markets for their brands and often face the issue of Channel Conflict. LongTail provides a unique solution to Channel Conflict. With the creation of variety and multi-packs, you will have the ability to sell the same product as your distributors in different sizes and/or varieties eliminating the Channel Conflict. This will eliminate the conflict as you are not selling the same product.
