The Myths About Channel Conflict

Most companies are hesitant to move into the uncertain, hostile environment of channel change for fear of conflict with their existing channels.  So, it’s not surprising that conflict avoidance is at the core of many companies’ e-commerce plans. An Accenture Research study showed that these fears may be exaggerated and those that choose to change can actually overcome channel conflict.

Additionally, the study proved that Internet strategies based on avoiding conflict amongst channels usually disappoints because they focus on delivering product information, rather than on leveraging technology to capture new markets.

The Myth's Been Busted

In a recent Forrester Research study, 77% of direct online sellers reported that the benefits they have experienced selling direct such as increased overall sales, improvements to customer service, and product development- far outweighed any disadvantages. While almost one quarter of those surveyed were concerned about declining sales orders from their existing resellers, only 13% of manufacturers with a direct sales channel actually experienced declining orders and 20% reported an increase in orders. 

Strategically Manage Channel Conflict

Manufacturers considering a direct sales strategy must consider how to balance the potential rewards of directly engaging consumers with the perceived risks of channel conflict. Once areas of possible conflict are understood, management must agree on the degree of conflict that is acceptable. 

Manufacturers can compromise creatively with their traditional channels to grow their business without conflict.

• Implement customer loyalty programs
• Offer exclusive products and services to boost channels
• Offer referrals for partners offering special product availability
• Review product competitiveness and pricing flexibility
• Engage resellers in a multichannel selling strategy that is designed to increase sales across all channels, including direct to consumer online