Channel conflict occurs when companies try to reach end consumers through multiple channels and they all compete with one another. This newly evolved relationship between wholesales/manufacturer and their retailer customer has been augmented by digital research and online purchasing. With the rise of eCommerce, branded manufacturers are facing this dilemma more frequently as traditional sales channels represent the bulk of revenue yet eCommerce is growing quickly and can no longer be ignored. The move to direct to consumer has created channel conflict, which if you’re a stakeholder or executive at a B2B company this is of serious concern as you’ll be using digital platforms to power new and existing sales channels.
However, channel conflict is not to be dwelled on. The game has changed and it’s time you accepted it, right? You’re probably thinking, “easier said than done”, but choosing inaction over action is detrimental to your business.
Doing nothing to avoid Channel Conflict is the wrong move 100% of the time
Retail is being won and lost on customer experience. Making your products as easy as possible for the end consumer to buy how they want is a winning strategy. It’s natural however to be tentative about commencing a direct to consumer approach as constant conflict and the consequences can be dire. The reaction from channel partners when introducing the online channel can vary widely from acceptance to seeking alternate products to stock and more frequently the development of their own private label.
By selling direct, dealers and distributors that represent the bulk of your business can become disengaged causing the sales infrastructure and relationships your company has worked hard to build to erode. Dealers will complain, and justifiably so, they are being used as a showroom for consumers to touch and feel products before buying online. But it doesn’t have to be this way.
The Price of Inaction
By not selling online, you are extending the path to purchase making it more difficult for consumers to buy the product they want. In addition, sending a consumer to visit a dealer where the vast majority of time the exact product they want is not there only makes the consumer less loyal… Another lost sale. By doing nothing it opens the door to new competitors who can better serve consumers around how they want to buy.
For those just selling exclusively online and not through wholesalers the cost of inaction is equally as daunting. Customer acquisition costs are becoming sky high, and online only brands are being forced to use discounts and free shipping (both ways), to grow their network beyond their small core audience. Coupled with the fact the volumes on direct to consumer are much lower giving your company no leverage with manufacturing partners. In fact, just like how online only brands are seeking to ‘cut out the middleman’, without the volume of retail to better negotiate with, manufacturing partners are using Amazon and offering private label to retailers to compete with these online only brands.
Neither online or wholesale by itself are the ideal solutions.
Traditional Means of Managing Conflict Not Sufficient
Those who participate in both online and wholesale channels utilize price, exclusive channel products, or other ways to ‘trick’ dealers into thinking you are not creating a channel conflict. Others use online only dealers and direct consumers to them. This however still creates a channel conflict as you prefer a handful of dealers over your entire dealer network. This approach also competes with brick and mortar anyway. In addition sales and customer visibility are also lost as consumers shop between your website and an online dealer who are also increasingly private labelling. If anything these activities hold your company back from being more successful both online and in-store by creating customer confusion and extra unnecessary work for your internal teams while extending the path to purchase for a consumer. Above else, these solutions avoid the problem instead of tackling it head on where more value creation and sales can occur.
Combining Channels is a Winning Strategy
Let’s face it, neither channel by itself is perfect. The easiest way to avoid channel conflict is to embrace and blend sales channels together to get everyone working in the same direction. When consumers seek to buy a product, they are shopping between channels and don’t consider their journey to be divided between online vs offline. They just want to buy on their terms as easy as possible, but many prefer the service only offline retail can provide. Brands need to cater to this thinking and figure out how they can get their digital and wholesale teams to focus on what the consumer wants to deliver a better experience. Integrating online and physical retail channels can create incredible value for consumers giving them the best of online and offline shopping.
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Sell Everywhere Your Consumers Buy
Keep reading to discover the stages of a true omni-channel strategy, but if you’d like an executive guide distilling everything, download The Enterprise Guide to Omni-Channel Ecommerce.
Inside, you’ll get one-pagers detailing …
Comprehensive data on the opportunities and threats
Merchant spotlights for insights on combining sales channels
A checklist to consider when implementing an omni-channel program
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Sell Online and Strengthen Dealer Relationships
Selling online, through retailers, and even using distributors can get complex. Yet keeping everyone in the channel informed and rewarded has immense opportunity to drive more sales and loyalty while getting your products in front of more consumers. Thanks to modern technology, you do not have to decide between selling online or not selling online. Your eCommerce sales can drive demand and fuel the wholesale channel to further entrench yourself with the dealers you aim to partner with and eliminate channel conflict. Having multiple approaches for consumers to gain additional exposure to your company is never bad so long as everyone in the channel is incentivized to cooperate.
ShipEarly’s cross-channel sales platform is enabling manufacturers to join the online sales channel while keeping channel partners informed and rewarded. Our solution offers customized rules for your company to set providing ultimate flexibility to achieve your sales goals. In today’s omnichannel World your company with our technology can not only meet modern customer expectations, but jump way over the bar giving consumers the best of online and offline retail.
Conclusion
It’s easy to decide one channel is better than another, however companies that favor one channel without considering the consumers buying preferences risk missing significant opportunities. Operating multiple channels and working to minimize the resulting conflict maximizes a provider’s opportunities to attract and retain both consumers and channel partners.
If your organization is struggling with channel conflict, you should call us. To learn more about bringing your B2B business online in omnichannel harmony call us at 1-888-536-1335 or request a demo.
