How to Avoid Channel Conflict with Dealers When Selling Online

by Shipearly on June 7, 2017 No comments

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 the fastest growing channel and can no longer be ignored. The move to online from direct has created channel conflict, which if you’re a stakeholder or executive at a B2B company this conflict is of serious concern as you’ll be using digital platforms to power new 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. By selling direct, dealers and distributors that represent the bulk of your business can become disengaged with your company 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 best way to not jeopardize these relationships is to set out clear guidelines as to how you plan to manage the channel conflict.

The Price of Inaction

By not selling online, you are extending the path to purchase for consumers and making it easier for your competitors to better service your now lost customer. In addition, you are directing your consumer to visit a dealer where the vast majority of time the exact product they want is not there… Another lost sale. By doing nothing it opens the door to new competitors who can better serve customers around how they want to buy. As competitors adopt an online to offline strategy your wholesale business is now in jeopardy. You can protect your listings and capture more mind share and market share at retail by partnering online with dealers.

Neither Online or Wholesale By Itself are Perfect

The easiest way to avoid channel conflict is to have only one channel. This is not an option however as most companies want the ability to sell to consumers wherever they are, even in locales without a dealer. Selling exclusively through dealers is not ideal either as it restricts your company to obtain sales wherever a dealer is, and can be perceived as less convenient for consumers whom we all depend upon. Let’s face it, neither channel by itself is perfect but by blending physical retail sales channels with online sales that includes everyone in the channel is a winning strategy. By collaborating online with channel partners branded manufacturers can offer the best of online and offline shopping to consumers, while eliminating channel conflict and using online sales to keep dealers more engaged in selling and stocking your products.

 Mechanisms for Minimizing Channel Conflict:

  • Pricing Consistency – The price online on your storefront should be the same price at retail.
  • Geography – Limiting sales geography, much like a franchise, allowing a channel partner to have exclusivity in a trade area, including filtering online sales to reward that dealer for committing to you and your brand.
  • Have Channel Exclusive Products – Instead of selling all products direct to consumer consider which products your dealers provide the most value to consumers and adjust accordingly.
  • Buy Online Pickup In-Store – Let consumers shop your website and filter sales to your dealers who perform retail as a service

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.

Ultimately the customer will decide how they want to purchase your products and may favor one channel over another. Most consumers still prefer shopping at physical retail as it provides the best experience. 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, or if you’re feeling the heat in any part of your B2B eCommerce offerings, you should call us. To learn more about bringing your B2B business online in omnichannel harmony call us at 1-888-536-1335.

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ShipearlyHow to Avoid Channel Conflict with Dealers When Selling Online