Guest Post: Resolving Ecommerce Channel Conflicts

By Kinjal Adeshara

While ecommerce has revolutionized the sales processes and opened up new avenues of sales for manufacturers, it has also disrupted the old processes and created many new problems. The issue of channel conflict is often problematic for large organizations, traditionally involved in B2B sales, with strong sales channels. Not only is there a general conflict between brick-and-mortar sales and online sales, but there is a bigger channel conflict between online sales by the manufacturer and the online sales by other retailers who sell the specific product.

Unless channel conflicts are handled tactfully and intelligently, they can cause a rift between partners, and profit margins may shrink when too many stakeholders selling the same goods get into a competition with each other. Whether you are a manufacturer trying to resolve channel conflict within your organization, or a business leader trying to resolve channel conflict between your business and your resellers, one of the following tried-and-tested approaches may be useful to you.

Build a Non-competitive Online Store

While the advent of ecommerce has made it possible for manufacturers around the world to sell directly to their customers, for most manufacturers, it is not possible to remove the resellers from the equation. For example, a number of people may be interested in the products you sell, but they may not know much about you, the manufacturer. Also, most online shoppers buy your products along with several others on popular websites and are not likely to visit your website especially just to buy a specific product.

Let’s take the example of a sporting goods manufacturer. A large number of people buy the goods from this company, but they buy them in different online and physical stores. Certain stores and sites specialize in selling baseball products, while others excel at selling costlier equipment like table tennis tables.

While a number of people may be interested in the products sold by this manufacturer, not many customers know much about the manufacturer. Different products by the same manufacturer are sold by different kinds of shops, and most potential customers tend go to a general sports website or store to buy such goods. So, if this manufacturer builds a website that competes with the retails, there is not much chance that the customers will make a beeline to this store.

It is a good idea for manufacturers to build a web presence, but you can keep the rates of the products slightly higher than that offered by your resellers to show that you are not directly competing with them. Similarly, you will need to go for non-competitive promotions to avoid conflict with resellers. Also, selling less popular products that most resellers don’t stock anyway can be a good idea.

DeMarini Sports has an online presence, but refers customers to retailers like Dick's to purchase their bats and other products.

DeMarini Sports has an ecommerce presence, but refers customers to retailers like Dick’s to purchase their bats and other products.

Fight for Better Deals on Reseller Websites

While ecommerce web development can open up a new channel for manufactures and allow them to sell directly, for certain businesses, developing a website may simply not make much sense. In case you do not want to build a strong ecommerce website of your own, you can empower the online arm of your sales on reseller websites by creating discounts and promotions only for the resellers.

Let’s go back to the example of the sports manufacturer. Such a company can refrain from building its own website, but negotiate better deals with resellers. By offering certain goods for lower rates online, it can get increased sales without compromising on profitability. If the price is significantly lower than that offered in brick-and-mortar stores, it will boost your online sales and profitability. So, at times, it is better to fight for better position on the reseller website than build an online store of your own. You can collaborate with resellers and make it easier for shoppers to discover your products on the resellers’ websites. You can also make it simpler for your customers to find physical and online stores by placing a ‘deal locator’ button on your website.

Apart from these two options, as a manufactures, you also have the option to go head-to-head with online resellers, and try to displace them in the search terms. This option is best when you are not afraid of losing your resellers.

The right choice for your business will depend on what kind of products you are selling and how users prefer to buy them – offline, online or both. And, when it comes to the conflict between your own online sales and sales in physical stores, it is best to develop a strong online presence even if it has some adverse impact on your sales in physical locations, because online shopping is here to stay and it is getting bigger.

What are your thoughts on handling the different kinds of channel conflicts that are created by the rise of online selling? Please share your idea, insights and experiences in the comments! 

 

Kinjal Adeshara is a digital marketer and blogger with Cygnet Infotech, an ecommerce solution provider specializing in building business apps and websites. She is always happy to share her passion for ecommerce and mobile technologies. Follow Kinjal on Twitter @adeshara_kinjal or connect with her on Google+

2 Comments

One Comment

  1. Posted December 12, 2013 at 7:41 am | Permalink

    Thanks for sharing this informative post. This will help those people who plan to put up a business.

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