For an ecommerce business, channel conflict is often a major problem. Defined by businessdictionary.com as a “situation when a producer or supplier bypasses the normal channel of distribution and sells directly to the end user”, channel conflict can be a potential cause for clash between channel partners, because the distributors get the feeling that they are being overlooked, leading to a loss of business.
The dynamics of channel conflict
Channel conflict is an unhealthy practice in ecommerce, and leads to a unique situation by which a business associate can become both a partner and a competitor. A prime reason for channel conflict is that both the partners’ business is carried out over the Net, which means that businesses could be partners; but could hardly have seen each other. They could be operating in different continents and could still be related to each other by business. Also referred to as disintermediation, channel conflict is a tempting proposition because partners can make direct contact with the seller and make a greater margin, as the channel costs are cut down.
History of channel conflict
Channel conflict began with the emergence of ecommerce. With the advent of this medium, distributors, who were the channel between the seller and buyer, started losing their importance, since their need was no longer as important as earlier. A costumer, instead of going to a shop which the distributor ran, could order online and get it delivered. This caused disquiet with the distributors, who tried to assert themselves by trying to show that they still had importance. Some distributors hit back by transforming themselves into distribution and logistical channels, which are very important for an ecommerce business. Some others devised a strategy of taking on supplemental roles such as order management.
The customer is the arbitrator
The customer is the one who finally decides how these conflicting interests converge. If she decides that it is best to have the product delivered through a distributor, then it is best for both to accept the need for each other. If the customer decides otherwise and thinks that no intermediary is needed, then the two partners need to devise ways by which they can contribute towards a harmonious business relationship, in which both get a share of what they agreed on. In essence, they need to collaborate and complement each other rather than be engaged in conflict, which will cause ruin to everyone –the partners and worse, the customer.
The dynamics of channel conflict
Channel conflict is an unhealthy practice in ecommerce, and leads to a unique situation by which a business associate can become both a partner and a competitor. A prime reason for channel conflict is that both the partners’ business is carried out over the Net, which means that businesses could be partners; but could hardly have seen each other. They could be operating in different continents and could still be related to each other by business. Also referred to as disintermediation, channel conflict is a tempting proposition because partners can make direct contact with the seller and make a greater margin, as the channel costs are cut down.
History of channel conflict
Channel conflict began with the emergence of ecommerce. With the advent of this medium, distributors, who were the channel between the seller and buyer, started losing their importance, since their need was no longer as important as earlier. A costumer, instead of going to a shop which the distributor ran, could order online and get it delivered. This caused disquiet with the distributors, who tried to assert themselves by trying to show that they still had importance. Some distributors hit back by transforming themselves into distribution and logistical channels, which are very important for an ecommerce business. Some others devised a strategy of taking on supplemental roles such as order management.
The customer is the arbitrator
The customer is the one who finally decides how these conflicting interests converge. If she decides that it is best to have the product delivered through a distributor, then it is best for both to accept the need for each other. If the customer decides otherwise and thinks that no intermediary is needed, then the two partners need to devise ways by which they can contribute towards a harmonious business relationship, in which both get a share of what they agreed on. In essence, they need to collaborate and complement each other rather than be engaged in conflict, which will cause ruin to everyone –the partners and worse, the customer.
No comments:
Post a Comment