6. Channel conflict

Hi friends, as we have seen in our earlier season about e-tailing now imagine traditional companies keeping their old ways of selling and introduced e-tailing what will be the result? Yes that's the topic of the day.

As increasing number of companies use internet to offer their products and services while keeping their traditional distribution channels. It is quite possible to encounter channel conflict. As traditional bricks and mortar companies enter online to enhance their sales and brand image. It is often observed that those companies suffer channel conflict because different channels compete with each other for same customer (As we have seen in our earlier session of e-tailing that multi channel shoppers change their channels frequently).

Channel conflict matrix

Channel conflict matrix helps traditional bricks and mortar companies to react towards possible conflict between their offline and online channels.

There are two main possible dimensions that determine how to deal with channel conflict.

• The destructive conflict between channels.
• The importance of existing channels that is threatened by the new channel.

As we can see from the channel conflict matrix diagram, the importance of existence channel and also we can judge the level of conflict risk which is very useful for taking decisions.

• If the risk of conflict is high and the importance of the threatened channel is also high. It is sensible to address the problem and find ways to reconcile the two channels like differentiating the two channels with different offerings.
• If the risk of conflict is high and the importance of the threatened channel is low. It is right to adapt the decline of that channel.
• If the risk of conflict is low and the importance of threatened channel is high then is required to let know employees that they will not get affected.
• If the risk of conflict is low and the importance of threatened channel is also low then it is right to ignore the problem.

Reflective report

I would consider channel conflict as any situation that upsets or draws back the traditional channel with the introduction of new channel (online).

Most of the British big retailers like Tesco, Argos and Asda and other big companies like john Lewis, M&S and so on has introduced their online business in order to generate additional revenue. These big companies know that internet will help to boost the sales but they haven’t forgotten the importance of their traditional channels that’s why even today Argos continues their online as well as stores and catalogue sales.

But it is also important to consider the sales and expenses of a particular channel while considering its importance because it is often happens in the business that revenue generated by one channel is converted into the expense of the other channel. This causes no additional benefit to the business and sometimes may lead to losses. In total it is important to maintain the balance between the different channels in order to run the business in harmony and as well gain profits.