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Channel conflict

Channel conflict occurs when different sales channels (e.g., direct and indirect sales) compete against each other for the same customers, leading to friction between them. This can undermine the overall effectiveness of the company’s distribution strategy, causing inefficiencies, loss of sales, or strained relationships between the organization and its partners. There are two main types of channel conflict: horizontal and vertical. Horizontal channel conflict occurs between two organizations or resources in the same channel (e.g., two retailers or resellers in the same region), while vertical channel conflict occurs between an organization’s direct sales team and their channel partners (indirect). Typically, price is used as a method to alleviate channel conflict; organizations that wish to drive direct sales typically set higher wholesale prices, while those wishing to maximize distribution at the cost of profit lower wholesale prices.

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