Ecommerce Growth

12 stories: Brands that managed channel conflict like champs

Channel conflict management is all about drawing harmony between your various channels. Here’s how 12 top brands nailed it.

12 stories: Brands that managed channel conflict like champs

Maintaining multiple sales channels empower eCommerce brands to maximize their distribution potential. But at times, those channels bump into each other.

On the other hand:

Multichannel distribution lets businesses access different audiences, provide buyers convenient shopping experiences, communicate credibility to shoppers, and scale revenue. 

For example, Marquis Matson from RugPadUSA explained that selling in-store and on eCommerce platforms like Amazon expose small businesses to massive traffic and sales.

Despite these benefits, most managers agree that eCommerce channel conflict drains their sales performance.

For instance, 59% of participants in a BCG study said that their annual revenue would increase by 11% to over 20% if channel conflict weren’t a thing.

Companies often sacrifice eCommerce sales to avoid channel conflict

The data explains why nearly 40% of eCommerce managers say tackling conflict commerce channels is their number one business concern.

However, savvy brands have found ways to turn channel conflict in eCommerce into tremendous sales opportunities. You’ll discover how in a bit.

12 effective channel conflict management strategies from Top Brands

Two-thirds of the survey respondents reported avoiding some sales channels to prevent disrupting sales in others. Fifty-three percent of eCommerce channel managers said they had experienced tensions between the in-house sales team and DTC channels.

And sadly, 44% believe channel conflicts in marketing will increase in the future.

Now, at this point, you’d ask, “What are the strategies for resolving conflicts in channel management?

To answer your question, we studied what eCommerce brands do behind the scenes to manage channel conflicts effectively.

Let’s take some examples and show you their fixes.

1. How Tortuga Backpacks beat channel conflict with its pricing strategy 

The benefits of expanding marketing across different channels are too good to pass up. 

For example, it maximizes your strategy—opening up multiple touchpoints to connect with shoppers, driving new demand, and giving customers the flexibility to self-direct their conversion paths.

But failing to harmonize prices across the channels could cause major channel conflicts.

For instance, selling a product at $25 in-store and offering the same product for $15 online could steal sales from the retail outlets, significantly impacting its demands.

Of course, a brand has to choose between harmonizing the price or discontinuing one of the channels to resolve this conflict. Unfortunately, the first option will cut into their profit margin, while the alternative shouldn't even be up for discussion.

But Tortuga Backpacks, an online travel backpack retailer, outmaneuvers this quagmire by pricing intelligently across its channels. Let’s see what we can learn from them.

The brand sells the most expensive version of its products on the eCommerce website, Tortugabackpacks.com.

Screenshot from Tortugabackpacks.com for channel conflict
Screenshot from Tortugabackpacks.com

But on Amazon, the company lists the older version of an item, targeted at specific demographics for a lower price on Amazon to move remaining inventory for discontinued or newer products. 

Here, you can see the Tortuga Backpack for men on Amazon has a lower price.

Tortugabackpacks revised pricing to beat channel conflict

The same strategy also applies to Tortuga backpacks for women.

Pricing for Tortuga Women's backpack on Amazon

The strategy lets the brand prevent direct competition of the same SKUs.

It also helps them cater to their penny-pinching customer segment. Tortuga Backpacks’ CEO, Fred Perrotta, explained they email the Amazon links to people asking for discounts or saying they can’t afford the product.

Key takeaway: By pricing intelligently across their existing channels, Tortuga Backpacks was able to drive demands and move inventory without channel conflict.

2. Harry’s managed channel conflict by harmonizing prices 

Unless you wish to clear specific inventory, selling at the same prices across all the channels helps avoid unnecessary channel conflicts. 

A men’s grooming eCommerce brand, Harry’s disrupted the $17 billion men care industry with its vertical integration—designing, manufacturing, and distributing its products online.

Harry’s started by selling online with an inventory of 10,000 razor handles in 2013 and sold out in a few days. The company expanded into other channels like Target, Amazon, and Walmart, perhaps, to maximize its reach and drive additional sales from unexplored spaces.

It avoided channel conflict by selling at the same price across all the channels. Harry’s move allowed it to circumvent price competition with and between its marketplace retailers.

A few years later, the company boasts three million monthly recurring customers and achieved about $200 million in revenue in 2017.

Key takeaway: Harry’s avoided channel competition by adopting one pricing.

Hey, have you seen this? Pick the right product price: 8 eCommerce pricing best practices

3. How Nike beats channel conflict and cannibalization

Several eCommerce businesses pursue omnichannel strategies to ramp up capacity and grab more market shares. 

While this expectation could turn out positively for many, creating additional consumer channels might cannibalize revenue for other retailers.

This cannibalization occurs when an existing store loses sales to a new channel or nearby store. It could be due to brick-and-mortar store customers shopping at the new online store or wholesale outlet or vice versa.

Of course, this channel conflict hurts sales performance, defeating the omnichannel intent.

Sadly, there’s no one-size-fits-all approach for dealing with cannibalization. But let’s see how Nike dealt with channel cannibalization. 

How Nike captured lost sales from Amazon channel conflict and cannibalization

Nike declined to sell and distribute apparel and footwear on Amazon for several years, perhaps to control brand messaging and enjoy higher profit margins.

But all the while, consumers still buy Nike products on Amazon—thanks to third-party distributors that acquire the products at wholesale prices to resale on Amazon and other DTC channels, cannibalizing sales at Nike retail outlets.

In 2017, against its earlier stance, Nike announced its partnership with Amazon to recover sales from Amazon channel conflict.

According to the source, “Nike finally acknowledged that third-party sellers are cannibalizing its direct revenues and is counting on recapturing lost sales by selling products directly on Amazon.

CNBC also reported Nike would sell to Amazon in exchange for stricter policing of counterfeits and restrictions on unsanctioned sales of its products.

But fast forward to 2019, Nike dumped Amazon to focus on its distinctive DTC efforts. The sports brand saw that selling to Amazon through Vendor Central didn’t align with their Direct to Customer (DTC) goals, so they pivoted.

The brand now maintains a Nike store on Amazon’s Seller Central as a merchant to drive more DTC sales.

How Nike captured lost sales from Amazon channel conflict and cannibalization
Screenshot from Nike.com

DTC sales are Nike’s highest-earning channel, so they’re doubling down on what’s working for them.

Key takeaway: Nike set up a presence on the channel cannibalizing its sales.

How Nike.com turned store channel conflict to an advantage

Nike also used channel conflict to its advantage when it started selling online. Its brick-and-mortar partners felt Nike was cannibalizing their revenue through Nike.com.

But the company took the position that they were “expanding the pie” and not taking market share away from their retailers.

Nike’s CEO at the time, Mary Kate Buckley, saw their brick-and-mortar partners as strategic to their growth.

Buckley felt those physical stores allowed Nike.com shoppers to touch and feel the product—an experience they would never have online. So the brand addressed its inter-type channel conflict—channel conflict within its organization. 

The company allowed departments outside its Nike.com project to contribute ideas and resources to the project.

4. WheelerShip adopts omnichannel to boost brand authority

While several businesses rely on multi-sales channels to scale operations, WheelerShip channel expansion shows a clear-cut omnichannel strategy can also boost brand authority.

The brand started as a family shop in 2010, operating in an industry that lacks customer and consumer confidence.

However, to strengthen its brand authority and build customers’ confidence in its products, WheelerShip adds several channels—Amazon, eBay, online wholesalers, dropshipping, and its eCommerce site —to reach customers through their preferred options.

The channel expansion allows the brand to meet their customers where they are, enabling them to shop in ways they feel comfortable.

Besides strengthening their marketplace presence, Kate Cannova, WheelerShip’s Chief Business Officer, explained investing in DTC and brand integrity also positively affected the B2B side of their business.

Key takeaway: WheelerShip expanded its online presence to build the brand’s authority, consequently robbing off on their B2B channel.

5. How Three Ships launched on Target while avoiding channel conflict on their stores

Three Ships, a natural skincare brand, started in Canada in 2017 in an apartment kitchen with a chemical engineer and business graduate. The brand was selling through its retail outlet without much success.

Conni Lo Notes, a co-founder, explained that raising broad US awareness was a major challenge. Consequently, the brand launched on an online marketplace to expand its reach.

Of course, this kind of expansion typically leads to multi-channel conflict, but the brand was strategic with the marketplace it adds to its sales channel to avoid creating conflict.

Lo explained their choice of Target was contingent on the retailer’s broad reach and customer base, which also aligns with their shopping demographics, meaning “exposure and instant recognition” from a high-reaching audience.

Instead of channel conflict, the launch made Three Ships experience the halo effect. According to Lo, “We’ve had many mass retailers reach out after discovering us at Target, which has greatly benefited our distribution rollouts.

Key takeaway: By adding a sales channel that matches its customer demographics (Target), Three Ships reached more Americans without hurting existing channels.

6. Beardbrand boosts sales by 20% by dropping Amazon

Brands like Nike navigated channel conflict by expanding into Amazon, but the Beardbrand experience proves there’s no one-size-fits-all solution to channel conflict management.

Albeit the American men’s grooming brand was generating up to 10% of its revenue from Amazon, it realized selling on the platform prevented it from maximizing its DTC channel.

So, the brand pivoted from the channel to focus on selling through its website and other channels to safely navigate the Amazon channel conflict. And this seemingly suicidal move boosts sales by over 20%.

However, the company didn’t just move out; it made shoppers aware it doesn't sell on Amazon again, perhaps, to prevent third-party retailers eyeing the void from cannibalizing its sales.

So, if you search for “Beardbrand + Amazon” on Google, you’ll find this result:

Beardbrand + Amazon Google search

Beardbrand dedicated a page to its Amazon exit and optimized it to rank in search results. 

The page explained that any products on Amazon are counterfeit, stolen, or any arbitrage play (buying from Beardbrand.com or Target and reselling on Amazon) to sway buyers to its other channels.

Beardbrand is not sold on Amazon
Screenshot from Beardbrand.com

Beardbrand found this channel conflict resolution approach effective for their brand. 

Its founder, Eric Bandholz, believes Amazon doesn’t fit businesses that heavily rely on branding and customer experience to sell their products.

He explained that selling on the platform slows them from delivering a “class-leading experience” to customers.

Key takeaway: Beardbeard navigated Amazon channel conflict by pivoting from the channel to maximize its best channel.

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7. Apple manages channel conflict through its controversial but successful move to DTC

Apple was leading the personal computer market in the 1990s, relying on authorized resellers and large retailers to push its Mac range of computers to the consumers.

But the brand had to adopt DTC sales after inter-type channel conflict made it lose its leading market share. According to the IBS Center for Management Research, “To regain its market share, Apple started selling online (1997) and through company-owned retail stores (2001).

Notably, it severed relationships with Sears and Best Buy due to poor sales support. In its place, the brand opened a 24-hour eComm store, the Apple Store Online, to increase its market share and sales.

Apple manages channel conflict through its controversial but successful move to DTC
Screenshot from Apple Store

However, Apple carried its channel expansion physically, opening several retail outlets to reduce middlemen’s involvement and boost its sales, incurring their ire.

The authorized resellers alleged Apple prioritizes its retail stores during shipments. One of the store owners explained that Apple wants to sell everything by itself. 

They keep opening more and more retail locations. They want to drive business to their own stores. They offer deals there that they don’t extend to (the channel). Every time they open another store, they are potentially putting a solution provider out of business.

So they sued the company in 2003. But Apple continued expanding its DTC strategies, generating close to $1 billion in sales from its 185 retail stores as of July 2007. And it continued to grow the outlets by 33% yearly.

Additionally, Apple maintains a store on Amazon as a direct-to-customer seller.

Key takeaway: Apple mitigated inter-type channel conflict through aggressive online and offline DTC expansion to cut down middlemen involvement.

8. Skinny & Co and Apple prevents channel conflict by eliminating discounts

A study found that nearly 60% of consumers search for promo codes before buying online, making it effective for driving sales.

But a downside is it undercuts your retailers, especially for brands that rely on third-party retailers to push their products to the consumers, driving an unnecessary wedge between retailers or the DTC channel and retailers’ network. 

Without a doubt, a typical consumer is a value maximizer. Thus they’ll generally prefer to shop with retailers or channels offering lesser prices for the same value. 

Of course, this effort could drive short-term revenue. However, it undermines the omnichannel network, stealing sales or cannibalizing other channels.

Apple and its retailers prevent this from happening by incentivizing purchases with product giveaways or gift cards instead of using discounts. And you could see this strategy on their website.

Apple offers attractive deals on its website
Screenshot from Apple Store

Product bundling is another way to offer value to shoppers without discounting, 

Besides delighting customers, boosting sales, and improving the average order value (AOV), it provides another option to manage inter-type channel conflict.

Skinny & Co, an organic cosmetics brand, nails product bundling.

Skinny & Co has great product bundling options

It bundles different organic body care products into a travel kit rather than selling them individually to promote a chemical-free lifestyle to travelers.

The bundling provides shoppers extra value without cannibalizing sales or shortchanging any channel. 

Key takeaway: By dropping discounts for product giveaways, gift cards, and bundled products, Skinny & Co., Apple, and Apple’s distributors incentivize purchases without cannibalizing sales.

Hey, you’ll love this: eCommerce product bundling: Best practices + Mistakes to avoid

9. Nike offers in-store-only unique products to navigate channel conflict

Offering exclusive products on a channel prevents competition with other sales channels or undercutting retailers on price. Additionally, it creates buzz and builds demand for the products, which could snowball into a halo effect on other products.

But the resource that goes into creating custom products makes this channel conflict resolution strategy not widely spread. However, Nike is an excellent example of the few brands doing it so well.

Nike offers in-store-only unique products to navigate channel conflict
Screenshot from Nike.com

The company offers unique products that only Nike.com provides, preventing conflict with other channels where those products are not available.

Its Nike By You (formerly, NikeiD) online service allows customers to personalize and design their iconic Nike merchandise.

Key takeaway: Nike curbed channel conflict by introducing unique offerings for in-store experiences, instead of competing on price.

10. Nike tested the waters before committing big to a new channel 

Nike prevents creating channel conflicts by testing the waters before committing big to a new channel. 

For example, before selling online through Nike.com, they tested the site with a few products and then committed more resources when they experienced reliable performance.

But the brand withdrew from the program to focus on their DTC strategies after selling on Amazon through their Vendor Central program for two years —2017 to 2019.

Nike saw the partnership with Amazon as a pilot.

As part of Nike’s focus on elevating consumer experiences through more direct, personal relationships, we have made the decision to complete our current pilot with Amazon Retail,” a Nike spokeswoman told CNBC.

Key takeaway: Nike avoided conflict by introducing their Nike.com channel gradually, learning from each move they made, and adjusting quickly before it hurts their brand and sales.

11. Nike, Beardbrand, and Three Ships beat channel conflict by doing more of what works

Nike, Beardbrand, and Three Ships channel conflict resolution strategies reveal that doing more of what works for you remains the best way to navigate channel conflicts.

Nike.com helped Nike reunite with their traditional way of selling their products—right out of Phil Knight’s car directly to the buyer. Phil built the brand on DTC and found success with it.

In 2019, Nike generated $11.8 billion from DTC sales. In addition, they saw a 35% boost in online sales and a 6% increase in same-store sales, confirming upward trending DTC sales for the brand.

Also, Beardbrand understands the channel that works for them and sticks to it. The company moved its products from Amazon to focus on its best-performing channels, boosting sales by over 20%.

Like Nike and Beardbrand, Three Ships was strategic with its sales channel choice. 

It opted for a marketplace with a customer base that aligns with its shopping demographics, enabling it to gain instant exposure and recognition from a highly qualified audience.

Key takeaway: Sometimes the best way to stay away from channel conflict is to stay with what’s working already. Nike and Beardbrand exemplify this point by sticking to channels that have worked for them.

12. Braas Monier manages channel conflict by launching a new brand

Of course, adding channels to reach new customers risks alienating existing resellers. 

But Braas Monier, a German roofing material maker relying heavily on distributors to push its products, avoided this friction when expanding its online DTC channel by establishing a new brand with its separate entity and website.

The new brand, MeinDach (My Roof), connects roofers with homeowners, allowing the latter to manage the process of repairing or replacing a roof faster than usual, in an industry where high demand and short supply results in a long wait time even up to a year.

Braas Monier manages channel conflict by launching a new brand
Screenshot from MeinDach.de

Setting up MeinDach as a separate brand made it work faster than if it had been part of Brass Monier, and this approach paid off.

Within 12 months of launch, MeinDach support boosted sales about five times the annual average for a typical German roofer. Additionally, the number of roofers interested in partnering with the company jumped from 12 to 500 in just a year.

Also, the company’s customer acquisition costs dropped from hundreds of euros per homeowner to about €20.

Key takeaway: By launching a new and distinct brand, Brass Monier prevented channel conflict when it expanded to DTC.

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Frequently asked questions and their answers

Let's quickly look at some of the questions people frequently ask on eCommerce channel conflicts and conflict resolution strategies.

What is channel conflict in eCommerce?

eCommerce channel conflict occurs when sales channels or partners in a sales channel oppose each other. This conflict usually happens when a brand sells directly to its customers online or via retail outlets to capture additional sales.

The move causes existing channels to compete against each other for available customers.

What is an example of a channel conflict?

Here are some real-life examples of channel conflict:

  • Beardbrand moved to Amazon to expand its eCommerce presence but found that selling on the marketplace prevents it from maximizing its best-performing channels.
  • Apple’s aggressive DTC expansion in the mid-1997 placed it on a collision course with its distributions, who sued the company for allegedly stealing their businesses.
  • Nike’s initial reluctance to sell on Amazon prompted third-party retailers to exploit the void to resell its merchandise, resulting in sales cannibalization.

What are the different types of channel conflict?

Three types of channel conflicts commonly exist, and they are:

  • Vertical channel conflict
  • Horizontal channel conflict
  • Multichannel channel conflict

What are the causes for channel conflict?

Some of the things that could cause eCommerce channel conflict include:

  • Expanding into additional channels to reach new customers
  • Selling on a channel that’s not suitable for the product may arise conflict. For instance, using Amazon for B2B products might cause friction with the in-house sales team.
  • Selling at different prices across the channels can cannibalize revenue
  • Offering online shoppers discounts undermines the retail outlets
  • Allowing third-party retailers unfettered access to buy at lower prices to resell on various channels.

What are the reasons for channel conflict?

Some of the reasons for channel conflict are:

  • Omnichannel expansion (selling on two or more channels)
  • eCommerce cannibalization (when an existing store loses sales to a new channel)
  • Retail arbitrage (buying a product at lesser and reselling on another channel)
  • Discounted prices

How do I reduce channel conflict?

Here are some tips to resolve sales channel conflicts:

  • Use uniform retail pricing to avoid undercutting existing channel partners.
  • Only expand into channels that are appropriate for the products.
  • Offer exclusive or unique products on a specific channel to prevent unnecessary competition with other channels.
  • Remove channels that fail to meet expectations or undermine maximizing your best-performing channels.
  • Recover lost sales from unauthorized third-party retailers by launching on all the marketplaces they use. If you don’t find it tenable selling on the platforms, then make it clear to customers that you don’t sell there.
  • Avoid the herd mentality. Stick to what works for you. For instance, if selling on Amazon pays you more than a DTC channel, then ramp up your Amazon marketing efforts.
  • Add several channels to strengthen the brand authority and build customers' confidence if you operate in a skeptical or less-trusting industry.

Are all channel conflicts bad?

Channel conflict provides a huge opportunity for brands to maximize their other channels. 

For instance, resolving the Amazon channel conflict helped Nike generate $11.8 billion from DTC sales, while Beardbrand boosted sales by over 20% by maximizing what works for them.

What is vertical channel conflict?

Vertical channel conflict occurs between players within different distribution channel levels. It’s typically between a retailer and a distributor or the manufacturer and a distributor.

What is a vertical conflict example?

An excellent real-life example of vertical channel conflict is Apple’s controversial move to DTC. 

In a bid to regain its leading market shares, Apple started selling online and through numerous company-owned retail stores. 

Apple’s aggressive DTC expansion puts it at loggerhead with several distributors who accused the brand of sabotage, consequently suing the company in 2003.

What is horizontal channel conflict?

Horizontal channel conflict occurs between players within the same distribution channel levels, such as retailers or distributors.

What causes horizontal conflict?

The primary cause of horizontal channel conflict is when the channel players try to undercut each other to drive more sales. For example, a retailer might offer a considerable discount to incentivize purchases, thereby driving businesses from other retailers within the area.

What is the first step in managing channel conflicts?

The first step in managing channel conflicts is understanding the source.

Beardbrand expanded into Amazon to maximize its reach. But with time, the brand realized that selling on Amazon limits it from maximizing the other channels.

Despite driving ten percent of its revenue, the eCommerce brand pivoted from the platform to selling through its best-performing channels. As a result, it boosted revenue by over 20%.

What is intertype channel conflict?

Intertype channel conflict is sales channel conflict within an organization.

An example of this conflict is when a brand’s online DTC channel expansion affects the company-owned brick-and-mortar stores’ sales performances. 

For instance, Nike’s physical stores, at a point, felt the company was cannibalizing their revenue through Nike.com—the online DTC channel. However, Nike managed the tension successfully, turning the store conflict into an advantage.

What is channel conflict and how is it managed?

As explained earlier, channel conflict is when partners in a sales channel oppose each other. The best approach to resolving channel conflict depends on its source.

For example:

  • If you are losing sales to marketplace resellers, you might want to expand into that platform like Nike did or drive negative sentiment against the resellers like Beardbrand.
  • If physical store retailers fail to provide expected sales support to your customers, then follow in Apple’s footsteps by expanding your retail outlets.
  • Use strong contract terms to prevent retailers from undercutting each other.

How do you resolve a multi-channel conflict?

Multichannel conflict occurs between a company’s two or more sales channels. It usually occurs when a brand targets the same audience. So the best approach to resolving a multichannel conflict is customer segmentation.

What is channel conflict management?

Channel conflict management is a systematic approach to resolve frictions between sales channels. It enables businesses to transform channel conflict into sales opportunities.

What is the best way to manage channel conflict?

There’s no one-size-fits-all strategy to managing channel conflict. However, the best channel conflict resolution approach remains to do more of what works for you.

Wrapping It Up

Channel conflict is an inevitable reality of running an eCommerce business.

Though it could be lethal to your sales, it provides opportunities for brands to maximize their other channels, enabling them to drive thousands of dollars from unexplored or unexpected spaces. 

Regardless of the industry or channel conflict type, the tips in this article provide a definitive approach to mitigating sales channel conflict.

Action them to transform your channel frictions into sales opportunities.

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