Channel conflict is when two or more partnering brands or manufacturers compete within the same supply chain or segment, disrupting their partner’s ability to sell to customers within that chain.
An effective supply chain relies on supportive, streamlined partnerships where brands, retailers, manufacturers, and distributors work together to get products in consumer hands quickly. But within any partnership structure, channel conflict can occur.
Channel conflict can disrupt operations and, ultimately, sales by adding a kink in an otherwise smooth workflow. If a manufacturer doesn’t deliver products to a retailer on time, they’ll need to take time to address delays. If a large retailer starts competing with a smaller retailer within the same market or product segment, the conflict might cause disruptions at the manufacturing level.
As another example, a brand might treat a brick-and-mortar retailer differently than an ecommerce retailer, causing the ecommerce business to lose ground in the market.
In each of these examples, the channel conflict can disrupt operations at all levels. That’s why it’s critical for all parties to maintain effective communication and resolve conflicts swiftly.