Channel conflict occurs when
manufacturers (
brands)
disintermediate their
channel partners, such as
distributors,
retailers,
dealers, and
sales representatives, by selling their products direct to
consumers through general
marketing methods and/or over the
internet through
eCommerce. Some manufacturers want their brands to capture the power of the internet but do not want to create conflict with their other distribution channels, as these partners are necessary and viable for any manufacturer to maintain and gain success. The Census Bureau of the U.S. Department of Commerce reported that online sales in 2005 grew 24.6 percent over 2004 to reach 86.3 billion
dollars. By comparison, total retail sales in 2005 grew 7.2 percent from 2004. These impressive numbers are attractive to manufacturers, however they have not been able to participate in these sales without harming their channel relationships.
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