Avoiding Channel Conflict Between Online and Retail Partners

In today’s world, brands need to be present everywhere, but their offering needs to be different everywhere they are stocked to capture customer attention. This can cause conflict as brands try to expand their DTC efforts while still maintaining the loyalty of their legacy retail partners. 

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This blog will provide you with a comprehensive overview of why channel conflict in wholesale can arise and how it can be resolved with simple yet effective strategies.

What Is Online vs Retail Channel Conflict in Wholesale 

Online vs retail channel conflict refers to a direct competition or disagreement between a fashion brand’s direct online sales (DTC) and its wholesale retail partners. Buyers can sometimes feel discouraged if the same stock they are offering customers is also available online, often for a cheaper price.

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Due to lower overheads, brands are often able to sell their product directly to customers for less, while selling to retail stores requires higher prices as they have profit margins to consider. 

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Buyers may feel undercut or bypassed if this occurs, which can lead to a breakdown in trust and can cause them to put pressure on brands to lower their margins. In worst-case scenarios where trust is lost or reputation is damaged, disagreements can lead to the termination of retail relationships. 

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Types of Channel Conflict in Wholesale

Online vs retail partner conflict is part of a broader system. Different types of conflict include: 

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Vertical Channel Conflict 

This is where conflict occurs between two different levels of the supply chain. This is typically a disagreement between brand and buyers, and can often occur when buyers feel like brands are bypassing wholesale agreements by selling DTC, selling cheaper, or holding stock back for their own ecommerce rather than giving inventory to retailers. 

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Horizontal Channel Conflict  

This is where conflict occurs between two distribution channels. This is typically a disagreement between retailers selling the same brand’s inventory.

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Territorial issues may arise, as retailers in the same region fight to appeal to the same customers, and this can sometimes lead to undercutting in a bid to gain market share. 

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Eco-System or Multi-Channel Conflict 

This is where conflict occurs between a brand’s internal team and a wholesale ecosystem, like a B2B marketplace or SaaS model.

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This is typically a disagreement arising when in-person teams and digital tools come together to try to target the same customers. This can confuse the selling process and create ambiguity about each channel's role in the hybrid selling approach. 

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Why Channel Conflict Happens Between Online and Retail Partners 

Channel conflict in wholesale fashion often arises due to differences in pricing, strategy, and execution. ‍

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Key causes include:

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• Pricing inconsistencies: brands offering low or discounted prices online or via DTC can cause retail partners to struggle to match pricing, leading to conflict.
  
  
• DTC expansion: brands selling directly to customers online are competing with their own retailer partners, which creates tension and can cause retailers to lose sales.
  
  
• Inventory imbalance: online channels tend to be able to offer customers better stock availability than retail stores, as they are not subject to stockouts in the same way.
  
  
• Unauthorized sellers: third-party sellers can list products online at uncontrolled prices, disrupting the pricing of other retailers and damaging brand positioning.
  
  
• Promotions mismatch: online channels frequently run discounts and campaigns that retail stores struggle to match, causing conflict. 

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The Business Impact of Poor Channel Conflict Management 

Poor channel conflict management directly impacts revenue, brand, and partner relationships.

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This can lead to:

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• Margin erosion: inconsistent pricing across different channels reduces profitability. When channels compete on price, margins shrink across the entire ecosystem, and brands suffer most.
  
  
• Retail partner churn: if a brand has too many distribution channels that conflict with retailer interests, retail partners may consider no longer stocking a brand. Once a retailer feels undercut, rebuilding trust is extremely difficult.
  
  
• Brand dilution: inconsistent pricing and confusing positioning can weaken a brand’s value. Uncontrolled channels can turn a premium brand into a discount brand overnight if brand image is not protected.
  
  
• Customer confusion: different prices across different channels confuse shoppers. Inconsistent experiences reduce trust in a brand and cause customers to delay purchase decisions.  

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How to Prevent Channel Conflict Between Online and Retail 

There are strategic steps that can be taken to avoid a conflict arising between online and retail channels. These include:

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Establish Clear Pricing & MAP Policies 

MAP (Minimum Advertised Price) policies are a forward-thinking way for fashion brands to protect their pricing. They ensure the lowest price that all retail partners and DTC ecommerce can sell a product for, ensuring no undercutting occurs and preserving brand integrity.

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Keeping pricing consistent across channels reduces conflict as it provides a level playing field.

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Differentiate Products Across Channels 

To reduce the chance of conflict, brands should consider creating different linesheets for different retail partners to ensure there aren’t too many overlapping products.

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Creating exclusive products or collections for dedicated channels is another good way to keep a positive relationship with buyers, as this avoids direct price comparison and ensures consumers visit multiple channels. 

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Align Inventory & Availability

Avoid ‘available online, out of stock in-store’ scenarios by using real-time inventory visibility tools. Some B2B platforms like JOOR offer this as a built-in feature, so fashion brands can ensure that retailers can reorder stock in good time and never be caught out understocked. 

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Segment Customers & Sales Channels 

To avoid regional overlap, segment your partners and channels so that who can buy what, and who can sell where, is clearly defined. Retailers should be categorized by strategic importance so that you can maximize your revenue potential without damaging any crucial business relationships. 

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Maintain Transparent Communications with Retail Partners

Keeping retail partners informed of your business plans is an easy way to build trust and prevent potential conflicts. Avoid any unwanted surprises by sharing your retail roadmap with your partners and pre-announcing promotions to them before they launch, so they always feel valued and in the loop.

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Use Technology to Monitor & Manage Channels   

Adopting a wholesale platform gives brands access to pricing analytics tools, allowing them to gain a complete overview of pricing variations across their different channels and partners. These insights can then help them to monitor and manage retail relationships constantly, in real time.

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Best Practices for Managing Channel Conflict in B2B Wholesale 

Managing channel conflict in B2B wholesale requires a strategic and partner-focused approach.

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Fashion brands should focus on:

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• Incentive alignment: any pricing, discounts, and commissions should support both DTC and wholesale partners, so that channels complement each other rather than compete.
  
  
• Partner-first mindset: brands should prioritize long-term retail partner relationships over short-term DTC gains and make sure they are transparent with partners about pricing and promotions.
  
  
• Deal protection systems: brands should implement systems that protect retailer deals and territories to prevent internal competition and pricing conflicts.
  
  
• Long-term relationship building: regular communication with retail partners is crucial for building mutual growth and trust. Collaborating with them whenever possible and offering support will help keep partnerships strong. 

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The Role of Digital Wholesale Platforms in Conflict Prevention 

Digital wholesale platforms help to reduce channel conflict by improving coordination and visibility for both brands and retailers. Centralized order management and automation features help to reduce the chance of conflict arising due to manual errors, while personalized digital showrooms with bespoke pricing reduce dependency on price wars and stop the need for undercutting. 

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B2B platforms like JOOR also offer real-time data visibility, which helps give brands a better overview of their business operations, so they can work on strengthening retailer relationships where required and keep all of their retail partners happy before conflict can develop. They also make it easy to manage multiple revenue streams.

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Diversifying your income with both wholesale and DTC can often be the smartest option for brands looking to maximize their growth potential. If you're looking to increase your wholesale channel, se what JOOR can do for you by requesting a demo.

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FAQs

What is channel conflict in wholesale?

Channel conflict in wholesale refers to a direct competition or disagreement between a brand’s direct online sales (DTC) and its retail partners. 

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Why does online vs retail channel conflict happen?

Conflict can occur between a brand’s online and wholesale retail channels when pricing varies drastically between the two, or when a wholesale partner feels like stock is being held back from them. 

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How do brands balance DTC and retail partners? 

Fashion brands can balance DTC and retail partners by ensuring that there is pricing alignment in place to reduce fears of undercutting. Brands also often offer their retailer partners an exclusive product or collection so that consumers have different reasons to shop the same brand in different places.  

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How can technology reduce channel conflict? 

B2B platforms like JOOR can help with preventing retail channel conflict, as they give brands the chance to create virtual showrooms and customized prices for specific retailers of their choice. This allows them to offer exclusive products and specialized collections that are tailored for each partner, quelling retailer fears about regional distribution and undercutting.