Channel Conflict is No Longer a Good Excuse for Overlooking E-commerce

Channel ConflictIn speaking with sales, marketing, and e-commerce executives on a daily basis, we still periodically encounter companies shying away from investing resources into their presence on Amazon due to channel conflict and the reactions it may elicit from long-standing retail partners.

For the most part, these companies aren’t living in the Stone Age. These brands usually have a pretty solid understanding of the role Amazon plays in the retail marketplace and at least some grasp of how much larger that role figures to be in the coming years.

They’re instead intimidated away from the starting line because of pressure from retailers that have, in some cases, help build and sustain their business for decades.

While it is a compelling argument from a close partner, in these instances it may be important to ask, “Whose best interest am I considering first, my company or someone else’s?”

I’m not suggesting long-standing relationships with retailers no longer have value, or that they shouldn’t be pause for consideration when making decisions about a business’ direction.

In many product categories, brick-and-mortar retailers still account for the vast majority of a brand’s overall sales. Not to mention, many longstanding relationships with retailers may also have become personal friendships with significant meaning and value as well.

However, nearly every growth metric imaginable in retail shows steady and considerable movement of consumers from brick-and-mortar to e-commerce, where Amazon has continued to not only be the biggest player, but also grow faster than every other e-retailer combined.

Brick-and-mortar still serves as a vital foundation of retail, but using the old guard as the justification not to allocate the time and resources necessary to compete in the next generation of your industry is like refusing to use e-mail to appease the postal service.

Overall, it may be time to reevaluate to what degree channel conflict should play a role in making decisions that will determine the future success of your company.

 

8 Questions to Consider When Facing Retailer Backlash in Response to a Focus on E-commerce:

  1. What has been the general growth trend of this retailer vs. e-commerce and Amazon?
  2. How large is the account vs. the potential of e-commerce?
  3. Are you going to be the retailer’s first vendor to shift some focus towards Amazon and e-commerce?
  4. Are your competitors holding back for the same reason?
  5. Knowing your consumer’s behavior, is an increased e-commerce presence actually going to lead to a significant downturn in this retailer’s sales?
  6. Would this retailer truly consider dropping you or reducing orders as retribution? If so, is this the type retailer you want to serve as a foundation of your business’ future success?
  7. Does this retailer have the same regard for your best company’s interest as you do for theirs?
  8. As more market share shifts to e-commerce, how might giving your competitors a head start in staking their real estate on Amazon and elsewhere online hamper your ability to compete in the future?

 

Image Source: SFGate.com