D2C expansion: channel conflict or co-operation?

For any manufacturer considering selling products direct to the consumer, it’s always important to think about the potential impact that a D2C strategy can have on existing channels.

If you’re going to take the D2C route, you might be worried about competing with your own channel partners, or perhaps you’re concerned about oversaturating the market. Maybe you’re thinking that you’ll be spreading your resources too thinly, fragmenting your communications and reducing your impact.

These are all valid concerns. Channel conflict can be part and parcel of any multi-channel distribution strategy. However, with careful planning and execution, those challenges will fade away and you can enjoy the many benefits that a D2C strategy can bring.

Let’s take a look at some of the potential channel conflicts that can occur when you start your D2C journey, along with how to avoid them.

The main causes of channel conflict

When it comes to D2C, there are a number of potential causes of channel conflict. These can vary, depending on your industry and the distribution channels involved, yet common causes are usually:

• Products or services are offered by different brands or companies within the same channel, creating unnecessary competition
• The same product or service is offered at widely different prices by a range of companies within the same channel
• Incompatible marketing strategies and conflicting messaging is being used by different companies within the same channel
• There’s a lack of communication or coordination between companies within the same channel

With these potential obstacles in mind, let’s explore some solutions.

Activate your D2C before your reseller channels

For all those regions, segments and markets that you’ve yet to tap into, it can be a great idea to start with a D2C strategy before you ramp things up with resellers. That’s because when you build a strong brand beforehand, you’ll have better control over your future negotiations with retailers and channel partners. Plus, there’ll be no existing contracts that can muddy your D2C waters.  

Attribute revenues to your resellers

The chances are you’ve invested a lot of time and effort into your existing reseller relationships. There’s no point in throwing it all away. If you have a strong reseller network that’s bringing you a lot of value, then it might be worth giving them a commission on any successfully processed purchases that they send your way.

This could be a strong strategy for products that people like to pick up in-store. When your resellers get behind your D2C channel, you’ll be able to improve the customer journey with online configurators, value-add services or upsell opportunities. And be sure you add a store selector in your check-out, too.

Explore exclusive offers

To differentiate your D2C product from your other channels, you could offer exclusive items on your e-commerce site. These would only be available to your customers, and can't be found elsewhere.

For example, you may bundle in personalised or signed merchandise, perhaps offer exclusive colourways or unique designs. When you adopt this strategy, you’re not competing with your channel partners on price, so they don't feel like you're undercutting them. At the same time, you’re applying additional value to your brand.

Take orders directly, but fulfil through retailers or dealer networks

This option is a great way to streamline your D2C sales process and sidestep complex logistics. When you partner with dealers to fulfill the orders generated by your own channel, everyone’s happy. Your processes are simpler, and your resellers can apply a pick-up in-store option, which means there’s an upsell opportunity for them.

When you use this model, you provide traffic to physical stores, while at the same time improving your local presence for the consumer.

Putting it all together

In any business, there will always be some form of channel conflict. It’s an unavoidable part of having a supply chain with multiple resellers. However, that doesn't mean you can’t minimise the impact and create new opportunities.

By addressing any potential obstacles up front, you can strengthen your existing channel relationships, develop your brand, and improve the customer experience, all at the same time.

To learn more about the D2C advantage, for expert advice on the best route for your business, or just to get to know us a little better, why not get in touch and we can talk you through the detail. Or you might just want to wander through our blogs and whitepapers to get a feel for things yourself. Whatever works for you, works for us.