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Quick Guide: I am an online supplier, how do I avoid sales channel conflicts?

2 minute read

I am selling my products online. How do I increase my online distribution without cannibalizing my own direct sales?

You have built a brand, have loyal customers, a killer Instagram account, and along the way, you have attracted other retailers who anxiously want to resell your products. Fantastic! Your business is growing, and you don’t have to do it alone.

Building a solid network of online and offline retailers can greatly increase sales. In fact, 49% of suppliers have reported that their retail partners have dramatically increased brand awareness and sales.

However, it is important to balance your direct online sales with the needs of your retail partners. Selling your products online, if done incorrectly, could destroy your relationship with other retail partners – both online and offline. This is “channel conflict,” which is when a variety of distribution channels selling the same products or services, clash. The most common form of channel conflict occurs when one tries to undercut the other’s price. This creates price compression and lower margins for everyone. Definitely not where you want to be!

So, how do you appease your distribution network, while adding to your bottom line? Here are 5 tactics to grow your business with your partners:

1. Brand Your Ecommerce Experience

A brand’s website is a journey into the brand. Each brand has a distinct advantage of creating a captivating customer experience on their site with rich imagery and videos, brand history, and additional product information. Customers must feel that their online experience is as alluring as touching and feeling a product in person. Often, ecommerce can be even more seductive.

Retail partners don’t have the same capabilities to offer rich content for every brand which they sell. In fact, 63% of brand loyalists visit a brand’s site to learn more about the product before making a purchase, and 20% of them will purchase directly from you. It is, therefore, important to also support your retail partners by redirecting business to them when possible, just as they have done for you.

2. Support Your Stockists
Offers tools to support your stockists by building a Store Finder on your site. Displaying the stores which are reselling your products gives customers confidence in your products. Strong retail partnerships also allow for interesting off-line events to take place, like trunk shows and pop-ups. These are fantastic opportunities to get to know the most loyal customers of your retail partners.

For brick-and-mortar stores within your Store Finder, it gives customers the chance to see your products in person if there is a store nearby. Remember, the greater the sell-through of your products in those stores, the larger their order (or re-order) may be. Store Finders reassure retailers that you have the common goal of boosting sales across all retail and sales channels. A recent study showed that 54% of brands’ channel partners saw incremental sales because the brand rerouted some of its customer interest – often through the Store Finder. You want to grow with your channel partners.

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3. Exclusive SKUs / Colors & Sizes

Retailers are selling many different brands, and therefore often cannot carry a brand’s entire collection. A good strategy is to sell products through your own storefront, which differ from the products sold to other resellers. This is a great chance to test the purchasing behavior of your customers, before investing in developing a product line. This can include additional colors, sizes (XXS or XXL), or even be different variations of the collection all together. To develop even deeper relationships with resellers, consider exclusive offerings with each retailer.

4. Don’t Compete on Price

At full retail value, never price products below your resellers. Never. Your MSRP should be the same as the full retail value that you suggest them to use. If you undercut your retail partners, you will lose them.

5. Be Creative with Sales Offers

Instead of being price-competitive, be offer-competitive. Here are some good examples of this:

  • Get x% off if you spend $x
  • Buy 1, get x% off the second item
  • Free shipping for orders over $x
  • % donated to a cause with every purchase over $x

These types of offers enable brands to offer incentives and capture their own direct sales, without directly competing on price with retail partners.

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