January 29, 2001, 9:30 AM — Putting an end to channel conflict
We've seen every industry stumble and grasp for solutions to the problem of channel conflict -- using e-commerce to cut out trusted distribution and retail partners. First the PC industry, prompted by Dell Computer's transfer of its direct model to the Web, threw Compaq, Hewlett-Packard, and IBM for a loop as they struggled to find a way to enjoy the cost advantages of selling directly to consumers and businesses, without incurring the wrath of a powerful network of distributors.
Later the automobile industry launched a number of "e-initiatives" that promised streamlined operations and eventually the Holy Grail -- custom configuring your own car online. Those efforts took years to get off the ground because automakers needed to describe to dealers the new Net world order, in which dealers don't simply fulfill; they provide a number of value-added services and manage the customer relationship.
By now nearly everyone understands that channel conflict has got to give way to channel cooperation.
Manufacturers want to build their brand awareness and gather valuable customer data online. Retailers, of course, will be threatened by consumer manufacturers who want to bypass them. Various technologies will allow them to coexist effectively, but as partners, not adversaries.
As the classic linear distribution network transforms into more collaborative practices, it is clear that the power is beginning to shift. Consumers expect more from their "suppliers" and are willing to break the rules of traditional supplier/retailer relationships.
Retailers' e-business efforts need to be well-integrated with their suppliers' operations to offer consumer-oriented services.
Because of their power to deal directly with consumers, manufacturers will gain more influence to dictate e-business strategy.
Has the disintermediation bugaboo been licked?