Channel conflict arises when two different distribution channels of the same manufacturer find themselves competing for the same set of customers.
Since manufacturers sell their products through a variety of channels from online stores to super markets, these conflicts are bound to arise.
- At times it could be a necessity of a normal competitive business environment , leading to increased efficiency in the supply chain forcing out-of-date players to adapt or perish.
- It has a negative effect when the overlap of consumers is big and one channel has significant advantage over the other. Sometimes the threatened channel retaliates of stops stocking the products. Ultimately the manufacturer suffers.
This is quite easy to relate to the Bharti-Walmart case. If Unilever’s products are stocked in a Bharti-Walmart store as well as in the near-by mom -and-pop store, the smaller local store is bound to feel threatened.