Insights — Channel Creation & New Revenue Streams — 3 min read
How to Avoid Channel Conflict When Going Direct to Consumers
Launching a D2C channel can threaten your distributor relationships. Protecting those partnerships while growing your business requires careful strategy.
In short
Avoid channel conflict by clearly differentiating your D2C proposition from the products and services you sell through your distributors. This can be achieved through product segmentation (D2C exclusives), maintaining price integrity that respects Recommended Retail Price (RRP), and framing your D2C efforts as a brand-building exercise that increases demand for all partners. Transparent, early communication with your distributors is essential to maintain trust and prevent retaliatory de-listing.
For B2B companies, distributors are often the lifeblood of the business. However, the rise of e-commerce has made the allure of selling direct to consumers (D2C) almost irresistible. The resulting tension is known as channel conflict.
Managed poorly, channel conflict can lead to distributors de-listing your products, destroying your core revenue before your new channel has even launched. Managed well, it can lead to a 'rising tide' that benefits everyone.
Product segmentation: The ultimate firewall
The most effective way to avoid direct competition is to ensure you aren't selling the exact same thing as your distributors. You can offer 'D2C exclusive' bundles, unique colourways, or products with added consumer services that a wholesale distributor isn't equipped to provide. This allows you to capture the D2C market without taking bread out of the mouths of your partners.
Pricing strategy and RRP integrity
Nothing angers a distributor more than being undercut on price by the manufacturer. You must resist the urge to use your lower cost-of-goods to win a price war. Maintain your D2C price at the RRP. This allows your distributors to remain competitive and ensures your D2C channel is built on brand value rather than just being the cheapest option.
Commercial reasoning: The value of the partner network
Before you launch D2C, calculate the risk. If your top distributor handles 30% of your volume and they leave, can your new D2C channel replace that volume in year one? Usually, the answer is no. You must treat your D2C channel as an addition to, not a replacement for, your trade network. Use D2C to gather data and test new products, then share those insights with your distributors to help them sell more.
The role of marketing as a shared asset
Frame your D2C marketing spend as a benefit to your distributors. By building a strong consumer brand presence, you are increasing general demand. A customer might see your ad, visit your D2C site, but ultimately decide to buy from a local distributor they already trust. This is a win for everyone. You are effectively acting as the marketing department for your entire channel.
Validate before you build
Before you launch, have honest conversations with your key partners. Explain the strategy. If the pushback is overwhelming, you may need to reconsider your approach or start with a 'white-label' brand that doesn't immediately link back to your core B2B identity. Use the Evans Opportunity Engine to model different scenarios of distributor loss versus D2C gain.
When NOT to do this
Do not launch a D2C channel if your contracts with distributors explicitly forbid it. Do not do it if your internal culture is so aggressive that your D2C team will naturally try to 'win' at the expense of your B2B partners. Finally, do not do it if you aren't prepared for the administrative burden of managing thousands of individual consumer relationships.
Could your business support another route to revenue?
Evans Channel Creation identifies, validates and builds additional revenue channels from capabilities a business already has — B2B to D2C, D2C to B2B, product to service, recurring revenue or partners — and says so plainly when a channel should not be built. Programme from £1,995 + VAT per month over six months.
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