Siu Yue Hon, Francis ( ) Lam Siu Chung. Rex ( )

Manufacturer Retailer Customer

Cause of Channel Conflict: Along with the advent of e-commerce, many merchants moved their distribution outlets online to reach customers directly and save on transaction costs. For example, manufacturers who have established brand name recognition and loyalty may want to reap greater returns on their sales by bypassing retailers.

Business Values: More important than what the firm values in these cases is what the customer values in each segment of business. If customers have come to appreciate, expect, and depend upon a certain type of service and presentation they received through an experienced retailer, a manufacturer may be shooting itself in the foot by trying to sell direct to customers over the Web.

Solution: The ultimate goal to handle channel conflict is to turn it into channel harmony. Channel harmony creates a synergy out of the conflict. For example, an online store might seek to take advantage of the fact that it has a physical store-front, and vice versa. Distribution channels are moving away from traditional linear models and toward more collaborative agreements. Channel harmony refers to the complementary environment in which a customer's use of one channel has a ripple effect throughout the organization or partnership.

A click-and-mortar business model that includes both online and offline operations, which typically include a website and a physical store. Customers have the choice between visiting one of firm's physical locations or using the website to complete transactions. Both store and website allow customers to compare and search for goods and purchase products.

1. Improved trust consumers who recognize a Web store as an extension of an existing business may perceive it to be more legitimate, and have more trust in the store 2. Reduced consumer risk e.g. being able to return goods to a physical store can lessen risks associated with online purchases

3. Broader coverage of diverse shopping preferences e.g. those needing an item immediately can pick it up at a local store, while those with limited free time can shop online at their convenience 4. Natural complementarities between the two channels e.g. items can be purchased online, while the physical store can be used as a site for servicing and advice.

P2P—Person-to-Person lending will try to disrupt the banking industry, but it is hard to do. Banks not only provide lending service, there also many attractive component parts (deposit taking, lending, servicing fees). Although P2P lending can provide better rates, but if banks reduce their rates, P2P lending will become less attractive, lenders and borrowers may choose traditional banks for more trust.

Reference: Free Encyclopedia of Ecommerce