--- title: "What Is Channel Conflict?" url: https://www.uncap.com/glossary/channel-conflict author: "Denis Dyli" published: 2026-10-28 updated: 2026-10-28 summary: "Channel conflict is the tension that appears when a manufacturer's routes to market compete for the same customers instead of covering different ones. A common case in B2B is a manufacturer selling direct, often through its own online store, to the same buyers its dealers or distributors serve, sometimes at prices that undercut them." --- # What Is Channel Conflict? > Channel conflict is the tension that appears when a manufacturer's routes to market compete for the same customers instead of covering different ones. A common case in B2B is a manufacturer selling direct, often through its own online store, to the same buyers its dealers or distributors serve, sometimes at prices that undercut them. **Channel conflict**: Channel conflict is the tension that appears when a manufacturer's routes to market compete for the same customers instead of covering different ones. A common case in B2B is a manufacturer selling direct, often through its own online store, to the same buyers its dealers or distributors serve, sometimes at prices that undercut them. ## How it works Channel conflict is the tension that appears when a manufacturer sells direct to the same customers its dealers serve. The dealer built the account, and now the manufacturer's own storefront offers the same product to the same buyer. If a dealer sells a product at $180 and the manufacturer's new storefront lists it at $140, the manufacturer has undercut the people who built its distribution. Restrictions a manufacturer places on its dealers also change how dealers of the same brand compete. The FTC says manufacturer-imposed requirements can benefit consumers by increasing competition among different brands (interbrand competition) even while reducing competition among dealers in the same brand (intrabrand competition). ## How manufacturers manage it First, decide the policy before launch, not after the first angry call. The approaches manufacturers use: - Price parity: sell direct at the same suggested retail price dealers use, so dealers compete on service and availability rather than price. - Exclusive lines: keep some products, bundles or configurations direct only, so the direct channel grows on new ground. - Geographic protection: sell direct only where there is no dealer coverage, or leave defined territories to dealers. - Lead routing: pass direct inquiries from a dealer's territory or account back to that dealer. - Clear communication: tell dealers what is launching and why before they hear it from a customer. ## Channel conflict and pricing rules Some of these tools are dealer restrictions, which antitrust law covers. The FTC's guidance on manufacturer-imposed requirements says reasonable price, territory and customer restrictions on dealers are legal. If a manufacturer, on its own, adopts a policy regarding a desired level of prices, it may deal only with retailers who agree to that policy and may stop dealing with a retailer that does not follow it. The FTC says the critical distinction is between a unilateral decision to impose a restraint (lawful) and a collective agreement among competitors to do the same (unlawful). It notes that in 2007 the Supreme Court determined that all manufacturer-imposed vertical price programs should be evaluated using a rule of reason approach, and that this change is in federal standards: some state antitrust laws and international authorities view minimum price rules as illegal, per se. A minimum advertised price policy is covered under [MAP pricing](/glossary/map-pricing). This is general information, not legal advice. ## Example A manufacturer sells a pump through dealers at a suggested retail price of $180 and opens a storefront. - Undercut: listing it direct at $140 puts the storefront $180 - $140 = $40 below the dealer price. - Price parity: listing it direct at $180 leaves a $0 gap, so dealers compete on service and availability. - Lead routing: a direct inquiry from a buyer inside a dealer's territory goes to that dealer instead of the storefront. ## On Shopify Shopify B2B is available on the Basic, Grow, Advanced and Shopify Plus plans, and you can use one store for both B2B and direct-to-consumer (D2C) sales or create a separate B2B-only store. In a blended store, products and pricing can be customized using catalogs assigned to B2B markets. By default the store is publicly accessible, but only logged-in B2B customers can access B2B-specific pricing, B2B-only products and B2B-exclusive store content. Any customer who isn't associated with a company location or doesn't sign in is considered a D2C customer. ## How Uncap helps Uncap's guide to [ecommerce for manufacturers](/post/ecommerce-for-manufacturers) covers selling direct without losing dealers: decide a channel conflict policy before launch, choose from price parity, direct-only product lines, geographic protection, routing leads back to dealers and telling dealers the plan first, and review any pricing policy with counsel. On Shopify, the mechanics are separate catalogs: dealers see dealer prices behind login, the public sees retail, and the two numbers never meet. ## Related terms - Distributor - B2B2C - Drop shipping - Robinson-Patman Act - Wholesale ecommerce ## Sources - FTC: Manufacturer-imposed Requirements - Shopify Help Center: Choosing the right store type for your B2B business - Shopify Help Center: Sign-in and customer accounts in B2B ## Frequently asked questions ### What is channel conflict? Channel conflict is the tension that appears when a manufacturer's sales channels compete for the same customers. The most common B2B case is a manufacturer selling direct to the same buyers its dealers or distributors serve. ### What is an example of channel conflict? A dealer sells a product at $180 and the manufacturer's new online store lists the same product at $140. The direct channel now undercuts the dealer by $40 on the dealer's own customers. ### How do manufacturers manage channel conflict? Manufacturers manage channel conflict by setting a policy before they sell direct: price parity with suggested retail, direct-only product lines, geographic protection, routing leads back to dealers, and telling dealers the plan first. Pricing restrictions on dealers should be reviewed with counsel.