CHALLENGES OF DUAL DISTRIBUTION AND HOW TO OVERCOME THEM: CHANNEL CONFLICT AND PRICE DISCREPANCIES

Whenever two channels overlap, there is a risk of channel conflict – situations where partners compete against each other or against the vendor’s direct sales for the same. In dual distribution, conflict could arise if both distributors target the same government customer or reseller, leading to duplicate efforts or competitive discounting that erodes margins. Price consistency becomes a concern: if Distributor A offers a lower price to a customer than Distributor B, or if each has different discounting practices with resellers, it can result in confusion and accusations of favoritism. Such discrepancies can damage partner trust and jeopardize.

Mitigation: The number one rule here is to keep pricing and incentives consistent across channels. As channel experts advise, if one sales route can offer a better deal than another, customers will gravitate to the cheaper option and your partners on the disadvantaged route will feel cheated. To prevent this, set a uniform price list and discount structure for your product in the public sector, regardless of distributor. Both distributors should be working off the same government price benchmarks and discount approval process. This may require the vendor to take tighter control of final pricing – e.g., mandate that any discount beyond a certain threshold requires vendor approval to ensure it’s uniformly applied.

Additionally, implement a robust deal registration program for partners. Once a partner registers an opportunity and it’s approved, that partner (and their chosen distributor) is the only one allowed to pursue it, eliminating conflict on that deal. Deal registration also lets you enforce pricing integrity: you can approve a special discount for the registered partner and ensure the other distributor can’t undercut it because they won’t even be quoting. In cases where both distributors have overlapping reseller partners, be transparent in dividing the business – some vendors will assign specific sets of resellers to each distributor (to avoid two distributors courting the same VAR). If you go this route, make those partner assignments clear in your program rules.

Lastly, proactively manage any “collision” situations: if a government customer inadvertently invites quotes from both distributors on the same requirement (it can happen via bid boards or GSA eBuy), quickly identify that internally and coordinate so they do not cannibalize each other. The vendor’s channel manager should facilitate these discussions behind the scenes to maintain a united front and preserve margin. In summary, clear rules, consistent pricing policies, and strong communication are essential to resolve and prevent channel conflicts before they escalate.