This is the marginalization of different sales channels within the same company. In short it is the negative competition between, say a business's dealer network and its e-commerce division, siphoning off sales from each other.

It is the fear of such a conflict that held many of the big companies back from investing in e-commerce at an early stage, allowing upstarts like Amazon to enter the fray relatively unchallenged. The established companies saw this new channel as a disruptive technology therefore making it much harder for them, with their corporate inertia, to embrace it. Those who have invested money, time and effort in the existing business model - suppliers, employees, bankers, shareholders, even customers - will resist anything that they perceive as a threat to their cultured stability.

This fear is exacerbated when the new channel has to offer lower prices to compete with its channel competitors, as is the case online. This channel conflict has hurt several major retailers including Barnes & Noble, who were slow to embrace online retail partly because they feared that selling at lower prices online would dent their profits, or Levi’s who were forced to stop selling jeans online due to pressure from franchise owners.

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