Question: A recent innovation by Amazon, the Vendor Flex program, seeks to lower overall transportation costs but also creates new forms of channel conflict with competitors.
A recent innovation by Amazon, the Vendor Flex program, seeks to lower overall transportation costs but also creates new forms of channel conflict with competitors. As a partner in the Vendor Flex program, P&G agreed to allow Amazon to build fulfillment centers within P&Gs own warehouses, thus helping to eliminate some of the costs of transporting P&Gs products to Amazons fulfillment centers. Believing that the program was giving its competitor Amazon an unfair advantage, Target reacted vigorously, moving all P&G products from prominent endcap positions in its stores to less prestigious and less visible locations. Target also stopped using P&G as its primary source of advice for planning merchandising strategies within each category. The conflict between Amazon and Target is an example of channel conflict.
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