Channel Leakage
The loss of sales or profit that occurs when products intended for one channel are sold through another, often at lower prices or without proper authorization.
Implications
The loss of sales or profit that occurs when products intended for one channel are sold through another, often unauthorized or at lower prices, disrupting pricing strategies and harming channel relationships.
Example
Example: A manufacturer experiences channel leakage when products sold at a discount to wholesalers end up being resold through unauthorized online marketplaces at lower prices, undercutting its retail partners.
Related Terms
Different from channel conflict, which involves disputes between channels, leakage specifically refers to the unintended or unauthorized flow of products between channels.
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