Despite e-tailing’s increasing popularity, many e-tailers continue to face serious issues that can restrict their growth. Perhaps the two most significant issues are channel conflict and order fulfillment.

Clicks-and-mortar companies may face a conflict with their regular distributors when they sell directly to customers online. This situation, known as channel conflict, can alienate the distributors. Channel conflict has forced some companies to avoid direct online sales. For example, Walmart, Lowe’s, and Home Depot would rather have customers come to their stores. Therefore, although all three companies maintain e-commerce Web sites, their sites place more emphasis on providing information-products, prices, specials, and store locations-than on online sales.

Channel conflict can arise in areas such as pricing and resource allocation—for example, how much money to spend on advertising. Another potential source of conflict involves the logistics services provided by the offline activities to the online activities.

For example, how should a company handle returns of items purchased online? Some companies have completely separated the “clicks” (the online portion of the organization) from the “mortar” or “bricks” (the traditional bricks-and-mortar part of the organization). However, this approach can increase expenses, reduce the synergy between the two organizational channels, and alienate customers. As a result, many companies are integrating their online and offline channels, a process known as multichanneling.

The second major issue confronting e-commerce is order fulfillment, which can create problems for e-tailers as well. Any time a company sells directly to customers, it is involved in various order-fulfillment activities. It must perform the following activities: quickly find the products to be shipped; pack them; arrange for the packages to be delivered speedily to the customer’s door; collect the money from every customer, either in advance, by COD, or by individual bill; and handle the return of unwanted or defective products.

It is very difficult to accomplish these activities both effectively and efficiently in B2C, because a company has to ship small packages to many customers and do it quickly. For this reason, companies involved in B2C activities often experience difficulties in their supply chains.