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ACCA Strategic Professional · Strategic Business Leader · E-business: value chain

Brightmoor Furniture, a manufacturer, sells through independent retailers. It launches a direct-to-consumer website at lower prices than the retailers charge. Within months, several main retailers cut their orders and threaten to drop the brand. Which e-business risk has materialised?

Channel conflict has materialised. By selling directly to consumers at lower prices, Brightmoor competes with its own retailers, who respond by cutting orders and threatening to drop the brand. This is a recognised risk of disintermediation and is distinct from technical risks such as cyber attack or data integrity problems.

  1. AChannel conflict arising from disintermediating existing intermediariesCorrect
  2. BLoss of data integrity from poor database design
  3. CDenial of service attack on the company website
  4. DOver-reliance on a single IT supplier

Explanation

By selling directly and undercutting retailers, Brightmoor competes with its own distribution channel, causing channel conflict. No facts point to data integrity failure, a cyber attack or supplier dependence. The retailers' reaction is the typical response to disintermediation.

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