Physical distribution Physical distribution is the set of activities concerned with efficient movement of finished goods from the

end of the production operation to the consumer. Physical distribution takes place within numerous wholesaling and retailing distribution channels, and includes such important decision areas as customer service, inventory control, materials handling, protective packaging, order procession, transportation, warehouse site selection, and warehousing. Physical distribution is part of a larger process called "distribution," which includes wholesale and retail marketing, as well the physical movement of products.

Channel conflict occurs when manufacturers (brands) disintermediate their channel partners, such as distributors, retailers, dealers, and sales representatives, by selling their products direct to consumers through general marketing methods and/or over the internet through eCommerce. Some manufacturers want their brands to capture the power of the internet but do not want to create conflict with their other distribution channels, as these partners are necessary and viable for any manufacturer to maintain and gain success. The Census Bureau of the U.S. Department of Commerce reported that online sales in 2005 grew 24.6 percent over 2004 to reach 86.3 billion dollars[1]. By comparison, total retail sales in 2005 grew 7.2 percent from 2004[1]. These impressive numbers are attractive to manufacturers, however they have not been able to participate in these sales without harming their channel relationships. Channel conflict is of three types.

Vertical channel conflicts, Horizontal channel conflicts, Multilevel channel conflicts.