Channel Conflict and Disintermediation Disintermediation means that the company cuts the middle man out from the business. For example, if it was a small shop, they would buy their products from a wholesaler. If they could start to buy their products straight from the manufacturer, they would cut out the wholesaler. The wholesaler will lose out – this will cause channel conflict. Tesco aren’t getting rid of an external middle man but they are getting rid of an internal middle man. Instead of going into the shops from the warehouse, the products will go straight to the customer. As long as this does not affect any jobs in the stores, there won’t be any channel conflict because no other businesses are losing out. Tesco might need to redistribute their staff, with more in the warehouse and less in the stores. Low customer confidence in payment security The customers that use the Tesco website do not believe that the payment system is secure because some people can get into the system and steal the customer’s personal details. This will allow them to look at the bank number and pass it on for ID theft – this can lead to fraudulent use.

Challenge of delivering goods (expectations of customer and reliability) When Tesco deliver their goods to the customer they have to make sure the customer has the right products that they have ordered from the website. If they can’t deliver the correct order they might put a substitute product in its place. Because the customer has seen the goods on the website, available to buy, and has paid for the goods, they expect the right product to be delivered on time. This might mean that the customer goes somewhere else for their products the next time, meaning Tesco will lose that customer and all their potential