Addressing Channel Conflict in GT, MT, and Online Through Loyalty Programs

Within the FMCG industry, multi-channel distribution has become the norm. Brands are expected to be present across General Trade (GT) channels like warungs and traditional mom-and-pop shops, Modern Trade (MT) such as minimarkets and supermarkets, and online channels including marketplaces and quick commerce platforms.

Each channel has its own unique characteristics; from promotional strategies and pricing models to consumer types. But these differences can also lead to channel conflict, which may hurt the brand itself if not managed properly.

This is where loyalty programs can play a crucial role: not only to drive sales, but also to maintain balance across channels and strengthen relationships with all stakeholders.

Understanding the Three Main Channels in FMCG

Let’s take a quick look at the typical distribution landscape in FMCG:

• GT (General Trade): Small shops, traditional retailers, and wholesalers. High volume, frequent transactions, and close proximity to daily consumers; especially in non-digital areas.
• MT (Modern Trade): Minimarkets, supermarkets, and hypermarkets. More structured, organized displays, and in-store promotions.
• Online Channel: Marketplaces, quick commerce, or direct-to-consumer. Moves fast and heavily influenced by promotions and discounts.

All three are equally important, each with its own unique characteristics, challenges, and way of working. But they ultimately share the same goals: revenue growth and brand visibility.

Common Multi-Channel Challenge: Channel Conflict

Brands operating across many channels often face internal conflicts. Examples include:

1. Price War Between Channels

Product prices on marketplaces are often much lower than in GT or MT due to major promotions, discounts, and brand subsidies. As a result:

• • Small GT stores lose customers to e-commerce platforms.
  • MT demands special pricing or additional incentives to stay competitive.

2. Uneven Stock Distribution

Products originally intended for GT or MT end up selling better online due to lower prices and easier access. This causes:

• • GT distributors reluctant to keep stock due to slow product turnover.
  • MT sales slowing down as consumers shift to online purchases.
  • Inventory piling up in offline channels, leading to unequal stock distribution.

3. Unaligned Promotional Programs

Due to poor coordination, each channel often runs its own promotion; for example, MT has bundling offers, GT offers cashback, and online has vouchers. But these operate in silos without synergy. As a result, one channel might run out of stock while another sees excess inventory.

For instance, during a major online flash sale, stock may run out within hours on e-commerce, while it still piles up in offline distributor warehouses.

4. Weakened Partner Relationships

Distributors and retailers may feel “betrayed” by brands for being excluded from digital strategies; even though they have supported distribution for years before online shopping took off. Left unaddressed, this can erode their loyalty, reduce their selling motivation, and eventually disrupt distribution.

Implementing Loyalty Programs Across Channels

Here are examples of loyalty program implementations tailored to the unique characteristics of each channel:

1. Loyalty Program for GT (Small Shops & Traditional Retailers)

• • Purchase-based points system (via receipt upload or familiar WhatsApp-based receipt scanning) every time certain products are bought.
  • Points can be redeemed for phone credit, e-wallet balance, vouchers, business tools, and more.

Goal: Keep GT retailers loyal and motivated to sell, even if they can’t compete on price.

2. Loyalty Program for MT (Modern Retail)

• • Offer cashier-based membership programs where points are collected by consumers or retailers.
  • Sales incentives for store managers, sales staff, or SPGs who hit sales targets.
  • Seasonal rewards like instant gifts or lucky draws.
  • Use purchase data to suggest product recommendations or attractive bundles.

This boosts sales and helps MT feel just as valued as other channels.

3. Loyalty Program for Online Channel

• • Consumers earn reward points for every e-commerce purchase, with tiered levels (Silver, Gold, Platinum) to encourage repeat buying.
  • Points can be redeemed for discounts on the next purchase or exclusive vouchers.

Benefits of Synergy Through Loyalty Programs

With an integrated loyalty program and clear channel strategy, brands can enjoy many benefits:

• • More Stable Customer Experience; Consumers don’t just chase the lowest prices; they look for value across every channel.
  • More Even Product Flow; Avoid stock piling in one channel while another runs out.
  • Traditional Channels Keep Growing; With relevant incentives and rewards, GT and MT retailers stay motivated to sell products.
  • Stronger Long-Term Partnerships; Partners feel appreciated and treated as collaborators—not just resellers.
  • More Aligned Internal Teams; Sales, marketing, and e-commerce teams share the same goals and work more cohesively.

Wrap up!

Channel conflict can’t always be avoided in multi-channel distribution; but it can be managed with the right approach. Loyalty and reward programs can be a powerful strategy to foster synergy between GT, MT, and online channels; if implemented with clear differentiation, fair pricing structures, and open communication.

Brands that create fairness across channels and build strong relationships with their distribution partners will earn market trust, strengthen distribution, and increase long-term loyalty from both partners and consumers.

If your company is looking for a loyalty platform that can design differentiated loyalty programs for each channel, Tada is ready to help. We have expertise in crafting various loyalty mechanics tailored to each stakeholder; from distributors and retailers to end consumers.

Request a demo today and discover how Tada can help your brand build stronger multi-channel synergy.