In 2019, Nike stopped selling directly on Amazon. The sportswear giant had spent two years treating the marketplace as a convenient volume channel, but found counterfeiters, unauthorized resellers, and price erosion undercutting its brand positioning everywhere else. The decision cost Nike immediate reach. It also restored the integrity of every other relationship Nike had built. Most companies get this trade wrong. They see channel strategy as a margin comparison between direct and indirect, when the real calculation is whether each route earns its place in a portfolio that sustains demand over time.
When Partners Become Disposable
Many suppliers barely conceal their contempt for distributors. They see distributors as temporary infrastructure, a tax paid until the brand grows strong enough to sell direct. This thinking treats channels as interchangeable pipes for the same product to reach the same buyer, differing only in the fee extracted.
That assumption collapses on contact with reality. Direct stores, specialist retailers, broadline distributors, and online marketplaces perform entirely different work in the customer journey. Apple’s retail locations do more than move iPhones. They deliver hands-on demonstration, immediate technical support through the Genius Bar, and the controlled environment that justifies premium positioning. Tesla’s direct sales model preserves pricing uniformity and captures customer data that would leak through franchised dealers. These are not margin optimizations; they are mechanisms for controlling how the product is experienced before and after purchase.
Specialist retailers add a different layer. Sephora’s beauty consultants provide sensory trial and personalized guidance that no brand could replicate at scale across thousands of standalone locations. Best Buy’s Geek Squad turns electronics purchases into installed solutions. The margin surrendered to these intermediaries purchases expertise and trust the supplier has not built itself.
Distributors operate further from the end customer but solve problems of equal weight. Tech Data, now TD Synnex, maintains the inventory breadth and logistics network that allows thousands of smaller IT resellers to compete without carrying millions in stock. Sysco’s food distribution to restaurants replaces a procurement operation no individual kitchen could staff economically. These partners reach geographies, customer sizes, and industry verticals where direct sales would lose money on every call.
The Portfolio Assignment
A channel strategy that works starts with a specific purpose for every route. It then matches products, prices, and customer segments to the channel equipped to serve them. Misalignment produces conflict that erodes durable demand.
Product allocation follows capability. High-complexity, customizable offerings belong in direct or value-added reseller channels where consultation and integration happen. Enterprise software from SAP or Salesforce moves through specialized partners or direct teams because the sale requires mapping to existing systems. Volume products with standard specifications, like Samsung’s entry-level smartphones, can flow through mass retailers and carriers without degrading the purchase experience. Luxury and exclusive items need restricted distribution. Apple’s Pro Display XDR appears only through direct channels and authorized premium resellers because broad availability would collapse the positioning that justifies the price.
Pricing requires the same discipline. When a supplier’s own promotions undercut partner competitiveness, the partner stops investing. Minimum Advertised Price policies, channel-specific SKUs, and exclusive bundles create differentiation that protects each route’s economics. HP offers particular laptop configurations only through its B2B direct channel, preventing price comparison against identical-looking consumer models sold through retailers. Without this separation, partners become free-riders or casualties, and neither outcome builds sustainable demand.
Customer segmentation completes the architecture. Demographics, purchasing behavior, and support needs determine routing. A small business buying three laptops needs different handling than a multinational refreshing ten thousand seats. The channel assigned to each must have the infrastructure, expertise, and incentive to serve that profile profitably.
The Cost of Getting It Backward
Channel conflict does not announce itself with dramatic ruptures. It accumulates through small betrayals. A manufacturer launches a direct promotion that undercuts its distributors by fifteen percent. A brand places its full product line on a marketplace where unauthorized sellers race to the bottom. A supplier starves its retail partners of marketing support while building direct capabilities. Each decision looks rational in isolation. Together they teach partners that investment in the relationship is unrewarded.
The damage is measured in withdrawal. Distributors reduce inventory and push competing lines. Retailers de-emphasize shelf placement and staff training. Specialist resellers redirect customers toward brands that protect their margin. The supplier gains short-term volume in one channel and loses durable demand across all of them.
Nike’s Amazon exit recognized this pattern. The marketplace had become a channel without a clear purpose in Nike’s portfolio, beyond undifferentiated reach. By withdrawing, Nike reinforced the value of its direct operations, its retail partnerships, and the controlled distribution that preserves brand equity. The theoretical margin of Amazon access was lower than the cost to every other channel’s willingness to invest.
What Remains Unresolved
The pressure toward direct sales is not irrational. Digital infrastructure has collapsed the cost of building proprietary channels. Customer data has become a competitive asset that intermediaries intercept. Investors reward the recurring revenue and higher multiples associated with direct relationships. These forces are real and growing.
Yet the companies that convert this capability into durable demand resist the temptation to treat partners as obsolete. They ask what function each channel performs that the supplier cannot replicate, then structure pricing and product access to make that function profitable to perform. The question is not direct versus indirect. It is whether the portfolio as a whole generates demand that outlasts any single quarter’s margin comparison.
For operators building or revising channel strategy, the test is straightforward. Can you state the specific purpose of every route to market in one sentence, name the customer segment and product set assigned to each, and identify the protection that prevents your own promotions from undercutting partner economics? If any answer is vague, the conflict is already building, and the cost will show up in partners who stop trying.
