Nike CEO Elliott Hill
Partner Benefits That Data Misses
Many businesses battle with two primary pathways for their distribution strategy. On one hand, you can sell direct-to-consumer. A sale through your own channels keeps the full margin and hands you the customer's data. The math looks easy here.
On the other hand, you could sell through a distributor, a reseller, or a referral partner. That sale gives away a bit of both revenue and customer data. Maybe you decide that path costs too much, and put your energy into selling direct.
The missing measurements in that choice usually have no line item. Partners give you showroom space, and buyers associate your brand with the retail outlet. Their rep brought up your name in rooms you were never invited to. Consumers took your presence in the store as validation.
You only learn what that partnership was worth after it’s gone, and by then a competitor is standing in the spot. One of the best-documented companies in the world went down this path, and its CEO described the regretful outcomes.
A Change of Heart Nine Years Apart
In October 2017, at Nike's Investor Day at its Oregon headquarters, an executive named Elliott Hill laid out for analysts how Nike would work with retailers. Nike had done business with 30,000 retailers the year before, Hill said, and it would run its direct strategy with about 40 partners. Nike later clarified that it would not necessarily remove its product from the rest but would focus its resources, marketing, and exclusive product on a select few.
Two years later, Nike ended its pilot with Amazon, framing the exit as a step toward closer customer relationships: "As part of Nike's focus on elevating consumer experiences through more direct, personal relationships, we have made the decision to complete our current pilot with Amazon Retail."
By March 2024 the tone had changed.
On Nike's third-quarter call, CEO John Donahoe said the direct strategy had "driven growth and direct connections with consumers," and yet admitted "we know NIKE is not performing at our potential." Finance chief Matt Friend said the consumer was "still clearly shopping in multi-brand retail" and added, "We don't like the way our brand is showing up in wholesale, and we own that."
Fortune reported six months later that Donahoe was out and Hill was coming back from retirement. Adidas, Hoka, and On, among others, had taken up shelf space as Nike disappointed fans with fewer new models. On the December 2024 earnings call, Hill told analysts, "Some partners and channels feel we've turned our back on them, and we stopped engaging consistently." He added that "[p]rioritizing NIKE Digital revenue has impacted the health of our marketplaces."
Nike continues to navigate the balance of direct versus partnerships. On the October 1, 2026 call, Hill admitted, "[W]e've been oversupplying our iconic retro product, asking them to do too much." Jordan, he said, would "get back to leading the scarcity model that we created," with deliberately fewer retro launches. "When consumers see the Jumpman, it should feel special, it should feel earned." On the Jordan cuts, he said, "We've discussed it with our wholesale partners. Together we will restore balance to the marketplace."
How a Channel Decision Became a Brand Problem
In the Vital6, Strategy and Market are the two elements that were in constant tension for years. The Strategy call was that owning the customer relationship was worth more than sharing it. Market showed the impact of that decision, even though Nike hasn’t said outright that cutting partners caused the oversupply.
Hill describes his plan to correct the impact as joint work with wholesale partners, and Friend's 2024 admission was about how the brand showed up in wholesale. That is as far as the record goes. It’s easy to count the customers that already found you; it’s harder to consider the missing customers a partner's store would have introduced or what a rival does with the shelf space you leave open.
The signals sat in the public record long before the headlines.
Fortune noted in 2019 that wholesale was already shrinking as a share of Nike's sales. Nike's leaders conceded in 2024 that the consumer was still shopping multi-brand retail. Nike's results slid elsewhere too: Greater China sales fell 11 percent in fiscal 2026 and 22 percent in the latest quarter. Hill said the performance business "is not yet large enough to offset the pressure" in sportswear, Jordan and Greater China together.
Finance is where the repair is happening: restoring scarcity means selling less today. Reuters reported that Nike's market value and earnings have more than halved since Hill's return and wrote that problems including weakness in China and over-reliance on discounted lifestyle products "continue to weigh on the business."
The Lesson For You
When did you last consider what partnerships do for your overall durability?
Maybe you dropped the independent dealers and moved to online orders. Maybe the agency that sent you leads got cut because you could run the ads yourself, or the installer that recommended you at the kitchen table lost your referral fee. The margin on each sale went up. A few months later the leads are thinner, the close rate is lower, and the customers you do get compare you to three competitors before they call. Nobody put that on a report, because the partner's work was never on one.
Before you cut the next channel, pause and ask ten recent customers how they first heard of you. If the answer keeps pointing at partnerships, there is real work happening that may not have a clean line tied to your spreadsheet.
Which partner would you drop if you looked only at your margin, and what do they do for you that never appears on an invoice?
Where do your newest customers say they first heard of you, and has that answer changed since the last time you changed channels?
Who would tell you if a competitor filled the space you left?
The Vital6 Assessment is how you read the strength and balance of your own business.
Want to go deep on the Vital6? I wrote a book about it.
