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A recent university study suggests that brands like Nike could add visible store locators on their own websites that guide customers to local and independent retailers to reduce backlash from wholesale partners as they expand in direct channels.
“While the practice may seem obvious, it is surprising how few brands mention their retail partners on their own channels,” wrote the researchers led by Michiel Van Crombrugge, a professor of market insights and innovation at the Erasmus School of Economics in Rotterdam, in a Harvard Business Review article.
The researchers noted that beyond often generating higher margins, direct selling can help brands connect with consumers. Direct can also serve as a “countermeasure” to the increasing dominance of aggregator platforms, such as Amazon in the U.S. or Tmall in China.
The risks of going direct, according to the authors, were shown by Nike, which has lost market share in recent years as moves to exit wholesale accounts while expanding direct-to-consumer hurt demand for its footwear. Under a new CEO, Nike is seeking to recapture lost wholesale space.
According to the researchers, other strategies for reassuring wholesale partners amid direct-to-consumer expansion include offering exclusive product lines or hosting in-store events to help “differentiate the retail channel better from the direct channels.”
Additionally, YETI, which saw direct-to-consumer reach 59% of sales in 2024, “continues to actively support retailers by offering promotional assets and product training through a dedicated platform for their retail partners,” the researchers wrote.
A BCG study suggested that one way to ease wholesale partners' concerns about sales cannibalization from direct or third-party e-commerce channels is by “making comparison shopping more difficult, such as by offering exclusive products or different SKUs in different channels.”
We Make Websites, an agency that designs Shopify Plus websites, in a blog entry urged brands early on to point out the “upside” of going direct, including how direct works as a marketing tool to raise brand awareness and help increase revenue for retail partners. Other suggestions included sharing revenue from direct online sales with wholesale retailers or enlisting them to fulfill direct online orders to drive consumers to wholesale partner stores.
On its latest quarterly call in March, Nike officials said they’re investing in cross-functional sales teams, reworking commercial terms, as well as refining segmentation and differentiation strategies to revive wholesale growth. Elliott Hill, president and CEO, said, “I continue to meet with wholesale partners to discuss the distinct role each can play with Nike.”