Distribution Rebellion

The record

1. 2017

   Nike

   Reversed

   Whether to bypass wholesale distributors and sell direct-to-consumer, cutting retail partners

   • Bypass wholesale, own consumer — Cut retail partners and grow a direct-to-consumer channelchose this
   • Keep wholesale balanced — Retain distributors as inventory and demand shock absorbers

   Stated reasonTo serve the consumer personally, at scale, keeping the wholesale discount, owning the data and controlling the story

   What happened

   • 2022-09 Inventory: Nike's inventory ballooned 44% and it missed its revenue projection for the first time in two years
   • 2023 Direct share of revenue: Nike Direct contributed $21.3 billion of $51.2 billion in total revenue (~42%), short of the 60% target
   • 2025 Wholesale vs direct growth: wholesale grew 8% year-over-year, and in Q2 fiscal 2025 North America wholesale grew 24% while direct fell 10%
   Read the full analysis →
2. 1994

   Dell

   Held in part

   Whether to stay on retail shelves or retreat to direct-only selling

   • Stay on retail shelves — Keep selling through CompUSA, Wal-Mart, Best Buy and Staples for volume.
   • Exit retail, go direct-only — Discontinue consumer retail sales and return to selling direct.chose this

   Stated reasonRetail reintroduced inventory forecasting and writedowns that hurt profitability and liquidity

   What happened

   • 1995 gross profit margin: gross profit margin recovered to 21.2% in FY1995 after the retail exit
   • 1995 net income: FY1995 net income was $149.2 million versus a net loss of $35.8 million in FY1994
   • 2008 channel distribution: Dell began selling through Wal-Mart in June 2007 and was in roughly 10,000 retail locations by 2008
   Read the full analysis →
3. 2007

   Progressive

   Held

   Whether to keep the separate Drive agent brand or fold agency products back into the master brand while keeping separate pricing

   • Keep separate Drive brand — Maintain a distinct agent brand to ease channel tension
   • Revert to master brand — Fold agency product under Progressive but keep separate pricingchose this

   Stated reasonProgressive found the power of the Progressive name outweighed a separate brand

   What happened

   • 2024 Direct vs agency auto policies in force: direct auto policies reached about 14.0 million against the agency channel's 9.8 million
   • 2024 Agency share of personal-vehicle premium: agency share drifted down to 45%, from 47% two years earlier
   • 2024 Net premiums written: $74.4B in 2024, up from $61.6B a year earlier
   Read the full analysis →
4. 2010

   Uber

   Held

   After the cease-and-desist, comply and stop or keep operating in the black-car lane

   • Shut down entirely — Obey the cease-and-desist and stop operating
   • Drop 'Cab', keep going — Rename and continue in the legal black-car lanechose this
   • Lead into personal-vehicle model — Immediately push the unlicensed peer-to-peer model

   Stated reasonThe objection was to the word 'cab' implying taxi status, not to the underlying black-car service, which was already legal

   What happened

   • 2012-11 regulatory citation: The CPUC issued $20,000 citations to Lyft, Uber, and Sidecar for operating as charterparty carriers without authorization
   • 2013-04 model adoption: Uber announced it would adopt the personal-vehicle model in April 2013
   • 2013-09-19 new legal category: The CPUC created the Transportation Network Company classification in Decision D.13-09-045
   Read the full analysis →
5. 2011

   Patagonia

   Held

   Whether to sell harder on Black Friday or run an anti-consumption ad and build a repair/resale loyalty engine

   • Run anti-consumption ad — Tell customers not to buy and build repair-and-resale infrastructure as a loyalty enginechose this
   • Sell hard on Black Friday — Treat the biggest selling day as ordinary retail with the sale as the finish line

   Stated reasonA customer who buys after being told not to has self-selected into the brand's values and stays longer; repair converts a product into a relationship

   Committedroughly $57,000 (cost of the full-page ad)

   What happened

   • 2021 cumulative items repaired: 415,174 items mended cumulatively since 2005
   • 2017-09 resale channel: permanent Worn Wear online resale site launched
   • 2011 free publicity: threw off $40 to $50 million in free publicity
   Read the full analysis →
6. 1989

   Best Buy

   Held

   Whether to keep commissioned selling or eliminate it and put all inventory on a self-serve discount floor

   • Keep commissioned selling — Compete on persuasion and higher margins funding trained salespeople
   • Adopt Concept II self-serve — Kill commissions, stack the floor, win on price and volumechose this

   Stated reasonStripping out selling cost let Best Buy compete on price and selection, driving volume that gave it bargaining power over suppliers

   What happened

   • 2025 Supplier concentration, top five suppliers: top five suppliers—Apple, Samsung, HP, Sony and LG—representing approximately 55% of total merchandise purchased
   • 2011 Supplier concentration, top five suppliers: five largest suppliers represented 39% of total merchandise purchased
   Read the full analysis →
7. 2002

   eBay

   Held

   Whether to keep fighting PayPal with Billpoint or acquire the payment layer embedded in eBay's own listings

   • Acquire PayPal — Buy the embedded payment network in stockchose this
   • Keep fighting with Billpoint — Continue competing via eBay's own payment product

   Stated reasonPayPal was embedded in eBay's listings and growing daily on a network eBay couldn't pry loose without alienating its sellers

   Committed$1.5 billion (tax-free stock-for-stock, 0.39 eBay shares per PayPal share)

   What happened

   • 2003 Billpoint phase-out: eBay's Billpoint was phased out in H1 2003
   • 2002 acquisition completion: eBay completed the PayPal acquisition, valued at approximately $1.5 billion; PayPal continued as an independent brand
   Read the full analysis →
8. 2013

   Best Buy

   Held

   Whether to make price-matching Amazon a permanent policy

   • Make price-matching permanent — Match Amazon's price across all stores, surrendering margin cushionchose this
   • Let customers walk out — Refuse to match and lose shoppers to cheaper rivals

   Stated reasonMatching kept the shopper at the register because letting customers walk out to buy elsewhere was worse

   What happened

   • 2015 Renew Blue annualized cost reductions: Renew Blue annualized cost reductions reached $1.02 billion by the end of fiscal year 2015
   • 2013 Vendor-funded store-within-a-store space: Samsung opened Experience Shops in more than 1,400 Best Buy stores and Microsoft opened Windows stores at 500 U.S. sites
   Read the full analysis →
9. 2014

   Atlassian

   Held

   Whether to hire commissioned salespeople or keep letting the product sell itself

   • Defer the sales hire — Keep the self-serve model and fund the product instead of reps.
   • Make the sales hire — Add commissioned Enterprise Advocates to close large deals.chose this

   Stated reasonThe Data Center product raised the average selling price from roughly $4,000 to roughly $48,000, giving enough margin to fund a commissioned rep

   What happened

   • 2020 Enterprise sales organization scale: ran an Enterprise Advocate organization with quota-carrying reps across the Americas, EMEA, and APAC, growing for about four years
   • 2026-03 Workforce reorganization toward sales: announced layoffs of roughly 10% of its workforce explicitly to pivot toward AI and enterprise sales
   Read the full analysis →
10. 2023

    Macy's

    Reversed

    Whether to scale the small-format off-mall store into a growth engine or keep it as a hedge

    • Accelerate small-format expansion — Open up to 30 new small-format stores, tripling the countchose this
    • Keep format as a hedge — Maintain a small fleet as a brand and real-estate hedge

    Stated reasonThe format posted strong early comps and was reframed as a revenue engine to justify tripling the count

    What happened

    • 2025-01 small-format store count: reached only 24 total, short of the 30-store target
    • 2025-01 small-format store closures: four small-format locations included in first closure wave
    Read the full analysis →
11. 2001

    Apple

    Held

    Whether to sell through resellers or open Apple's own retail stores

    • Keep selling through resellers — Continue selling through Sears, CompUSA, and big-box electronics floors
    • Open Apple's own stores — Go direct with company-owned retail stores in mallschose this

    Stated reasonResellers misrepresented the products and Apple wanted to control the customer experience and margin

    What happened

    • 2017 sales per square foot: roughly $5,546 per square foot - the highest of any retailer in the United States
    Read the full analysis →
12. 2012

    Nordstrom

    Held

    How should Nordstrom win over wholesale-allergic DTC brands: keep the standard buy or become a strategic investor?

    • Standard wholesale deal — Offer a transactional purchase order for a season of inventory
    • Strategic investor model — Take minority equity, co-market, and curate placement rather than buychose this

    Stated reasonStop offering the commoditizing purchase order and instead offer a stake in the brand's upside so the brand gains a rooted partner rather than a buyer.

    Committed$16.4 million minority investment round (Nordstrom led the round in Bonobos)

    What happened

    • 2021 New DTC brand partnerships: Skims made Nordstrom its very first retail partner in 2020, following Reformation (stocked since 2018) and Everlane
    Read the full analysis →