The news: Nike will cut ties with more than 1,000 online distributors in China starting in January, its latest effort to stabilize sales in the region after two years of declines. Instead, the sportswear company is prioritizing sales on its app and website, along with its official storefronts on Alibaba’s Tmall, Douyin, and JD.com. Partners like Topsports International, China’s largest sportswear retailer, will be able to sell Nike products in stores but not on their ecommerce channels.

The strategy: Nike is hoping that a reduced number of online selling partners will give it more control over its brand, pricing, and shopper experience. The company downplayed concerns that the move would hurt product availability, instead highlighting it as a means of “reducing fragmentation and strengthening the consumer journey,” according to Cathy Sparks, Nike’s new vice president and general manager of Greater China, in the letter announcing the shift.

A simplified selling network could help Nike combat counterfeiting and brand and pricing inconsistency, which could help it regain traction among China’s shoppers. But Nike risks repeating the mistakes it made in the US market, where an ill-considered shift away from wholesale created an opening for competitors to take share. A reduction in the number of places to buy Nike could also cause the brand’s sales to fall even more in the near term. Revenues from the Greater China region fell 12% YoY on a reported basis in Nike’s most recent fiscal quarter and were down nearly 35% compared with 2021.

Implications for Nike: Nike has decided that controlling how its brand shows up across digital channels is more important than having a wider reach. That may be true in the short term as the company refines its messaging and product range to appeal to local tastes. But a smaller ecommerce distribution network could hinder longer-term growth, since we expect ecommerce sales in China to outpace physical retail sales into 2030.