DistributionEmerging Pattern

Build your own distribution channels even when partnering seems more efficient

Outsourcing critical distribution to a partner (especially a potential competitor) creates existential risk. Even if building in-house is expensive and slow, owning your primary customer acquisition channel is essential for long-term survival. A partner relationship is not a substitute for core capabilities.

When to use

When considering whether to partner with a platform/marketplace for distribution vs building your own. Any time a partner would control your primary customer relationship.

Don't do this

Signing exclusive long-term contracts with partners to handle distribution you could build yourself. Treating partnership as a replacement for core competency rather than a complement.

1 Founder Who Did This

1
Toys R Usby Charles Lazarus

Partnered with Amazon in 2000, paying $50M/year for eCommerce instead of building their own online sales. Amazon violated the contract and worked with competitors. Toys R Us had no independent eCommerce infrastructure when online became dominant.

Result:Filed for bankruptcy in 2017, closed all stores by 2021. The reliance on Amazon meant they had no online presence when eCommerce became critical.
Read full story →