How should a board evaluate Amazon, DTC and wholesale channel mix?
Short answer: A board should evaluate channel mix by the economics and strategic attributes of each channel—not by assuming that DTC is always better, Amazon is always riskier, or wholesale is automatically lower value. The right mix depends on contribution, working capital, customer access, complexity, and concentration.
Compare channels on consistent dimensions
For each major channel, show contribution after channel-specific costs, cash-conversion characteristics, inventory requirements, customer/data access, operational complexity, and dependence on counterparties or platforms. This makes trade-offs visible.
Avoid gross-margin bias
DTC can show attractive gross margin while requiring heavy paid acquisition and fulfillment. Amazon may carry fees but provide high conversion and efficient demand capture. Wholesale can produce lower gross margin yet strong cash economics and lower operational complexity. None should be judged on one line of the P&L.
Understand channel interactions
Channels do not operate independently. Unauthorized marketplace sellers can affect retail pricing. DTC promotions can create retailer conflict. Wholesale liquidation can leak into Amazon. Advertising in one channel may lift demand in another. Governance should account for the system rather than optimize each channel in isolation.
Ask what mix improves enterprise value
The board should challenge plans that diversify for optics or concentrate solely for near-term efficiency. The better question is which mix creates attractive contribution and strategic flexibility without introducing unmeasured dependencies.
EVA perspective
Channel mix is a portfolio decision. The board should understand what each channel contributes economically, what risk it adds, and how the mix supports the company’s value-creation and exit thesis.
Related James Thomson resources
James Thomson helps PE sponsors, CEOs and boards govern ecommerce, marketplaces and channel complexity as enterprise-value issues.