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Nike Inc. started cleaning up its stats sheet a week ago and the first time, the sneaker empire declined to report “future orders,” a crucial way of measuring wholesale demand from the galaxy of retailers who sell the famous kicks. Nike, No. 9 in the B2B E-Commerce 300, says the metric doesn’t matter much anymore, because now it’s centered on working directly with consumers and removing the middleman.

Nike sells to retailers through a combination of EDI and e-commerce. While Nike reported its slowest quarterly sales growth since 2010, its performance as being a retailer-as opposed to a wholesaler-was actually a relative highlight. Sales on Nike’s own online store were up 19% inside the recent quarter, while its retail locations notched a 5% grow in same-store sales. 28% of all sales are direct this season, compared with 4% five years ago. CEO Mark Parker said the organization is obsessed at this time with making shopping more personal. “Retailers who don’t embrace distinction will likely be left out,” he warned over a conference call Tuesday.

Still, that wasn’t enough to impress investors-at least, not. The overlooked attractiveness of bricks-and-mortar retail is just how well retail chains lend themselves as to what economists call price segmentation. Shoemakers like Nike can simply target customers by sending the cheap nike shoes to the correct kind of store (think: first-class vs. coach, iPhone X vs. iPhone 8, Banana Republic vs. Old Navy). In Nike’s case, it ships expensive, exclusive edition sneakers to high-end boutiques, routes its stock Jordans to chains like Foot Locker Retail Inc., and dumps its low-end product and off-key colorways in these places as DSW Inc.

If performed correctly, all of this socioeconomic slotting moves as much merchandise as you can with minimal fuss, while not tarnishing the bigger brand. Making no mistake: Nike does it correctly. On its face, the Swoosh is really a design shop supercharged by the kind of storytelling its TV commercials, billboards and magazine ads are famous for. But Nike’s real genius isn’t marketing, it’s merchandising: knowing what to ship where. For each and every sneaker sketching savant in Beaverton, Ore., there’s a mid-level manager having a giant spreadsheet, making certain “Momofuku” Dunks aren’t too simple to find, ordering up cheap nike shoes wholesale for China, distributing its best-sellers to all the best Di,ck’s Sporting Goods Inc. outlets and dumping plenty of Chuck Taylors at outlet malls.

Nike has become upsetting their own well-oiled applecart. In giving traditional retail the stiff arm, which Nike made official in June, the Oregon empire is tearing up that playbook and trying to make a stop play the essential economics of price segmentation. The strategy-a bold move, given the historical manufacturer-to-retail model being discarded-requires no shortage of swagger. But Nike’s numbers show that the bet seems to be working, primarily because Nike has become sharpening its digital game.

Sought-after sneakers now ship out via Nike’s own ecosystem of apps, including SNKRS, which it launched early a year ago. The center of their lineup, meanwhile, sells on Nike.com as well as in their own big box stores. When it comes to cheaper, less-popular kicks, they quietly trickle to the company’s “factory” stores (read: outlet) and onto Amazon.com. Nike even features a studio in Ny that creates cheap nike shoes free shipping within an hour.

In a nutshell, the business is deemphasizing its ready-made network wemjjs retailers to generate an even more precise targeting mechanism. Tuesday Parker said the end goal is to buy in front of the consumer and offer “the most personal, digitally connected experiences” in the business. “While altering your approach is rarely easy, Nike has proven before that when we all do, it’s always ignited the following phase of growth for our company,” he explained.

In principle, Nike can know any customer better-and their willingness to pay for-by utilizing its very own venues and platforms, particularly on its digital properties. The challenge will likely be building the mechanism to sort all of the data, and in doing so, the shoppers. In real life, they sort themselves: The top-end boutique isn’t right next to the cut-rate discount outlet. Inside the virtual world, it’s not too easy.

For that record, Under Armour Inc. is slightly in front of Nike Inc., with 31% of its sales coming directly from consumers; Adidas AG is slightly behind, with 23% of revenue from retail. At its current pace, Nike will quickly be collecting one out of three of the sales dollars right from consumers. Its challenge will likely be ensuring that not one of them get too good an arrangement.

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