Nike reportedly is ending its 2017 deal with Amazon whereby the athletics brand sells its clothes and shoes directly to customers on the e-commerce site, reports Bloomberg. Third-party sellers will be able to continue selling Nike products, but Nike will no longer act as a wholesaler to Amazon.
At the time of the initial deal, Nike’s aim was to regulate its products that appeared on Amazon by limiting unlicensed distributors and knockoff items sold by third-party sellers. But during the last two years, accordin to Bloomberg, which broke the story, this control never fully materialized. Nike struggled to compete against third-party listings, who would often benefit from having more reviews than Nike’s listings.
The split also comes amid an overhaul of Nike’s retail strategy and the hiring of ex-EBay CEO John Donahoe as its new CEO, signaling that the company was going to double-down on its e-commerce strategy, apparently without Amazon’s help.
“As part of Nike’s focus on elevating consumer experiences through more direct, personal relationships, we have made the decision to complete our current pilot with Amazon Retail,” the company said in a statement. “We will continue to invest in strong, distinctive partnerships for Nike with other retailers and platforms to seamlessly serve our consumers globally.”
Nike also has been increasingly emphasizing direct-to-consumer sales via avenues such as the Nike app and Nike.com.
For some, the split suggests that “Brands don’t need Amazon,” Jefferies analyst Randy Konik told CNBC. “Amazon had a delivery speed advantage, but that advantage has compressed. With Nike leaving the Amazon platform … it strengthens our view that retailers/brands won’t be displaced by Amazon.
“The move shows us that strong brands realize that traffic driven to their own site (e.g. NIKE.com) is self-sustaining, more profitable, and actually brand enhancing, while traffic and incremental revenue from Amazon.com is less profitable but also less brand enhancing,” Konik continued. “We believe many strong apparel (and even non-apparel) brands will continue to avoid or curb their relationships with Amazon in the future.”
Amazon reportedly has been preparing for such an announcement from Nike, making effort to ensure that Nike products are available from third-party sellers.