Nike-Amazon strike a deal which will sell the apparel makers’ products directly to the people
Nike-Amazon have partnered to help the apparel maker sell its shoes on the e-commerce giant’s website. This move is a step to curb the sale of counterfeited products by third-party sellers. It’s also bad news for unlicensed distributors buying official products wholesale and selling them on Amazon.com. The deal is a big win for both companies though.
Goldman Sachs (GS) said on Wednesday it believed the deal would give Nike better exposure to Amazon’s huge retail channel and customer base, especially millennials.
Nike-Amazon hope to earn increased profit margin on goods sold on Amazon’s website. Nike has in the past sold its shoes through Amazon-owned Zappos.com. However, the company has never allowed Amazon to sell its products directly unlike its competitors Adidas and Under Armour. Goldman believes the deal would give Nike better control of its brand’s presentation on the site.
As of now, it’s unclear just how much more Nike merchandise will ultimately be sold via Amazon. But the deal is expected to dramatically impact the counterfeit sneaker market.
This all bodes well for Amazon’s new Prime wardrobe initiative too. Announced recently, the Prime Wardrobe program will ship consumers clothes from eligible partners in a resealable return box with a prepaid shipping label. This try-before-you-buy approach could at some point expand to footwear. Amazon could soon become a disrupting force with this new added service.
While this new partnership is a great way for Nike to ensure that their customers get authentic products, it will damage their retail partners like Foot Locker and Finish Line. The stocks of both companies have already dropped in wake of today’s news.
It doesn’t take much to spook investors in the sporting goods sector, however. The years since the 2008 recession have not been kind.
All things considered, the Nike-Amazon deal is unlikely to make anything easier for sports retailers.