Abandoning Amazon: Nike delists its products from retailing giant
December 15, 2019
2 min read
What's going on here?
Following a strategic overhaul, Nike has decided to stop selling its products on Amazon.
What does this mean?
Nike has listed its trainers and apparel on Amazon since 2017, with the hope that the partnership would give it more control over its brand and lead to a reduction in fake listings. However, it has now decided to end this venture, citing a need to make more direct and personal relationships with consumers.
Amazon operates in two ways: 1) as an online marketplace for independent retailers and 2) as a traditional retailer, buying goods from wholesalers. Under the arrangement between Amazon and Nike, Nike acted as a wholesaler and its products were then sold by Amazon. Nike has chosen to shun Amazon’s platform as part of a more aggressive retail strategy under new CEO John Donahoe.
What's the big picture effect?
Nike is not the first brand to distance itself from Amazon. Other brands have made similar moves to protect their brand values, due to the prevalence of fake products and unauthorised sellers on the platform. In response, Amazon has stated that it is working to eradicate fake products through various initiatives, for example, allowing brands to put unique codes on products, in order to easily identify counterfeit goods.
While their products were listed on the site, Nike reportedly found it difficult to control third-party sellers, because they would reappear under various names. Also, unofficial or counterfeit Nike products often had more reviews so legitimate Nike products often received worse exposure in the marketplace. Interestingly, since Nike pulled its products from Amazon, many more third-party Nike sellers have emerged on the platform, which vindicates its decision.
The question now is whether other Amazon wholesalers follow Nike’s lead and pull out of the online marketplace. Nike is such a large company that it can afford to make this move, but not all brands can afford to be as selective as Nike. Regardless, shares in Nike rose as much as 1.4% on the NYSE when the announcement was made, whereas shares in Amazon were down by 0.6%.
Report written by Sarina Johal
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