Nike partners with Amazon as it looks to take back control of pricing and distribution
Nike has confirmed it will start selling products directly on Amazon in a move which signals a shift in the balance of power between brands and the e-commerce giant.
Nike will open an Amazon shop to help prevent counterfeits and restrict unsanctioned sales of its products
Details of the partnership were laid out during a call with investors with Nike’s management team announcing it will begin selling a limited product assortment, including athletic footwear, apparel and accessories, on Amazon in the US.
Nike chief executive Mark Parker said the new pilot scheme would attempt to "improve the Nike consumer experience on Amazon”.
The move represents a significant turnaround for the world’s biggest sports brand which had previously held out on selling its products on the platform, instead focusing its efforts on its own digital marketplace.
However, Nike has now agreed to a partnership in exchange for stricter policing of counterfeits and restrictions on unsanctioned sales of its products.
Despite the sportswear giant choosing not to sell either directly or through approved wholesalers, authentic Nike products have long been sold on Amazon through third party sellers. In fact, according to a Morgan Stanley survey, the Oregon-based company is most purchased apparel brand on the site.
The issue is part of a wider problem for big brands such as Chanel, The North Face and Patagonia, all of which are seeing their grip on pricing and distribution undercut by an explosion of third-party sellers on Amazon. Without a direct distribution deal with Amazon there is little they can do to curb the trend given that third-party resellers are allowed to resell goods they have lawfully acquired at any price they want.
Nike decision to partner with Amazon means starting from 13 July third-party sellers will no longer be allowed to sell certain Nike items, including footwear and apparel.
During the earnings call Nike revealed its net income rose to $1bn in the fiscal fourth quarter compared to $846m during the same period one year ago. It also mentioned more about what's in store for Nike later this year, including the launch of the dedicated footwear app and Nike+ experience in Europe and China.
Earlier this month Nike announced a it would cut 2% of its global workforce as part of a wide ranging corporate restructure designed to accelerate growth.