Nike and Amazon have agreed to a partnership but what exactly does this mean. Let's break this down and take a look at what the partnership means, who it affects, and what we can expect to see in the future.
What will Nike sell on Amazon?
Nike CEO Mark Parker reportedly said, "In the US, we're executing a new pilot with Amazon with a limited Nike product assortment. As we do with all of our partners, we're looking for ways to improve the Nike consumer experience on Amazon by elevating the way the brand is presented and increasing the quality of product storytelling. We're in the early stages, but we look forward to evaluating the results of the pilot."
Why did Nike decide to partner with Amazon?
Nike will be able to "elevate the way the brand is presented" by gaining more control over how its products are marketed on the site, Parker said.
Since 3rd parties can sell on Amazon, there has been an issue with Counterfeit/Fake Nike's being sold on Amazon and this caused a bit of concern for Nike. As a result, part of deal entails Amazon weeding out the questionable sellers on Amazon and making it even tougher for sellers to sell Nike products on Amazon without proper vetting.
Who sells Nike products on Amazon?
Nike's products can already be found on Amazon via unlicensed and licensed third-party vendors. This basically means that resellers are allowed to sell on Amazon but getting approved to sell Nike products on Amazon is very difficult.
Supposedly, Amazon has been working on a registry of legit resellers to assure customers that the products they buy are 100% authentic.
Right now, third-party sellers are already selling thousands of Nike items on the site and reportedly account for more than 50% of all sales. These days, analysts estimate third-party sales in total have surpassed Amazon's own sales on the site, and the number of sellers has swelled to over two million.
In addition to this, the 3rd party sales are generally more profitable for Amazon because they collect seller fees without having to deal with storing the products and shipping them out. So, it would not make much sense for Amazon to get rid of all of the 3rd party sellers currently selling on Amazon.
As of July 13 Nike will begin to sell products on Amazon. Any products that Nike decides to sell means that any 3rd party seller can not sell the same products as Nike.
How does the Nike Amazon Partnership affect retail?
Retail and big box stores are feeling the brunt end of this whole partnership. Stores like Sports Authority and Sports Chalet have already filed for bankruptcy while companies like Footlocker and Finishline have seen their stocks decline.
Who has the leverage Nike or Amazon?
It appears that Amazon has the leverage over Nike. While Nike continues to be the largest sportswear company in the world by a long shot, Amazon is still a much larger company than Nike. Also, Amazon has already been selling tons of Nike products through 3rd parties.