By
Bena Ilyas
May 13th, 2024
Nike explained its decision to terminate relations with Amazon by its desire to build more direct, personal relationships with customers.
In a surprise turn of events, footwear maker Nike has decided to terminate its relationship with technology giant Amazon and it will no longer sell its goods on the retail website of Amazon.
In a statement Nike said:
“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.”
“We will continue to invest in strong, distinctive partnerships for Nike with other retailers and platforms to seamlessly serve our consumers globally,” added the company.
The footwear maker has decided to implement a direct-to-customer model where its wholesalers will be able to ship directly to customers. The pilot program which started in 2017 has formally come to an end for both parties. This, of course, has caused some concern for the retail giant as many analysts expect other merchants to follow suit.
This does not, however, stop other commercial relationships that the two companies share. Nike indicated that it will continue using Amazons’ web services to host its website so it isn’t exactly totally over between the two companies.
For one thing, Amazon has the distinct advantage of having a logistics network that functions very much like that of a logistics company with automated systems and so on that make deliveries easy. That, however, can also be outsourced to logistics companies with similar capabilities as it appears that this is what Nike has opted to do.
One factor playing against Amazon is the presence of so many brands in one place. This is obvious by the way and manner the products are displayed. Nike being one of the most popular footwear brands would require some sort of exclusivity which Amazon can’t give. The split is going to enable Nike to focus on growing its brand by driving traffic directly to its website in order to sell its goods.
The other problem which Amazon still hasn’t been able to curb is the presence of fake and counterfeit merchandise. This also has made many exclusive brands to shy away from selling their merchandise with the retail giant.
The major issue which Nike has faced over the years is finding a model that works for its electronic commerce activities. Due to the presence of way too many counterfeit goods the company has struggled over the years to find the right model that will enable it to compete effectively against other competitors who seem to have found one way or the other to shine.
The recent announcement of the decision to hire former e-bay CEO John Donahue in 2020 when Mark Parker will step down is an indication that the Footwear company may be going in the right direction. How this will affect sales remains to be seen but the recent announcement terminating the partnership with Amazon grew retail sales by 10%.
It’s worth mentioning that Amazon stock hasn’t reacted to this news negatively. It is trading at 1 758,30 USD (+0.20%).