Big brands rely on their retail partners. These partnerships allow them to extend their reach, satisfy more customers, and capture more sales. But, as in any relationship, things can come to an end. The breakup is sometimes the best next step, especially if the relationship becomes dysfunctional and ends up hurting one of the partners.
This is what happened to Nike and Amazon. Earlier this week, Nike announced the breakup with Amazon. As the two-year-long partnership comes to an end, consumers are wondering what led to it. The deal is void, and, at first sight, it might appear damaging to Nike, Amazon, and even the consumers.
Nike Took Its Time Before Joining The Amazon Family
While Amazon became the undisputed champion of online sales long ago, many big-name brands stayed away from the platform for quite long. Nike was one of these brands. Only retailers that went behind the company’s back were on Amazon. Thus, Nike sportswear and footwear could be found on Amazon.
Another source of Nike goods on Amazon were sellers of counterfeit goods. Yeah, that’s right. Customers were, and still are, able to purchase fake Nike goods on Amazon with no problems. This was the main reason why Nike chose to stay away from the platform. The company didn’t want to risk getting its original products mixed up in the Amazon offer with counterfeit goods.
Nike was in this mood for several years. It was in 2017 when the company decided to make a move and enter the world’s most popular eCommerce site even if it meant standing against the platform’s questionable policing of counterfeit goods.
Nike Started Selling Footwear to Amazon in 2017
It was in 2017 when Nike announced that they are about to start selling footwear goods on Amazon. For the retail and eCommerce industry, this was a huge thing. Two big players have united. The synergy of quality and design of Nike footwear and the popularity of Amazon services is potent. Both parties, at a time, were delighted with how things were.
But for Nike, it wasn’t just about boosting sales and reaching more customers. In 2017, there were plenty of independent resellers of Nike goods on the platform. While half of these resellers didn’t have a relationship with Nike, the other half were selling counterfeit products.
Since Nike invests a lot in customer experiences, partnering up with Amazon to ban independent resellers from the platform seemed like a logical solution. In an interview with Vox journalist, the Nike executive at the time, Heidi O’Neill, confirmed that Nike’s arrangement with Amazon is bound to potentially improve the customer experience by removing independent resellers from the picture.
Did Amazon Deliver?
Does a grey-goods market exist on Amazon? It does. Who stands to lose money from barring all sellers distributing counterfeit goods on Amazon? Well, besides the obvious answer - the sellers - Amazon also gets hurt in breaking the deal with these sellers. But barring them has been part of the deal done with Nike. Why did Nike then decide to “Just Do It” but without Amazon?
The answer is rather simple. Amazon didn’t deliver on its promise to deal with independent sellers who didn’t have a partnership with Nike, nor did it bar the sellers of counterfeit goods. Apparently, this is a deal-breaker for Nike. The company decided to pull out from the partnership and stop direct sales through Amazon.
When it comes to big players on the market, Amazon managed to enter partnerships with Apple and Nike. With Nike pulling out from the deal, Amazon is now left with only one world-famous partner.
But why did Nike decide to stop the program? Does it only have to do with independent resellers and counterfeit goods, or is there something more? Is it possible that the company wants to make an aggressive move on the eCommerce market? These are just some of the questions that might pop in your head.
Nike’s Decision To Pull Out From The Partnership With Amazon
Nike’s officials called the program to sell directly on Amazon “the pilot program.” And for something that comes with the adjective “Pilot,” this program extended its stay on Amazon well beyond the time frame usually described by the term “Pilot.”
The decision to stop directs sales through Amazon was followed by a public announcement.
“As part of Nike’s focus on elevating consumer experiences through more direct, personal relationships, we have decided to complete our current pilot with Amazon Retail,” Nike’s spokesperson said. “We will continue to invest in strong, distinctive partnerships for Nike with other retailers and platforms to seamlessly serve our consumers globally.”
Immediately after the announcement, all eyes turned to the stock market. The decision didn’t backfire, and Nike’s stock went up by 1.4 percent.