Two major companies on the cusp of a new stage in their respective histories are about to enter into a landmark deal. Nike, perhaps the top brand name in the world for shoes and other sporting goods, has been undergoing some operational restructuring that could see its total workforce being reduced. Meanwhile, Amazon, fresh from its multi- billion dollar buy-up of Whole Foods has been working non-stop in developing and introducing new features and services to entice more buyers and customers. Now a step by Nike to ensure that no knockoffs of their products would even be put up for sale on Amazon may lead to its logical conclusion: that of the sporting brand selling directly to the online retailer.
Greater retail control
Nike is signing up for a brand registry program with Amazon, giving it greater control over how its products may be sold over the retail platform’s online marketplace. This was shared to Bloomberg News by an inside source that asked not to be identified due to the arrangement not yet being made public by official announcement. The sports brand has held aloof on this idea in the past, for fear that Amazon’s aggressive branding would end up undermining their own. Until this point, Nike products on Amazon may have been already available through third-party vendors, but not all of them have been duly licensed to do so.
According to analysis reports from Goldman Sachs, the shoe and sports goods brand has decided to cut out any middlemen in transactions with Amazon, opting instead to open a true online Nike store attached to the e-commerce heavyweight’s website.
This enables them to manage the presentation of their brand for online retail, thus reducing the influence of unlicensed third-party distributors and sellers of imitation Nike items. There’s also a pragmatic undertone to this move. Barely any people are going to brick and mortar stores to buy Nike anymore. The brand-registry deal would help Nike tap into the “Millennial” shoppers who prefer to buy things from Amazon.
Strengthening relationship
Nike's first major online partnership had been with shoe e-commerce site Zappos. Amazon bought Zappos in 2009. Nike has since lingered on making any deal with the online retail giant itself even as its competing brands Adidas and Under Armor who already have custom online storefronts on the Amazon site.
The surge of counterfeit Nike shoes selling on that platform has spurred the company to pursue a more proactive policy regarding online sales worldwide.
Not long after the agreement was publicized on Wednesday, Nike gained 1.8 percent on the stock market for a year-to-date 3 percent gain. Amazon, in turn, gained as much as 0.6 percent. Goldman Sachs is of the opinion that the two companies are keen on developing even closer ties.
