Recently, Nike announced that it will stop selling its sports shoes and apparel directly on Amazon.com. The decision to terminate the partnership plan is because Nike will focus on selling directly to consumers through its website, stores and various applications.
In fact, for Nike, Amazon is both a partner and a competitor, but the latter is more likely big.
Looking back to 2017, Nike and Amazon reached a pilot cooperation. At that time, the overall U.S. retail industry declined in 2017, and more and more consumers tended to shop online, which put great pressure on companies that relied on physical retail, and Nike was one of them.
Nike has always attached great importance to offline channels. In addition to its self-operated stores, it also has many cooperative wholesale retailers. At that time, Nike Two important wholesalers are Foot Locker and Dick’s Sporting Goods.
The situation of these two major wholesalers is not very good, and the contribution rate continues to decline. According to reports at the time, Dick’s turnover hit its lowest level in 18 months, and Foot Locker sales were the lowest in three years.
According to the third fiscal quarter of 2017 announced by Nike, Nike’s total revenue only increased by 5% year-on-year, and in its most important North American market, revenue only increased year-on-year. 3%, the growth rate in all regions is lower than that of Adidas, which has been soaring.
In this fierce sports brand war, Nike has reached a two-year cooperation with Amazon in order to deal with competitors and also plans to get rid of its over-reliance on offline sales.
In exchange, Amazon must tighten regulations on counterfeit goods and restrict the sale of unapproved products.
On the surface, Amazon has indeed regulated Nike product sellers. In the past year, Amazon has collected and analyzed data from the online market and has rectified the 30% of Nike brand shoes on the market.
However, the cooperation between Amazon and Nike did not meet Nike’s expectations. The cooperation between the two parties did not give Nike more control over sales on the Amazon platform. , the third-party sellers who have been cleared can re-apply for business by simply changing their names.
In addition, because Nike’s official products have few reviews from buyers, their page position on the website is not conspicuous, so they do not receive much traffic.
Looking further, the more important factor in announcing the breakup is that Amazon’s business model is changing. Amazon’s development of its own brands may not be a good thing for Nike.
Amazon will start with products already on sale, proactively develop these products into its own brands and sell them on its website.
These private brands do not clearly indicate that they are affiliated with Amazon. Most of them use low prices as their selling points and other brands. Start competing.
As for sportswear, Amazon is also actively expanding. Kirsten K. Harris, who hired Nike’s product development manager, joined Amazon as a senior brand manager for the sportswear business.
Nowadays, Amazon’s free brands include underwear, food, electronic product accessories, home furnishings, clothing and other fields. Nike seems to have discovered something “wrong”.
So Nike regards direct business as a company strategy and continues to deepen it. More representative is Nike’s acquisition of New York-based digital design studio Virgin MEGA to help build the SNKRS application, a footwear platform that was launched a year ago.
In August this year, Nike continued to deepen its direct business and announced the acquisition of Celect, a retail analysis company headquartered in Boston. The deal will be the latest in a series of acquisitions by Nike in the future, as part of its Target Direct strategy.
Celect is to accelerate the prediction of consumers’ retail shopping patterns and behaviors. The acquisition of Celect will help Nike reduce the out-of-stock rate and maximize consumers’ needs for sports shoes and clothing. In addition to demand, it can better control inventory. The most important thing is that this strategy can improve Nike’s profit margins.
According to data, Nike’s direct business sales increased from US$9.1 billion in fiscal year 2017 to US$11.8 billion in fiscal year 2018, and the proportion of direct sales revenue has reached 30% , Nike may need to break up a lot in the future. </p
