The honeymoon between Nike and Amazon is officially over. In fact, the entire relationship is now over, just two years after it started.
Nike has decided it is going to stop selling its sneakers and apparel on Amazon, which marks the end of a pilot program it started in 2017, according to Bloomberg.
The move is part of a larger shift of Nike's retail strategy and the hiring of ex-eBay CEO John Donahoe. The move is an indication the company is going aggressive after e-commerce sales, even without Amazon's help.
The company 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.”
Amazon is shunned by other large brands, namely because of the amount of fakes and unauthorized sellers that can undercut pricing. Nike pulling out is sure to catch the attention of other large retailers who sell through Amazon. Nike had acted as a wholesaler to Amazon during the program, instead of letting third party merchants sell their items.
Nike did say, however, that it will continue to use AWS to power its apps and Nike.com services.
Amazon had been "preparing for the move" according to people familiar with the matter. It has been working on recruiting third party sellers with Nike products so that the merchandise is still widely available on the site, while at the same time working to stem the flow of counterfeits.
The only thing left to see is whether other retailers follow in Nike's footsteps.
Amazon, which now sells everything from vitamins to mattresses, may not be viewed as taking the concerns of major brands seriously after Nike's departure. Brands continue to express frustration that the company doesn't do enough to combat fakes and unauthorized sales.
Neil Saunders, an analyst at GlobalData Retail said: “Nike has enormous reach and its products are in demand, so it can afford to be selective about where its products are distributed because customers will come find Nike where it is offered. I don’t think as many brands can be as selective as Nike.”
Nike joined Amazon's brand registry program in 2017 in hopes that the move would give them more control over Nike items sold on the website and the power to remove fake listings. But Nike struggled to control the Amazon marketplace and third party sellers continued to pop up under other names. Nike products got fewer reviews, which means they got worse positioning on the website. The news of the partnership sent shoe-retailer stocks plummeting at the time.
James Thomson, a former Amazon employee who now helps brands sell products online through Buy Box Experts, said: "Leaving Amazon won’t necessarily solve Nike’s problems, which represent a big brand struggling to adapt to selling products in the digital age. Just because Nike walks away from Amazon doesn’t mean its products walk away from Amazon and doesn’t mean its brand problems disappear. Even if every single Nike product isn’t on Amazon, there will be enough of a selection that someone looking for Nike on Amazon will find something to buy.”
After the pilot began, Nike showed off plans to revamp its retail strategy, including "drastically reducing" the number of retailers it partnered with in favor of direct-to-consumer selling through the Nike app and Nike.com.
In 2017 the company did business with 30,000 retailers - now, the goal is to focus primarily on "about 40 partners".
The company hasn't specified who they would be, but names like Nordstrom and Amazon had been tossed around by various media outlets. About 68% of Nike's sales come from wholesale channels, down from 81% in 2013.