Nike to end its deal with Amazon
today Nov 14, 2019
With Nike soon to be headed up by the former head of Ebay, the U.S. sports and apparel brand has announced that it is leaving Amazon. New boss, John Donahoe, a digital expert, will not take over from Mark Parker until early 2020, but Nike’s digital strategy is already taking a major turn.
The world-leading sports giant, which decided to enter Amazon with a selection of products in June 2017 after years of refusing, is pulling back. The group confirmed in a press release the information first reported by Bloomberg.
"As part of Nike's goal to improve the consumer experience through more direct and personal relationships, we have made the decision to end our current pilot project with Amazon Retail," said Nike.
"We will continue to invest in strong and distinctive partnerships for Nike with other retailers and platforms to seamlessly serve our customers globally."
Specifically, Nike says it wants to focus on its own network. The previously announced strategy aims to work with 40 major accounts worldwide, where Nike products will benefit from a more special welcome, and in parallel, will help develop its direct sales. The same is true for it flagship stores, which are increasingly considered as experiential. Nike has already opened its new House of Innovation concept in New York and Shanghai, with another to open this winter in a 4,300 square-meter-space at 79 Avenue des Champs Elysées in Paris.
The DTC expansion (including direct-to-consumer sales) also includes digital, with its brand website, but also the Sneakrs app, which gives access to information on the latest limited edition shoe drops.
In its latest quarter detailed by management and financial analysts, Nike saw a 50% community growth on the app, which is today available in 22 countries. The group also saw that half of sales growth on its Nike Direct platform was carried out by customers enrolled in its loyalty program.
Online is clearly a major focus for the group (the new Nike boss is proof of that), and Amazon is no longer part of the picture. Nike joined the e-commerce platform mainly to gain visibility over counterfeit and unauthorized resellers who can be found on Amazon.
According to Bloomberg, its aspiration to curb both these two components was not fully successful, and the brand did not fundamentally succeed in attracting Amazon buyers, which put it below other sellers in the marketplace rankings. Nike will, therefore, still be present on Amazon via products offered by third-party sellers. The American group also said that it will continue to rely on the Amazon cloud and Amazon web services to operate Nike.com.
Nike's own online platform or those of identified partners, such as Zalando or JD Sports in Europe, are a growth driver for the group. Last year, Nike achieved 35% digital growth.
Meanwhile, in its first quarter presented on September 24, growth was 30%. Nike expects 30% of its global turnover to come from digital at the end of its fiscal year 2023. During its last financial year, the U.S. giant earned $39.1 billion, up 11% at constant exchange rates.
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