Amazon is making headlines once again following the news of its USD 13.7 billion acquisition of Whole Foods. This time, the e-commerce giant is making big moves in the sportswear industry, snatching up Nike as the newest Amazon partner. Amazon will begin selling Nike shoes and other products directly through a brand registry program designed to eliminate the threat posed by counterfeit goods.
Following this announcement, shares of Nike rose 2% to USD 59.59, and shares of Amazon rose by USD 9.64 to USD 1,002.23. In contrast, many competing sportswear and sporting goods stores have seen their shares dip. According to Bloomberg, Foot Locker Inc. fell roughly 11%; Dick’s Sporting Goods Inc. fell by more than 9%; and Finish Line Inc. fell 5.9%. Goldman-Sachs predicts that becoming an Amazon partner and selling through the platform could increase Nike’s revenue in the United States by USD 300 million to reach USD 500 million, or roughly 1% of its global sales.
Nike products are already available on Amazon Marketplace, but through third-party sellers that Nike is not affiliated with and cannot control. Becoming an Amazon partner will allow Nike to better regulate the sales of counterfeit products from third-party vendors, control brand presentation, and have better access to Millennial consumers. This partnership is also highly beneficial for Amazon: it will supply the company with a new source of revenue and a new consumer segment. It will also help Amazon to further strengthen its relatively new but thriving position in the clothing and apparel industry.
Nike has been increasing its focus on digital retailing as of late, cutting about 2% of its workforce in an effort to restructure its global operations. This overhaul is reportedly allowing the company to speed up product development and hone in on key markets and customer demographics. Through this restructuring and with the benefit of digital sales as an Amazon partner, Nike will be able to better compete with Adidas, one of its major competitors in North American markets, and with Under Armour, which is already an Amazon partner and has a direct-sales deal with the site.
This is a major move for Nike that could cause many other brands to try and walk in their shoes—especially brands that suffer from sales of counterfeit products and unauthorized sellers. An official statement has not yet been made by either company, but it is safe to say that the sportswear industry is already feeling the effects of this collaboration.
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