Nike to Stop Selling Directly to Amazon -- Update
November 13 2019 - 1:40PM
Dow Jones News
By Khadeeja Safdar and Dana Mattioli
Nike Inc. said it would stop selling its clothes and sneakers
directly to Amazon.com Inc., an about-face for the sportswear
brand.
The sneaker giant agreed in 2017 to sell products to Amazon in
exchange for stricter policing of counterfeits and restrictions on
unsanctioned sales. It was part of Amazon's effort to court big
fashion brands to sell their products through its website.
In a statement Tuesday, Nike said it has decided to focus on its
direct business, though it will continue to seek partnerships with
other retailers and platforms. Bloomberg News earlier reported on
Nike's move.
Although Nike is one of the top-selling brands on Amazon, Nike
itself only sold a relatively small amount of goods on the site and
mostly offered down-market items, according to people familiar with
the matter. Nike executives referred to it as a pilot test.
Nike has been saving its highest-profile products and limited
releases for its own SNKRS app or specialty stores that typically
avoid heavy discounting.
Nike officials were disappointed the deal with Amazon didn't
eliminate counterfeits and give the brand more control over
gray-market goods that account for many of the Amazon listings,
these people said. Such items are typically legitimate merchandise
purchased from distributors or retailers, and resold on the
site.
A search on Amazon's website Wednesday for "Nike sneakers" found
more than 10,000 results that qualified for free shipping with
Amazon Prime. A search for "Nike shirt" found more than 5,000 such
results.
While rivals such as Adidas AG and Under Armour Inc. sell
directly to Amazon, many big fashion brands have resisted. A few
have reversed course. The owner of Birkenstock pulled its products
in 2016, saying Amazon wasn't doing enough to police the gray
market and counterfeit sellers.
Amazon seeks out long-term and mutually beneficial partnerships,
an Amazon spokeswoman said, and negotiating terms is a regular part
of any retail business. When Amazon negotiates with sellers, it
seeks to bring customers the widest selection of products and the
lowest prices, she said.
Nike had refused to sell directly to Amazon for years, fearing
it would undermine its brand. The company has focused on bulking up
sales from its own stores, apps and website. It has pared back the
number of retailers it uses and now gets more than 30% of its
annual sales from its direct-to-consumer business.
At the same time, Amazon's website has come under greater
scrutiny as the volume of products sold by third-party sellers has
exploded. They accounted for 60% of physical merchandise sales on
the site in 2018, up from 30% a decade ago. Amazon has made the
process to list products so simple that counterfeiters have been
exploiting the marketplace.
Amazon says it prohibits the sale of counterfeits. Earlier this
year, it started letting brand owners delete listings on its site
for products they deem fake. At the time, Amazon said its engineers
were working to better train the algorithms that automatically
scan, block and scrub the site of suspect listings.
Amazon said it invested more than $400 million last year to
police its website. The company said in 2018 it stopped more than 1
million suspected bad actors from opening seller accounts and
blocked more than 3 billion suspected bad listings before they were
published to the site.
Write to Khadeeja Safdar at khadeeja.safdar@wsj.com and Dana
Mattioli at dana.mattioli@wsj.com
(END) Dow Jones Newswires
November 13, 2019 13:25 ET (18:25 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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