When Nike announced in 2017 that they would start selling some footwear to Amazon, it was a deal that was kept as a sign of the times in retail. The sportswear giant could no longer overlook the fact that the e-commerce giant Amazon had become a major player in the sale of sneakers and sportswear.
But two years later, the deal is dead, and that's the ultimate situation of losing-losing-losses: for Nike, for Amazon, and for everyone who trades on Amazon, too.
Earlier this week, Nike said it would no longer sell its merchandise to Amazon and would end the two-year partnership. The scheme referred to as a "pilot", although it sounds more than a little ridiculous for a two-year high profile relationship.
"As part of Nike's focus on enhancing consumer experiences through more direct, personal relationships, we have made the decision to complete our current pilot with Amazon Retail," the company said in a statement. "We will continue to invest in strong , Nike's distinctive partnership with other retailers and platforms to seamlessly serve our consumers globally. "
Over the past few years, Nike has been on a mission to build what is known in the industry as its direct-to- consumer business, which aims to sell more of its merchandise through its own websites and stores, while less reliant on selling wholesale to retail partners like Foot Locker. This decision fits within that thinking.
But Nike had already started it the way it chose to launch the Amazon deal in 201
However, over the past two years, the Nike shopping experience on Amazon was still most cluttered, with Nike's own approved merchandise – sold directly by Amazon – still popping up along with stock from random Amazon sellers in search results.
And the Wall Street Journal reported this week that Nike was "disappointed that the deal with Amazon does not eliminate counterfeiting and gives the brand more control over gray market goods," which are legitimate goods that Amazon sellers buy from distributors or retailers, rather than Nike self.
The problem for Nike is that removing themselves from the Amazon platform will not solve this problem. In fact, it will probably get worse. Amazon will now look to acquire more "gray market" Nike products to fill the inventory Nike will leave.
For Amazon, Nike was perhaps the biggest brand partner with Apple, and definitely the sexiest in clothing. category. It was a name executives would often point to when trying to convince other big names to sell directly to the tech giant in Seattle.
"Losing Nike is a major setback for Amazon that could very well affect other brands – or at least eliminate Amazon's trophy that it points to when recruiting other brands," said Larry Pluimer, a former top executive of Amazon's Outdoor Life category and now runs Indigitous, an Amazon sales consultant.
"This was Amazon's JEDI contract for Amazon's retail," he added, referring to the $ 10 billion Pentagon contract that Amazon Web Services recently lost to Microsoft.
From a business perspective, the short-term effect on Amazon is probably minimal. But when it comes to the company's reputation, it can make it more difficult to land more top-tier brands that have enough cached and direct consumer relationships to afford to say "no" to the e-commerce giant.
Finally, it's a bad result for you, provided you are someone who trades on Amazon.
Over the past two years, if you found Nike sneakers or shirts on Amazon and Amazon was the actual seller of the goods, you can be relatively confident that it was a legitimate product from Nike itself.
Now, any sense of extra security is gone. Amazon will definitely find ways to fill in the gaps in its product catalog, but unless it comes from Nike or someone who is approved to resell their products, there will always be questions about what you buy.
As Amazon's top manager once told me: "If [a brand’s] got three brokers for some retailer that gets a real product – and they have good prices – we will."