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Nike CEO Outlines Next Steps After Sneaker Resale Scandal

Days after a Bloomberg investigation exposed Ann Hebert’s connection to her son’s sneaker resale business, the Nike executive was out the door.

The footwear titan had promoted Hebert from vice president of global sales to vice president and general manager of the company’s North America business just nine months earlier. In her then-new, now-former position, she oversaw, among other things, SNKRS, Nike’s e-commerce platform for its most in-demand releases.

When Bloomberg’s bombshell report dropped, the story fit squarely within a controversial narrative surrounding SNKRS and the greater higher-end sneaker market for years now, that individuals using specially designed software, or “sneaker bots,” were abusing the system in order to make a earn a pretty penny on popular resale platforms.

Hebert’s 19-year-old son Joe openly talked of using these bots, the logistics of reselling and the “pretty calm 10 to 20” percent profit he aimed to make. In one instance, he discussed how he and a group of allies bought up 600 Yeezy shoes in one morning, racking up a $132,000 credit card bill. “In almost as little time as it had taken to buy them,” according to Bloomberg, the shoes resold at a cool $20,000 profit.

But the kicker for many, and perhaps the nail in the coffin for Hebert, was that her son accrued his massive bills on a credit card registered in her name. Less than a week after the Bloomberg article hit the internet, Hebert had stepped down, ending a more than 25-year career at Nike.

Hebert’s departure alone, however, is unlikely to assuage suspicions about whether or not the sneaker game is rigged in the favor of a select few. A popular tweet from TV host Tamara Dhia sympathizing with the newly departed Nike executive garnered more than 33,000 likes.

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“This Nike reseller situation is so crazy,” she tweeted. “But honestly the worst part is that Ann Hebert worked her way up the ladder in a male-dominated industry for 25 years only to be knocked down by her clout-chasing son.”

Where does Nike go from here?

Given how difficult it is for any individual to successfully land any  given SNKRS release, it’s unclear whether any hit to Nike’s trust will impact its bottom line. Though sneaker enthusiasts have long complained about the prevalence of bots, resale prices remain as high as ever.

Margot Bloomstein, author of “Trustworthy: How the Smartest Brands Beat Cynicism and Bridge the Trust Gap,” however, believes that if Nike does nothing to confront its problems with bots and cynicism grows unchecked, the sneaker authority risks losing its legions of fans and shoppers. “Right now, their audience is people that love sneakers, they love exclusive access, getting something special before anyone else,” she told Sourcing Journal. “They either serve that audience, or they serve the audience of bots.”

For Nike’s part, it appears the company does plan to institute some changes following the Hebert scandal. CEO John Donahoe discussed Hebert’s resignation in an internal meeting of the brand’s North America team last week, according to Complex, which reviewed a recording of the virtual meeting.

“There’s no value more core to who we are than the trust our consumers put into us and our brand and our products,” Donahoe said. “And the fact of the matter is, this incident has sparked questions in some of our consumers about whether they can trust us, particularly around launch product.”

Donahoe indicated several steps Nike would take moving forward to restore consumer confidence, including auditing its launch process, doubling down on anti-bot technology and updating its policies to make it clearer what is and is not appropriate for employees and their immediate family.

Despite these reported internal discussions, Nike has not publicly addressed the scandal surrounding Hebert except to announce her resignation two weeks ago. Bloomstein said public acknowledgement will be key to rehabilitating goodwill.

“I think by first acknowledging the problem, explaining it in detail, that respects their audience,” Bloomstein said. “And then from there, I think they demonstrate accountability in that same level of detail…. Say ‘Here’s why it’s not going to happen again, here’s what we’re going to change about our internal processes, access to this system, so that we do respect the situation, we do respect your frustration and here’s how you can hold us accountable so that it doesn’t happen in the future.’ And I think that type of accountability can go a long way to rebuilding trust in their community.”

Bloomstein suggested Nike look to Zoom. After experiencing a surge in users at the beginning of the pandemic, the video communications company was plagued by a host of security and privacy issues, leading names like Google and NASA to ban the software. But rather than downplaying the problems, Zoom recognized the issues and said it would shift its engineering focus to security and privacy and submit to third-party audits.

“The volume of detail that they offered to explain what had happened and what they were going to do to address it, I think that offers a wonderful model for other brands to address these kinds of flaws and breakdowns in trust,” Bloomstein added.

Furthermore, she framed Nike’s current position as a chance for it to grow closer to its audience, so long as it confronts the concerns of its massive customer base.

“Nike has a tremendous opportunity now to engage their audience, to reach out to that audience and say, ‘Alright you value exclusivity and fairness in the process. It isn’t that you have to know somebody here to get the sneakers. No, we believe in luck, that you’re on the platform at the right place and the right time, anybody can get this, not just somebody that’s written the appropriate script,’” Bloomstein said.